A A 265 MUKASIPUDUR PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY,ERODE vs. THE INCOME TAX OFFICER, WARD 2(1), ERODE

आयकर अपीलीय अिधकरण, ’डी’ �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI �ी इंटूरी रामाराव, लेखा सद� एवं �ी एस.एस. िव�ने� रिव, �ाियक सद� के सम� । Before Shri Inturi Rama Rao, Accountant Member & Shri S.S. Viswanethra Ravi, Judicial Member आयकर अपील सं./I.T.A. No.1785/Chny/2026 िनधा�रण वष�/Assessment Year: 2017-18 A A 265 Mukasipudur Primary Vs. The Income Tax Officer, Agricultural Cooperative Credit Society, Ward 2(1), Erode, Attavanaipudur, Mukasipudur Post, Tamil Nadu-638001. Olagadam Via, Anthiyur Taluk, Erode Tamil Nadu-638314.

[PAN: AACAA1065G] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Ms. A. Vijayalakshmi, C.A. (Virtual) ��थ� की ओर से/Respondent by : Ms. T. Mythili, JCIT सुनवाई की तारीख/ Date of hearing : 13.05.2026 घोषणा की तारीख /Date of Pronouncement : 03.06.2026 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:

This appeal filed by the assessee is directed against the order dated 30.01.2026 passed by the Ld. Commissioner of Income Tax (Appeals), ADDL/JCIT (A)-1, Mumbai, for the assessment year 2017-18.

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the AO disallowed an amount of ₹25,80,942 by holding that the assessee is not eligible to claim deduction to its ‘A’ class members as well as ‘B’ class members, taking support from the decision of the Hon’ble Apex Court in the case of M/s. Citizen Co-operative Society Ltd., reported in (2017) 84 taxmann 144 (SC). A contention was raised before the Ld. CIT(A) that though ‘B’ class members designated as associated members are members within the meaning of the Tamil Nadu Cooperative Societies Act, 1983, the loans advanced to such class of members qualify for deduction under Section 80P(2)(i) of the Act. Ld. CIT(A) found the said explanation not acceptable and confirmed the order of the AO. Aggrieved, the assessee is before us.

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class members. The relevant portion in para 8 is reproduced hereinbelow for ready reference:-

“8. The FAA had dismissed the appeal of the assessee only for the reason that assessee has not furnished documentary evidence with regard to member-wise loan details, utilization of loans for agricultural purpose, etc. The Hon'ble Apex Court in the case of The Mavilayi Service Cooperative Bank Ltd., supra had categorially held that there is no necessity that loan has to be given by the co-operative society for agricultural purpose and the utilization must be only for the said purpose. When co-operative society is carrying on the business of providing credit facilities to its members, classification of the said credit facilities whether it is for agricultural purpose or not is not the subject matter of deduction u/5.80P(2)(a)(i) of the Act. Therefore, the reasoning of the FAA for denying the claim is also not legally tenable. From the facts and circumstances of the case, in light of the judgment of the Hon'ble Apex court in the case of The Mavilayi Service Cooperative Bank Ltd., supra and the Chennai Bench order of ITAT in the case of M/s.AA531 Kesarimangalam Primary Agricultural Co-op Credit Society Ltd., supra, we direct the AO to grant deduction u/s.80P(2)(a)(i) of the Act of Rs.13,70,700/-. It is ordered accordingly.” 6. On perusal of the above, we note that the Tribunal held the reason of the FAA for denying the claim under Section 80P(2)(i) of the Act not legally tenable and, by following the ratio of the Hon’ble Supreme Court in the case of Mavilayi Service Cooperative Bank Ltd. v. CIT, Calicut, reported in 431 ITR 1, which held that there is no necessity that loan has to be given by the cooperative society for agricultural purpose and the utilization must be only for the said purpose. Further, the Tribunal considered another Coordinate Bench decision in the case of M/s. AA 531 Kesarimangalam (supra), which held that giving loan to ‘B’ class members would not disqualify the assessee from claiming deduction under Section 80P(2)(i) of the Act. We find the facts and circumstances in the present case are similar to the facts before this Tribunal in the case of M/s. AA 284 Mailambody (supra) and in the case of M/s. AA 531 Kesarimangalam (supra), and following the findings therein, we hold that the assessee is entitled to claim deduction under Section 80P(2)(i) of the Act in respect of ‘B’ class members. Thus, the order of the Ld. CIT(A) is not justified and it is set aside. Therefore, we direct the AO to grant

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deduction to the extent of ₹13,18,170. Accordingly, the grounds raised by the assessee are allowed.

Order pronounced on 3rd June, 2026 at Chennai.

Sd/- Sd/- (INTURI RAMA RAO) (S.S. VISWANETHRA RAVI) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, 03.06.2026 MM/- आदेश की �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant, 2.��थ�/ Respondent, 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR & 5. गाड� फाईल/GF.