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TMI Blog2025 (3) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... g the reason for the delay; and on perusal of it, reveals that the assessee was not aware of the existence of assessment order that was passed by AO on 24.12.2018 and came to know about it only in the first week of March, 2020 and immediately thereafter assessee handed over to the Ld.AR, the relevant papers for filing appeal before the Ld.CIT(A). But, because Covid- 19 pandemic paralyzed the functioning of institutions from 20th March, 2020, therefore, the Ld.AR could not file the appeal within 30 days and therefore, he filed the appeal only on 22.05.2023. According to the Ld.AR, the Department circular itself had extended the period of "Taxation and other laws (Relaxation and Amendment of certain Provisions of the Act, 2020)" [TOLA] up to March, 2023 and since the assessee had filed within 60 days of the end of TOLA period, the delay may be condoned. 4. Per contra, the Ld.DR doesn't want us to condone the delay considering the delay of 1575 days in filing appeal before Ld CIT(A) 5. Having heard both the parties on the issue of delay caused in filing appeal before the Ld.CIT(A), it is noted that the assessee society has filed an affidavit through its secretary explaining the dela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receive dividend or exercise their voting rights and cannot participate in the general administrative and meeting of the society, whereas these privileges are given only to 'A' class members. According to the AO, the 'B' class members are admitted for limited purpose of availing loans and their membership exits for limited period (maximum of three years) whereas, the 'A' class members enjoy all rights in addition to their rights and liabilities of the society and therefore, according to AO, the associated members are not entitled to the benefit of surplus and hence, benefit of mutuality consent cannot be extended to assessee and therefore, he relied on few decisions and rejected the deduction claimed u/s. 80P(2)(d) of the Act to the extent of Rs. 7,06,759/-. 8. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), who rejected the appeal without admitting it citing the reason of delay, supra. Aggrieved, assessee is before us. 9. We have heard both the parties and perused the record. We are not repeating the facts for the sake of brevity. We note that the assessee is a primary agricultural co-operative credit society registered under the Tamilnadu Co-operative Societie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of demand would not be enforced till the outcome of the special leave petitions in the Hon'ble Supreme Court, arrived at tax and initiated penalty proceedings under Sections 271(1)(c) and 271B of the Act. 9. The assessee carried the matters on appeal to the Commissioner of Income Tax (Appeals) [hereinafter called the CIT(A)], who, by separate orders respectively dated 30.8.2016 and 31.7.2017 respectively for the assessment years 2013- 14 and 2014-15, allowed the appeals filed by the assessee. As against the same, the Revenue carried the matters on appeal to the Tribunal. However, the Tribunal, by the impugned orders, dismissed the appeals filed by the Revenue. Therefore, the Revenue is before us. 10. The learned Senior Standing Counsel for the Revenue submits that the decision of the Hon'ble Supreme Court in the case of Citizen Cooperative Society Limited Vs. ACIT [reported in (2017) 84 Taxmann.com 114] is in favour of the Revenue and that the review petition filed against that decision was dismissed by the Hon'ble Supreme Court in the decision reported in (2017) 88 Taxmann.com 279. He further submits that in the case of CIT, Panaji, Goa Vs. Goa Staff Cooperativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Citizen Cooperative Society Limited was relied upon by the Revenue before the Tribunal, which, in paragraph 6.1 of its order dated 28.2.2018 for the assessment year 2014-15, extracted the operative portion of that judgment. In that case, the Hon'ble Supreme Court found that the society carried on certain activities, which were contrary to the provisions of the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995 and that they accepted deposits from third parties, who were not members in the real sense and were using those deposits to advance gold loans. Therefore, the Hon'ble Supreme Court pointed out that such an activity of the said society was that of a finance business and could not be termed as a cooperative society and that the loans, which were disbursed, were without the approval from the Registrar of Mutually Aided Cooperative Societies, Ranga Reddy District. The Hon'ble Supreme Court found that the said society was not entitled to deduction under Section 80P of the Act. 16. It is noteworthy to point out that the Hon'ble Supreme Court in the decision in the case of Citizen Cooperative Society Limited also observed that in the light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e co-operative societies engaged in banking business i.e. engaged in lending money to members of the public, which have a licence in this behalf from the RBI. Judged by this touchstone, it is clear that the impugned Full Bench judgment is wholly incorrect in its reading of Citizen Cooperative Society Ltd. (supra). Clearly, therefore, once section 80P(4) is out of harm's way, all the assessee's in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i), notwithstanding that they may also be giving loans to their members which are not related to agriculture. Also, in case it is found that there are instances of loans being given to non-members, profits attributable to such loans obviously cannot be deducted. 46. It must also be mentioned here that unlike the Andhra Act that Citizen Cooperative Society Ltd. (supra) considered, 'nominal members' are 'members' as defined under the Kerala Act. This Court in U.P. Cooperative Cane Unions' Federation Ltd., Lucknow v. Commissioner of Income Tax, Lucknow-I (1997) 11 SCC 287 referred to section 80P of the IT Act and then held: "8. The expression "members" is not defined in the Act. Since a cooperativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appeals and all pending applications are disposed of accordingly. These appeals are directed to be placed before appropriate benches of the Kerala High Court for disposal on merits in the light of this judgment. 11. According to the Ld.AR, when we apply the binding judicial precedent of Hon'ble High Court & Supreme Court (supra), in the Mavilayi Service Co-operative Bank to the facts of the assessee's case, the assessee society is registered under the TamilNadu Co-operative Societies Act and the definition of 'Member' under TNCS Act is as under: - "2(16) "member" means a person joining in the application for the registration of a society and a person admitted to membership after registration in accordance with the provisions of this Act, the rules and the by-laws and includes an associate member;" 12. And further it is noted that the 'Restrictions on loans' is similarly given in section 66 of the TNCS Act, which reads as under:- "66. Restrictions on loans. (1) A registered society shall not make a loan to any person other than a member: Provided that, with the general or special sanction of the Registrar, a registered society may make loans to another registered society ..... 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