Asst.CIT, Circle-9(1), Hyderabad V. M/s The Rangareddy District Judicial Employees Mutually Aided Cooperative Society Ltd., Hyderabad

ITA 1332/HYD/2012

• Counselvise Citation: 133222514 RSA 2012
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 29-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 03-09-2012
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: P PRASAD
• Keywords: Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A NOS. 348 & 1332/HYD/2012 ASSESSMENT YEARS: 2008-09 & 2009-10 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-9(1), HYDERABAD VS M/S. THE RANGAREDDY DISTRICT JUDICIAL EMPLOYEES MUTUALLY AIDED COOPERATIVE CREDIT SOCIETY LTD., L.B.NAGAR, HYDERABAD [PAN: AAATR6558A] I.T.A. NO. 136/HYD/2014 ASSESSMENT YEAR: 2010-11 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-9(1), HYDERABAD VS M/S. THE RANGAREDDY DISTRICT JUDICIAL EMPLOYEES MUTUALLY AIDED COOPERATIVE CREDIT SOCIETY LTD., L.B.NAGAR, HYDERABAD [PAN: AAATR6558A] (APPELLANT) (RESPONDENT) FOR REVENUE : S HRI RAMA KRISHNA BANDI , DR FOR ASSESSEE : S HRI P. PRASAD , AR DATE OF HEARING : 29 - 0 1 - 201 5 DATE OF PRONOUNCEMENT : 04 - 03 - 2015 O R D E R PER BENCH : THESE THREE REVENUE ARE APPEALS FILED AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VI, HYDE RABAD DATED 28-12-2011 FOR THE ASSESSMENT YEAR (AY) 2008-09, DT . 15-06-2012 FOR ITA NOS. 348, 1332 /HYD/2012 & 136/HYD/2014 M/S. THE RANGAREDDY DIST. JUDICIAL EMPLOYEES MUTUAL LY AIDED COOP CREDIT SOCIETY LTD. , :- 2 -: THE AY. 2009-10 AND DT. 21-10-2013 FOR THE AY. 2010 -11. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE APPEALS, THESE ARE HEARD TOGETHER AND DISPOSED-OFF BY THIS COMMON ORDER. 2. WE HAVE HEARD THE LD.DR AND LD.COUNSEL IN DETAIL . 3. BRIEFLY STATED, ASSESSEE IS A CO-OPERATIVE CREDI T SOCIETY REGISTERED UNDER THE AP MUTUALLY AIDED CO-OPERATIVE SOCIETIES ACT (APMACS ACT). IT HAS BOTH MEMBERS AND NON-MEMBERS. MEMBERS ARE HAVI NG A SHARE(S) VALUE OF RS.10/- EACH AND HAS VOTING RIGHTS WITH CE RTAIN OTHER PRIVILEGES. NOMINAL MEMBERS/ASSOCIATE MEMBERS HAS TO DEPOSIT ON LY RE.1/- PER SHARE AND DOES NOT HAVE VOTING RIGHTS. HOWEVER, NO MINAL MEMBERS AND ASSOCIATE MEMBERS (COLLECTIVELY CALLED AS NON-MEMBE RS) CAN DEPOSIT AMOUNTS AND ALSO OBTAIN LOANS AS PER THE BYE LAWS O F THE SOCIETY. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER WAS OF THE OPINION THAT ASSESSEE ADMITTEDLY RECEIVED DEPOSITS MAINLY FROM NON- MEMBERS, PARTICULARLY TAKING DEPOSITS OF THE BAIL A MOUNT FROM THE BAILEES AND KEEPING THEM IN DEPOSITS ON THE ORDERS OF THE COURT WHILE GRANTING BAIL TO THE ACCUSED PERSONS. WHILE COMPLE TING THE ASSESSMENT, ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE HAS VIOLATED THE PROVISIONS OF MUTUALLY AIDED CO-OPERATIVE SOCIETIES ACT, 1995 AND HAS NOT STRICTLY FOLLOWED THE BYE LAWS OF THE SOCIETY A ND THEREFORE NOT ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I). ASSESSING OFFICER ALSO ANALYSED THE PROVISION OF BANKING REGULATION ACT AND CONSIDERED THAT ACCEPTING THE DEPOSITS/MONEYS FROM THE PUBLIC ARE AKIN TO BANKING BUSINESS, THEREFORE, ANALYZING THE PROVISIONS OF THE BANKING REGULATION ACT AND POWERS OF RBI ETC., HAS COME TO THE CONCLUSION THAT IF THE CORPORATE VEIL IS LIFTED, THE SOCIETY RUNS FOR THE SOLE PURPOSE AN D MOTIVE OF EARNING PROFIT, AS SUCH PRINCIPLE OF MUTUALITY CANNOT BE EX TENDED TO THE FACTS OF ITA NOS. 348, 1332 /HYD/2012 & 136/HYD/2014 M/S. THE RANGAREDDY DIST. JUDICIAL EMPLOYEES MUTUAL LY AIDED COOP CREDIT SOCIETY LTD. , :- 3 -: THE CASE. THE ASSESSING OFFICER THERE UPON DISALLO WED THE DEDUCTION CLAIMED U/S.80P. 4. LD.CIT(A) HAVING NOTICED THAT ASSESSEE IS REGIST ERED UNDER APMACS ACT AND BYE LAWS PERMITS ACCEPTANCE OF DEPOS ITS FROM THE NON- MEMBERS ALSO DID NOT FIND ANY MERIT IN THE ASSESSIN G OFFICER'S CONTENTIONS. SINCE MOBILIZATION OF FUNDS IS PERMIT TED U/S.14(2) OF APMACS ACT, CIT(A) WAS OF THE OPINION THAT MOBILIZI NG FUNDS FROM OUTSIDERS IS NOT A VIOLATION OF THE PROVISIONS OF G OVERNING ACT I.E., APMACS ACT. EVEN OTHERWISE, LD.CIT(A) HELD THAT TH E ACCEPTANCE OF DEPOSITS FROM NON-MEMBERS CANNOT SAID TO DISQUALIF Y ASSESSEE FROM THE BENEFITS OF SECTION 80P. SINCE SECTION 80P(2)(A)(I ) SPECIFIES ONLY THAT ASSESSEE SHOULD BE ENGAGED IN THE BUSINESS OF PROVI DING CREDIT FACILITIES TO ITS MEMBERS; WHAT SHOULD BE THE SOURCE OF FUNDS OF SUCH CREDIT IS NOT SPECIFIED IN THE SECTION. LD.CIT(A) ALSO HELD THAT THE PRINCIPLE OF MUTUALITY RELIED ON BY THE ASSESSING OFFICER IS NOT RELEVANT TO THE FACTS OF THE ASSESSEE'S CASE AS ASSESSEE HAS NOT CLAIMED ANY EXEMPTION ON ACCOUNT OF MUTUALITY. THE LD.CIT(A) ALSO HELD THAT THERE IS NO BAR TO CATEGORIZE OF MEMBERS AS GENERAL, NOMINAL AND ASSOC IATE. BY VIRTUE OF SECTION 19(3) OF THE ACT, LD.CIT(A) WAS OF THE OPIN ION THAT ASSESSEE HAS NOT VIOLATED THE PROVISIONS OF APMACS ACT AND ALSO NOT COVERED BY THE BANKING REGULATION ACT AS ASSESSEE IS NOT ENGAGED I N BANKING ACTIVITY BUT ONLY PROVIDING CREDIT FACILITIES TO ITS MEMBERS . ANALYSING THE ISSUE IN DETAIL, THE LD.CIT(A) HELD THAT ASSESSEE IS ELIGIBL E FOR DEDUCTION U/S.80P(2)(A)(I) ON ITS PROFITS AND GAINS ATTRIBUTA BLE TO THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THEREA FTER, LD.CIT(A) WENT ON TO CALCULATE THE ELIGIBLE DEDUCTION VIDE PARA 9.1 A ND DIRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S.80P(2)(A)( I) AT RS.14,66,822/- AND 80P(2)(D) OF RS.14,61,250/- IN AY. 2008-09. SI MILARLY, IN OTHER YEARS ALSO, THE DEDUCTIONS WERE QUANTIFIED AND DIRE CTED TO BE ALLOWED BY ITA NOS. 348, 1332 /HYD/2012 & 136/HYD/2014 M/S. THE RANGAREDDY DIST. JUDICIAL EMPLOYEES MUTUAL LY AIDED COOP CREDIT SOCIETY LTD. , :- 4 -: THE CIT(A) IN THE ORDER. REVENUE HAS RAISED THE FO LLOWING GROUNDS COMMONLY FOR AYS.2008-09 AND 2009-10: '1. THE OBSERVATION OF THE LEARNED CIT(APPEALS) THA T THE ASSESSEE IS A COOPERATIVE SOCIETY DOES NOT EMANATE FROM THE AS SESSMENT ORDER AS SHE HAS FAILED TO GIVE A CLEAR FINDING WHETHER THE ASSESSEE IS A COOPERATIVE SOCIETY THOUGH IT HAS VIOLATED THE PRI NCIPLES OF THE ANDHRA PRADESH MUTUALLY AIDED COOPERATIVE SOCIETIE S ACT (APMACSA), 1995. 2. THE OBSERVATION OF CIT(A) IS MISPLACED WITH REG ARD TO DEDUCTION U/S.80P(2)(I)(A), IS EVEN OTHERWISE GIVEN TO ASSES SEE EVEN IF IT ACCEPTS DEPOSITS FROM NONMEMBERS. 3. THE PRINCIPLE OF MUTUALITY RELIED UPON BY THE A SSESSING OFFICER EMANATE TO DISTINGUISH THAT THE ASSESSEE HAS VIOLA TED THE PRINCIPLES OF MUTUALITY, WHICH THE CIT(A) FAILS TO COMPREHEND . HAVING ESTABLISHED ON RECORD THAT THE ASSESSEE HAS DEPOSI TED MONEY IN REGIONAL RURAL BANKS, THE STATUS OF WHICH IS NOT R ECOGNIZED IN THE INCOME TAX ACT, AS COOPERATIVE BANK, CAN THE INTER EST ARISING OUT OF THE DEPOSIT OF THIS REGIONAL RURAL BANK WOULD QUAL IFY FOR DEDUCTION U/S.80P(2)(D)'. 5. AS CAN BE SEEN FROM THE ABOVE, THE GROUND NO.1 I S MIS-PLACED. ASSESSEE-SOCIETY IS CLEARLY A CO-OPERATIVE SOCIETY AND ASSESSING OFFICER HERSELF HAS STATED THAT ASSESSEE IS A CO-OPERATIVE SOCIETY, BUT VIOLATED THE PROVISIONS OF THE CO-OPERATIVE SOCIETIES ACT. THER EFORE, GROUND NO.1 IN OUR VIEW IS MISCONCEIVED. 6. GROUND NO.2 IS ALSO NOT MAINTAINABLE AS THERE IS NO RESTRICTION OF GETTING ANY DEPOSITS FROM OUTSIDERS, LEAVE ALONE FR OM NOMINAL MEMBERS AND ASSOCIATE MEMBERS. AS RIGHTLY POINTED OUT BY T HE LD.CIT(A), THE SOURCE OF FUNDS FOR DOING THE BUSINESS IS NOT A CRI TERIA. WHAT IS REQUIRED TO BE EXAMINED BY THE ASSESSING OFFICER IS WHETHER THE DEDUCTION U/S.80P(2)(A)(I) IS FROM THE PROFITS AND GAINS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. TO THAT EXTENT THE ASSESSING OFFICE R CAN EXAMINE THE ASSESSEE'S TRANSACTIONS. JUST BECAUSE ASSESSEE HAS DEPOSITS FROM NON- ITA NOS. 348, 1332 /HYD/2012 & 136/HYD/2014 M/S. THE RANGAREDDY DIST. JUDICIAL EMPLOYEES MUTUAL LY AIDED COOP CREDIT SOCIETY LTD. , :- 5 -: MEMBERS, IT DOES NOT PREVENT BEING A CO-OPERATIVE S OCIETY NOR IT PREVENTS CLAIMING DEDUCTION U/S.80P(2)(A)(I), IF IT IS OTHER WISE ELIGIBLE ON THE SAID INCOMES. 7. GROUND NO.3 RAISED ON PRINCIPLE OF MUTUALITY IS ALSO DOES NOT APPLY BECAUSE ASSESSEE HAS NOT CLAIMED ANY EXEMPTIO N OF INCOME ON THE PRINCIPLE OF MUTUALITY. AS FAR AS DEDUCTION U/S.80 P(2)(D) IS CONCERNED, THEY ARE ELIGIBLE UNDER THE ACT. ASSESSEE CAN CLAIM DEDUCTION U/S.80P(2)(D) ON THE DEPOSITS OF MONEY MADE IN REGI ONAL RURAL BANKS, CO-OPERATIVE SOCIETIES ETC. AS PER THE PROVISIONS. THE RESTRICTIONS PLACED U/S.80P(4) DOES NOT APPLY TO THE FACTS OF THE CASE AS THE SAID PROVISION IS APPLICABLE ONLY IN THE CASE OF INCOMES RECEIVED BY A CO-OPERATIVE BANK AND NOT BY A CO-OPERATIVE SOCIETY. THIS ISSUE IS A LSO DISCUSSED IN THE CO- ORDINATE BENCH AT HYDERABAD DECISION IN THE CASE OF 'THE ADVOCATES MUTUALLY AIDED COOP SOCIETY, HYDERABAD' PRONOUNCED ON 20-02-2015 AS UNDER: '22.1 THE GROUND NO.3 REGARDING DEDUCTION UN DER SECTION 80P(2)(D) IS IN RESPECT OF INTEREST RECEIVED FROM COOPERATIVE SOCIETIES AND THE COOPERATIVE BANKS. WE ARE UNABLE TO UNDER STAND WHY THE COOPERATIVE BANKS ARE NOT CONSIDERED AS COOPERATIV E SOCIETIES IN BANKING BUSINESS. THE SUB-SECTION (4) INTRODUCED B Y FINANCE ACT, 2006 W.E.F. 1.4.2007 IS AS UNDER : (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY COOPERATIVE BANK OTHER THAN A PRIMARY AGRIC ULTURAL CREDIT SOCIETY OR A PRIMARY COOPERATIVE AGRICULTUR AL AND RURAL DEVELOPMENT BANK. EXPLANATION FOR THE PURPOSES OF THIS SUB-SECTION ,- (A) CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDIT SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO T HEM IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949) . ITA NOS. 348, 1332 /HYD/2012 & 136/HYD/2014 M/S. THE RANGAREDDY DIST. JUDICIAL EMPLOYEES MUTUAL LY AIDED COOP CREDIT SOCIETY LTD. , :- 6 -: (B)PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEV ELOPMENT BANK MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELO PMENT ACTIVITIES. 22.1. AS PER THIS SECTION, THE EXEMPTION PROVIDED UNDER SUB- SECTION (2) OR SUB-SECTION (3) DOES NOT APPLY TO T HE INCOMES OF THE COOPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL COOPERATIVE SOCIETY OR A PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. HOWEVER, THE ABOVE PROVISION APP LICABLE IN THE CASE OF COOPERATIVE BANK IS NOT IN RESPECT OF INTE REST RECEIVED FROM COOPERATIVE BANKS BY A COOPERATIVE CREDIT SOCIETY/ COOPERATIVE SOCIETY. SECTION 80P(2)(D) IS APPLICABLE TO THE AS SESSEE SOCIETY IN RESPECT OF INCOMES BY WAY OF INTEREST OR DIVIDENDS RECEIVED BY THE COOPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER COOPERATIVE SOCIETY. THEREFORE, IN THE CASE OF THE ASSESSEE SO CIETY, SUB-SECTION (4) IS NOT APPLICABLE AND DEDUCTION UNDER SECTION 80P(2)(D) IS CERTAINLY ELIGIBLE TO ASSESSEE. IN THE ASSESSMENT OF A COOPERATIVE BANK, THE INCOMES MAY NOT BE EXEMPT AFTER 01.04.20 07 BY VIRTUE OF SUB-SECTION (4), BUT ASSESSEE IS NOT A COOPERATIVE BANK. THEREFORE, THE REVENUE GROUND IS NOT ONLY ILLOGICAL BUT ALSO NOT SUPPORTED BY THE FACTS OF THE CASE. MOREOVER AS SEEN, THE RECOM MENDATION MADE BY THE A.O. TO THE LD. CIT IN THEIR INTERNAL CORRE SPONDENCE IS EXTRACTED AS A GROUND. THIS ALSO INDICATES NON-APP LICATION OF MIND EITHER BY THE A.O. OR BY HIGHER AUTHORITY LIKE CIT . THIS SORRY STATE OF AFFAIRS SHOULD COME TO AN END AND OFFICERS SHOULD ACT RESPONSIBLY WHILE PREFERRING SECOND APPEAL ON THE ORDERS OF TH E SENIOR OFFICER LIKE LD. CIT(A). REVENUE APPEAL IS DISMISSED'. IN VIEW OF THIS, WE DID NOT FIND ANY MERIT IN THE REVENUE'S GROUNDS, PER SE. 8. HOWEVER, WE ARE UNABLE TO APPROVE THE CALCULATIO NS RESORTED BY THE LD.CIT(A) IN QUANTIFYING AND ALLOWING THE DEDUC TIONS. WHILE HOLDING THAT ASSESSEE HAS TRANSACTIONS WITH NON-MEMBERS, IT WAS INCUMBENT ON THE CIT(A) TO EXAMINE WHETHER ASSESSEE HAS CLAIMED ANY DEDUCTION ITA NOS. 348, 1332 /HYD/2012 & 136/HYD/2014 M/S. THE RANGAREDDY DIST. JUDICIAL EMPLOYEES MUTUAL LY AIDED COOP CREDIT SOCIETY LTD. , :- 7 -: U/S.80P(2)(A)(I) ON THE TRANSACTIONS WITH NON-MEMBE RS ALSO. THERE SEEMS TO BE NO EXAMINATION OF THE ABOVE ASPECT. 9. AS CAN BE SEEN FROM THE ORDER OF THE ASSESSING O FFICER, MEMBERS ARE ALLOWED WITH ADMISSION OF MINIMUM NUMBER OF SHA RES AND FACE VALUE OF RS.10/-, WHEREAS THE NOMINAL MEMBERS/ASSOC IATE MEMBERS ARE ALLOWED WITH A SHARE VALUED AT RE.1/-. MOREOVER, NO MINAL MEMBERS/ASSOCIATE MEMBERS DOES NOT HAVE ANY VOTING RIGHTS. THE LD. ASSESSING OFFICER DISCUSSED THE BYE LAWS OF THE SOC IETY BUT THE FULL TEXT OF THE BYE LAWS ARE NOT PLACED ON RECORD. WE HAD AN O CCASION TO EXAMINE THE BYE LAWS OF THE ADVOCATES MUTUALLY AIDED COOP SOCIETY, HYDERABAD, WHEREIN IT WAS NOTICED THAT BY LAW (3)(IV)(B) DEFIN ES ASSOCIATE MEMBER AND NOMINAL MEMBER MEANS OTHER THAN SHAREHOLDER OF THE SOCIETY. EVEN THE LD.CIT(A) GIVES A FINDING THAT ASSOCIATE MEMBER S AND NOMINAL MEMBERS ARE NOT REGULAR MEMBERS, BUT THE DEPOSITS F ROM NON-MEMBERS DOES NOT PREVENT THE CO-OPERATIVE SOCIETY IN CLAIMI NG DEDUCTION U/S.80P. WHEN THE BYE LAWS DISTINGUISHES A MEMBER AND NOMINA L MEMBER/ASSOCIATE MEMBER, THE LATER BEING NOT A SHAR EHOLDER OF A SOCIETY, DEDUCTION U/S.80P CANNOT BE ALLOWED TO THE EXTENT OF INCOMES/PROFITS AND GAINS ON PROVIDING CREDIT FACIL ITIES TO ASSOCIATE MEMBERS AND NOMINAL MEMBERS. THERE MAY BE RESTRICT IONS THAT THE SOCIETY SHALL NOT INDUCT MORE THAN A CERTAIN NUMBER OF MEMBERS AS ASSOCIATE MEMBERS/NOMINAL MEMBERS. WHEN THE BYE LA WS PERTAIN TO MEMBERSHIP DEFINE THE MEMBERS OF THE CO-OPERATIVE SOCIETY AND NOMINAL/ASSOCIATE MEMBERS CANNOT BE TREATED SHAREHO LDER/MEMBER, AS THEY HAVING ONLY A RIGHT TO PAY ADMISSION FEE AND T AKE LOANS FROM SOCIETY AND MAKE DEPOSITS WITH SOCIETY WITHOUT OTHER PRIVIL EGES, THEY CANNOT BE CONSIDERED EQUAL TO THE MEMBERS OF THE SOCIETY. TH ERE ARE CERTAIN JUDGMENTS GIVEN UNDER THE CO-OPERATIVE SOCIETIES AC T IN THE CASE OF SOCIETIES INVOLVED IN BANKING BUSINESS, BY VIRTUE O F WHICH DISTINCTION ITA NOS. 348, 1332 /HYD/2012 & 136/HYD/2014 M/S. THE RANGAREDDY DIST. JUDICIAL EMPLOYEES MUTUAL LY AIDED COOP CREDIT SOCIETY LTD. , :- 8 -: BETWEEN MEMBERS AND NON-MEMBERS WAS NOT CONSIDERED MATERIAL AND THEIR EQUAL TREATMENT AS FAR AS BUSINESS OF BANKING IS CONCERNED WAS ACCEPTED. HOWEVER, AS RIGHTLY POINTED OUT BY THE L D.CIT(A), ASSESSEE IS NOT INVOLVED IN BUSINESS OF BANKING AND HAS ONLY IN VOLVED IN PROVIDING CREDIT FACILITIES TO THE MEMBERS OF THE SOCIETY. 10. IN VIEW OF THIS IT IS TO BE EXAMINED WHETHER TH ERE ARE INCOMES FROM THE CREDIT FACILITIES PROVIDED TO NON-MEMBERS I.E., NOMINAL/ASSOCIATE MEMBERS. IF SO, ASSESSEE IS NOT ELIGIBLE FOR DEDUC TION ON THOSE PROFITS. IN THE CASE OF 'THE ADVOCATES MUTUALLY AIDED COOP S OCIETY', IN ITA NOS.546, 547 & 1331/HYD/2012 & ITA NO.1860/HYD/2013 & ITA NOS.548 & 549/HYD/2012 & ITA NO.1859/HYD/2013 PRONO UNCED ON 20- 02-2015, IT WAS NOTICED THAT THE SAID CO-OPERATIVE SOCIETY WAS CLAIMING ONLY PROPORTIONATE DEDUCTION U/S.80P EXCLUDING THE TRANSACTIONS WITH THE NON-MEMBERS. WE DID NOT FIND ANY SUCH WORKING IN THIS CASE. SINCE THE CSIT(A) TOOK OPEN THEMSELVES TO QUANTIFY THE SE CTION 80P, WE ARE NOT SURE WHETHER, HAVING GIVEN A FINDING THAT NOMINAL/A SSOCIATE MEMBERS ARE NOT MEMBERS OF THE SOCIETY, THE INCOMES FROM T HEM ARE EXCLUDED WHILE CALCULATING DEDUCTION U/S.80P(2)(A)(I). 11. IN VIEW OF THIS, WHILE ACCEPTING IN PRINCIPLE T HAT ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) AND 80P(2)(D), QUANT IFICATION OF INCOME IE. INCOME/PROFITS AND GAINS ON CREDIT FACILITIES PROVI DED TO MEMBERS, IS RESTORED TO THE FILE OF ASSESSING OFFICER FOR NECES SARY EXAMINATION OF THE DETAILS OF THE TRANSACTIONS AND QUANTIFYING THE SA ME. THEREFORE, WHILE UPHOLDING THE ORDER OF THE CIT(A) ON THE PRINCIPLES OF LAW, THE QUANTIFICATION OF DEDUCTIONS MADE BY CIT(A) IS THER EFORE SET ASIDE AND RESTORED TO THE FILE OF ASSESSING OFFICER TO EXAMIN E IT AFRESH, IN THE LIGHT OF THE ABOVE OBSERVATIONS/ DIRECTIONS. ITA NOS. 348, 1332 /HYD/2012 & 136/HYD/2014 M/S. THE RANGAREDDY DIST. JUDICIAL EMPLOYEES MUTUAL LY AIDED COOP CREDIT SOCIETY LTD. , :- 9 -: 12. IN VIEW OF THIS, REVENUE'S APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. AY.2010-11: 13. IN THIS YEAR, THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS: '1. THE ORDER OF CIT(A)-V, HYDERABAD IS AGAINST FAC TS OF THE CASE. 2. WHETHER THE LD.CIT(A) IS CORRECT IN LAW IN HOLD ING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I ) OF THE ACT, IN VIEW OF THE CLEAR FINDING OF THE ASSESSING OFFICER THAT , THE ASSESSEE HAD VIOLATED THE PROVISIONS OF AP MUTUALLY AIDED CO-OP ERATIVE SOCIETIES ACT, 1995. 3. WHETHER THE LD.CIT(A) IS CORRECT IN LAW IN HOLD ING THAT THE SOCIETY ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT , OBSERVING THAT THE SECTION DOES NOT STIPULATE ANY CONDITION AS TO WHA T SHOULD BE THE SOURCE OF THE FUNDS AND WHAT SHOULD BE THE QUANTUM OF THE LOANS TO EACH OF THE CATEGORY OF THE MEMBERS ARE NOT SPECIF IED THEREIN. 4. WHETHER THE LD.CIT(A) IS CORRECT IN LAW IN HOLD ING THAT THE SOCIETY IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) AND 80P (2)(D) OF THE ACT, IN VIEW OF THE FACT THAT, THE ASSESSEE SOCIETY IS ACC EPTING THE LOANS, DEPOSITS FROM EVEN NON-MEMBERS FROM WHICH, IT CAN BE INFERRED THAT THE SOCIETY IS ENGAGED IN THE ACTIVITY OF BANKING AND THE DEDUCTION U/S.80P IS NOT ALLOWABLE TO THE SOCIETIES ENGAGED IN BANKING ACTIVITIES AS PER THE PROVISIONS OF SECTION 80P(4) OF THE ACT'. 14. AS CAN BE SEEN FROM THE ABOVE GROUNDS, EVEN THO UGH THEY ARE DIFFERENTLY WORDED, THE ISSUES ARE MORE OR LESS SAM E. SINCE THESE ARE ALREADY CONSIDERED IN THE ABOVE APPEALS, THERE IS N O NEED TO ADJUDICATE IT AFRESH. HOWEVER, IN THIS YEAR ALSO THE LD.CIT(A), TOOK OPEN HIMSELF TO QUANTIFY THE DEDUCTION U/S.80P(2)(A)(I). THEREFORE , TO THAT EXTENT OF QUANTIFICATION OF DEDUCTION, FOR THE REASONS STATED ABOVE IN THE OTHER TWO APPEALS, WE SET ASIDE THE ORDER OF THE CIT(A) ON QU ANTIFICATION OF DEDUCTIONS AND RESTORE THE ISSUE TO THE FILE OF ASS ESSING OFFICER FOR FRESH ITA NOS. 348, 1332 /HYD/2012 & 136/HYD/2014 M/S. THE RANGAREDDY DIST. JUDICIAL EMPLOYEES MUTUAL LY AIDED COOP CREDIT SOCIETY LTD. , :- 10 -: COMPUTATION OF DEDUCTION OF EXAMINING THE FACTS OF THE CASE AND AFTER GIVING DUE OPPORTUNITY TO ASSESSEE. 15. THE GROUNDS ARE CONSIDERED ALLOWED PARTLY TO TH AT EXTENT. 16. IN THE RESULT, ALL THE THREE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 04 TH MARCH, 2015. SD/- SD/- (ASHA VIJAYARAGHAVAN) (B. RAMA KOTAIAH) JUDICIAL MEMBER ACC OUNTANT MEMBER HYDERABAD, DATED 04 TH MARCH, 2015 TNMM COPY TO : 1. ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 9(1), 1 ST FLOOR, B - BLOCK, I.T. TOWERS, A.C.GUARDS, HYDERABAD. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-9(1), ROO M NO.245, 2D, SECOND FLOOR, I.T.TOWERS, A.C.GUARDS, M ASAB TANK, HYDERABAD. 2. M/S. THE RANGAREDDY DISTRICT JUDICIAL EMPLOYEES MUTUALLY AIDED CO-OPERATIVE CREDIT SOCIETY LTD., R.R.DIST CO URT BUILDING, L.B.NAGAR, HYDERABAD. 3. CIT(APPEALS)-VI, HYDERABAD. 4. CIT-VI HYDERABAD. 5. D.R. ITAT, HYDERABAD