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Income Tax Appellate Tribunal, “B” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI & SHRI V. DURGA RAO
आदेश /O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals), Salem, dated 27.03.2015 relevant to the assessment year 2010-11.
The brief facts of the case are that the assessee, a primary agricultural co-operative bank named as M/s S-1293 Thammampatty Primary Agricultural Co-op. Credit Society Ltd., filed the return of income declaring a total income of ` 15,78,028/- and claimed deduction under Section 80P of the Income-tax Act, 1961 (in short 'the Act'). This claim of the assessee under Section 80P of the Act was denied by the A.O.
On being aggrieved, the assessee carried the matter in appeal before the CIT(Appeals). The Ld. CIT(Appeals), by following the decision of this Tribunal in assessee's own case in & 921/Mds/2013 dated 23rd May, 2014, allowed the appeal of the assessee.
On being aggrieved, the Revenue is in appeal before us. At the time of hearing, the Ld.counsel for the assessee submitted that the issue involved in the appeal is covered by the decision of co- ordinate Bench of this Tribunal in assessee's own case for assessment years 2007-08 and 2009-10 in & 921/Mds/2013 dated 23rd May, 2014.
On the contrary, the Ld. Departmental Representative relied on the orders of the authorities below and submitted that against the order of the Tribunal, the Revenue has already preferred an appeal.
We have heard both sides and perused the records and gone through the orders of the authorities below. The only issue arises for consideration is whether the assessee is eligible for deduction under Section 80P of the Act or not. The co-ordinate Bench of this Tribunal has already considered the issue in the assessee's own case and allowed the claim of the assessee in & 921/Mds/2013 dated 23rd May, 2014. The relevant portion of the order is extracted below:-
“5. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below as well as the decisions of the co-ordinate bench of the Tribunal relied upon by the ld.AR of the assessee. In both the appeals, the assessee has impugned the findings of the CIT(Appeals) for rejecting the claim of deduction u/s.80P(2)(a)(i) to the assessee. The CIT(Appeals) in his order has held that the assessee- society is not a co-operative bank, therefore, the 5 & 921/Mds/2013 provisions of section 80(P)(4) are not attracted. However, the CIT(Appeals) has denied the deduction on the ground that the assessee has extended credit facilities to Class-B Members, who are not regular Members of the Society and thus the assessee is not eligible for claiming deduction u/s.80P(2)(a)(i) and (iv).
6. Section 2(16) of the Societies Act, 1983 defines ‘Member’ as under:
“Member means a person joining in the application for the registration of Society and a person admitted to membership after registration in accordance with the provisions of this Act, the Rules and Bylaws and includes an Associate Member”.
A perusal of definition of the term ‘Member’ clearly shows that ‘Member’ includes ‘Associate Member’. The reference of class ‘B’ Members by CIT(Appeals) is with respect to Associate Members. The CIT(Appeals) has denied deduction to the assessee only for the reason, that credit facilities have been extended to a particular class of Members, who are not normal Members of the society. We do not agree with the CIT(Appeals) on the issue. The authorities under the Act cannot go beyond their jurisdiction and make classification within a classification of members to deny the benefit of deduction. The co-ordinate bench of Tribunal in the case of M/s.SL(SPL) 151, Karkudalpatty Primary Agricultural Co- 6 & 921/Mds/2013 operative Credit Society Ltd., Vs. ITO (supra) has dealt with this issue. The findings of the Tribunal are as under:
“7. We have heard both parties and gone through the case file. As stated in the preceding paragraphs, the CIT(A) has proceeded to enhance the assessment(supra) only on the ground that the assessee’s credit and various other loan facilities have been allowed to be availed by ‘B’ class ‘nominal’ members whose liability is limited, at the best; to the extent of loan repayable instead of ‘A’ class members who have voting rights and dividend claim, and also that the latter members are jointly and severely liable. In this backdrop, when we peruse the relevant provisions of the State Co-operative Societies Act, 1983, governing the assessee-Society, it is evident from the definition of ‘member’ u/s 2(16) that the same includes an ‘associate member’ u/s 2(6) appended therein. In other words, the ‘nominal’ members also enjoy statutory recognition as per the Act. The net result is that once the ‘nominal’ members or non-voting members are themselves included in the definition of ‘members’, they satisfy the relevant condition imposed by the legislature u/s 80P(2)(a)(i). We make it clear that we are dealing with a deduction provision to be interpreted liberally. In our considered opinion, the objections of the Revenue that the ‘members’ defined in sub- clause(i) of section 80P(2) should only include voting members would amount to a classification within classification which is beyond the purview of tax statute; unless provided specifically by the legislature. Moreover, we find that the case law of hon'ble Punjab & Haryana high court (supra) also supports the assessee’s case wherein it has been held under the very provision that for the purpose of impugned deduction, it is irrelevant so far as classification of the 7 & 921/Mds/2013 members in ‘A’ or ‘B’ category is concerned. We follow the same and accept contentions of the assessee”.
7. Similar issue had come up before the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Punjab State Cooperative Bank Ltd., reported as 300 ITR 24, wherein the Hon’ble High Court had decided the issue in favour of the assessee. The ld.DR has not been able to controvert the contentions of the AR.
The issue in appeal is similar to the one adjudicated by the co-ordinate bench in the case of M/s.SL(SPL) 151, Karkudalpatty Primary Agricultural Co-operative Credit Society Ltd., Vs. ITO (supra). Accordingly, we hold that the assessee is eligible to claim benefit of deduction u/s.80P(2)(a)(i) & (iv) of the Act.”
In view of the above, respectfully following the order of this Tribunal in assessee's own case in & 921/Mds/2013 dated 23rd May, 2014, we dismiss the appeal filed by the Revenue.
In the result, the appeal of the Revenue is dismissed.
Order pronounced on 19th August, 2015 at Chennai.