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TMI Blog2024 (5) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee allowed. - Shri Duvvuru Rl Reddy, Hon ble Judicial Member For the Appellant : Shri G.V.N.Hari, AR For the Respondent : Dr. Aparna Villuri, DR ORDER PER SHRI DUVVURU RL REDDY, JUDICIAL MEMBER : These appeals are filed by the assessee against the orders of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi vide DIN Order No. ITBA/NFAC/S/250/2023-24/1060157942(1) dated 27.01.2024 and ITBA/NFAC/S/250/2023-24/1058978403(1) dated 21.12.2023 for the Assessment Year (A.Y.) 2018-19 and 2020-21 respectively. I.T.A.No. 86/Viz/2024 was filed with the delay of 15 days. The assessee filed a petition for condonation of delay, submitting that Sri Guduri Prasada Rao, Secretary of the assessee society and authorised signatory, suffered from severe lower back pain and was under treatment and bed rest during the period from 10.02.2024 to 28.02.2024. The secretary could not attend to any other affairs during this period and hence the appeal could not be filed within the due date. As soon as the condition improved, the Secretary took necessary steps and filed the appeal on 05.03.2024. The assessee submitted medical certificate as proof and submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs. 43,80,340/- made by the assessing officer towards disallowance of deduction u/s 80P of the Act. 3. Any other ground that may be urged at the time of hearing. 5. Ground No.1 and 3 are general in nature, which do not require any specific adjudication. 6. Ground No.2 is related to disallowance of deduction claimed u/s 80P of the Act. The Ld.AR submitted that the assessee is a Primary Agricultural Cooperative Credit Society, registered with District Registrar of Co-operative Societies under Andhra Pradesh Cooperative Societies Registration Act with Regn. No. 1904 dt. 05.02.1957, established with the objective of carrying on banking business by providing credit facility to it s members, marketing of agricultural produce grown by it s members, supply of agriculture inputs to members etc. The assessee society made deposits with District Cooperative Central Bank (DCCB) in compliance with the statutory regulation of AP Cooperative Societies Act, the interest on such investment is eligible for deduction u/s 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had claimed deduction u/s 80P of the Act. The contention of the Ld. AO and the Ld. DR is that any income by way of interest or dividends derived by the Co-operative Society from it s investments with any other cooperative society is only eligible for deduction u/s 80P of the Act. The Ld. Revenue Authorities have also placed relied on the decision of Hon ble Supreme Court of India in Civil Appeal No. 1622 of 2010 in the case of M/s Totgars Cooperative Sale Society Ltd., wherein it was held that investment of surplus on hand not immediately required in Short Term deposits and securities by a cooperative society providing credit facilities to members or marketing agriculture produce to member . However, in the instant case, the facts are distinguishable and hence, in my view, the ratio laid down in the case of M/s Totgars Cooperative Sale Society Ltd.(supra) shall not be applied to the instant case. On similar set of facts, coordinate Bench of this Tribunal in the case of The Andaluru Large Size Co-operative Society vide I.T.A.No.58/Viz/2024 dated 27.03.2024 held in favour of the assessee, relying of the decision of the coordinate bench in the case of Kakateeya Mutually Aided T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g credit facilities to its members, or (ii) a cottage industry, or [(iii) the marketing of agricultural produce grown by its members, or] (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or (v) the processing, without the aid of power, of the agricultural produce of its members, [or] [(vi) the collective disposal of the labour of its members, or (vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members,] the whole of the amount of profits and gains of business attributable to any one or more of such activities: 9. Further, we also extract below the provisions of section 80P(2)(d) and (e) of the Act for reference: (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other cooperative society, the whole of such income; (e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) was in respect of a co operative credit society, which was also marketing the agricultural produce of its members. As seen from the facts disclosed in the decision of the Karnataka High Court in Totgars, from out of which the decision of the Supreme Court arose, the assessee was carrying on the business of marketing agricultural produce of the members of the society. It is also found from paragraph-3 of the decision of the Karnataka High Court in Totgar's Co-operative Sale Society Ltd.'s case (supra) that the business activity other than marketing of the agricultural produce actually resulted in net loss to the society. Therefore, it appears that the assessee in Totgars was carrying on some of the activities listed in clause (a) along with other activities. This is perhaps the reason that the assessee did not pay to its members the proceeds of the sale of their produce, but invested the same in banks. As a consequence, the investments were shown as liabilities, as they represented the money belonging to the members. The income derived from the investments made by retaining the monies belonging to the members cannot certainly be termed as profits and gains of business. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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