THE GRAMIN SEVA SAHAKARI SAMITI MARYADIT, RAIPUR (CG) V. THE INCOME TAX OFFICER 1(3), RAIPUR (CG)

ITA 31/BIL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4423 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 16-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G S AGRAWAL
• Keywords: Business income; General deduction; Opportunity of being heard; Additional evidence
• Section: 56; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH : RAIPUR BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.31/RPR/2016 ASSESSMENT YEAR: 2011-12 GRAMIN SEVA SAHAKARI SAMITI MARYADIT, VILL. MOHDA TILDA, RAIPUR, RAIPUR (CG). PAN: AAAAG9755H VS. INCOME TAX OFFICER 1(3), AAYKAR BHAVAN, CIVIL LINES, RAIPUR, RAIPUR (CG). (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.S. AGRAWAL, CA REVENUE BY : SHRI P.K. MISHRA, CIT, DR SHRI SANJAY KUMAR, DR DATE OF HEARING : 14.08.2018 DATE OF PRONOUNCEMENT: 22.10.2018 ORDER PER R.K. PANDA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 14 TH DECEMBER, 2015 OF THE CIT(A)-I, RAIPUR, RELATING TO ASSESSMEN T YEAR 2011-12. 2. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESS EE READS AS UNDER:- 1. BANKING BUSINESS: 1.1. THAT UNDER THE FACTS & THE LAW THE LD. CIT (APPEALS ) ERRED IN REJECTING THE DEDUCT CLAIMED BY THE APPELLANT U/S 8 0 P(2)(A)(I) ITA NO.31/RPR/2016 2 PERTAINING TO ITS BANKING BUSINESS AMOUNTING TO RS. 23,74,716/- AS REJECTED BY THE LD AO. PRAYED THAT RS. 23,74,716/- IS INCOME FROM BANKING BUSINESS & DEDUCTION BE ALLOWED. 1.2. WITHOUT PREJUDICE TO ABOVE THE LD CIT(APPEALS) FURT HER ERRED IN NOT DEDUCTING THE INTEREST PAID AMOUNTED TO RS.13,0 6,258/- FROM THE AFORESAID SUM OF RS. 23,74,716/-. PRAYED, WITHOUT PREJUDICE TO GROUND NO. 1 , INTERES T PAID TO ITS MEMBERS ON THEIR DEPOSIT AT RS 13,06,258/- BE DEDUC TED FROM RS. 23,74,716. 1.3. THAT UNDER THE FACTS & LAWS THE LD CIT(APPEALS) FUR THER ERRED IN CONFIRMING THE ADDITION OF RS 2,66,499/- BEING OVER DUE INTEREST RECEIVED FROM THE MEMBERS, MADE BY THE LD. AO. PRAYED THAT RS. 2,66,499 IS DEDUCTIBLE U/S 80P(2)(A )(I) & BE DELETED. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESS EE IS A PRIMARY AGRICULTURAL COOPERATIVE SOCIETY ENGAGED IN CARRYING OUT THE BUS INESS OF BANKING; PADDY PROCUREMENT; SALE OF FERTILIZERS, SEEDS, MANURES AN D PESTICIDES AND SALE OF CONTROLLED ITEMS UNDER PUBIC DISTRIBUTION SYSTEM. IT FILED IT S RETURN OF INCOME ON 24 TH MARCH, 2013 DECLARING TOTAL INCOME AT RS. NIL, AFTER CLAIM ING 100% DEDUCTION U/S 80P OF THE INCOME-TAX ACT FROM THE ABOVE ACTIVITIES. THE ASSE SSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ONE OF THE ACT IVITIES OF THE SOCIETY IS CARRYING OUT BANKING BUSINESS LIKE BORROWING, RAISING OR TAKING UP MONEY AND LENDING OR ADVANCING OF MONEY FOR THE PURPOSE OF AGRICULTURE, SALE AND P URCHASE OF SEEDS AND UREA TO ITS MEMBERS. THE ASSESSEE COOPERATIVE SOCIETY AVAILS CR EDIT FACILITY FROM COOPERATIVE BANKS FOR DOING BANKING BUSINESS. THE SOURCE OF INC OME OF COOPERATIVE SOCIETY FROM ITA NO.31/RPR/2016 3 BANKING BUSINESS IS INTEREST ON LOAN ADVANCED TO IT S MEMBERS AND INTEREST ON DEPOSIT IN COOPERATIVE BANK. THE ASSESSING OFFICER OBSERVED F ROM THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE THAT IT HAS SHOWN RECEIPT OF INTEREST FROM THE FOLLOWING SOURCES, THE DETAILS OF WHICH ARE AS UNDER:- INTEREST ON LOANS & ADVANCES : RS. 16,63,105/- INTEREST ON DEPOSITS WITH BANK : RS. 23,74,715/- EXCESS INTEREST FROM BANKS : RS. 2,66,499/- IN THE P& L ACCOUNT, THE ASSESSEE HAS DEBITED EXPE NDITURE ON ACCOUNT OF THE FOLLOWING INTEREST AMOUNTS: INTEREST ON LOANS : RS. 8,68,505/- INTEREST ON DEPOSITS : RS.13,06,258/- INTEREST ON RAKSHIT NIDHI : RS. 11,768/- 4. HE OBSERVED THAT THE ASSESSEE HAS CLAIMED THE ENTIR E INCOME OF COOPERATIVE SOCIETY FROM BANKING BUSINESS AS DEDUCTIBLE U/S 80P (2)(A)(I) OF THE IT ACT, 1961. SINCE THE ASSESSEE IS CARRYING ON THE BUSINESS OF B ANKING AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS, THE ASSESSING OFFICER HELD THAT THE DEDUCTION CLAIMED U/S 80P(2)(A)(I) IS ALLOWABLE ONLY IN RESPECT OF TRANSACTIONS WITH I TS MEMBERS AND NOT WITH OUTSIDERS. HE OBSERVED THAT THE ASSESSEE HAS SHOWN AN AMOUNT O F RS.23,74,716/- AS INTEREST INCOME ON BANK DEPOSITS AND EXCESS INTEREST FROM BA NKS OF RS.2,66,499/-. THE ASSESSEE SOCIETY HAD INVESTED THE SURPLUS FUNDS AS AND BY WAY OF INVESTMENT AS AN ITA NO.31/RPR/2016 4 ORDINARY INVESTOR. HE, THEREFORE, HELD THAT INTERE ST ON SUCH INVESTMENT HAS GOT TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. 4.1. ON BEING QUESTIONED BY THE ASSESSING OFFICER, IT WA S ARGUED THAT IT HAD INVESTED THE FUNDS ON SHORT-TERM BASIS AS THE FUNDS WERE NOT REQUIRED IMMEDIATELY FOR BUSINESS PURPOSE AND CONSEQUENTLY SUCH ACT OF INVESTMENT CON STITUTED A BUSINESS ACTIVITY BY A PRUDENT BUSINESSMAN. THEREFORE, SUCH INTEREST INCO ME WAS LIABLE TO BE TAXED U/S 28 AND NOT U/S 56 OF THE IT ACT AND, CONSEQUENTLY, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80P(2)(A)(I) OF THE IT ACT. IT WAS ARGUED THAT WHA T IS SOUGHT TO BE TAXED U/S 56 OF THE ACT IS THE INTEREST INCOME ARISING ON THE SURPLUS I NVESTMENT IN SHORT-TERM DEPOSITS AND SECURITIES WHICH SURPLUS WAS NOT REQUIRED FOR BUSIN ESS PURPOSES. VARIOUS DECISIONS WERE ALSO BROUGHT TO THE NOTICE OF THE ASSESSING OF FICER FOR THE ABOVE PROPOSITION. 4.2. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WI TH THE ARGUMENTS ADVANCED BY THE ASSESSEE. RELYING ON VARIOUS DECISIONS INCL UDING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY LTD. VS. ITO REPO RTED IN 188 TAXMAN 282 (SC), THE ASSESSING OFFICER HELD THAT INTEREST THAT ACCR UES ON FUNDS NOT REQUIRED IMMEDIATELY BY THE ASSESSEE FOR ITS BU SINESS PURPOSES AND WHICH HAVE BEEN ONLY INVESTED IN SPECIFIED SECURITIES, ALL SUC H INVESTMENTS CANNOT BE SAID TO BE ATTRIBUTABLE EITHER TO THE ACTIVITY MENTIONED IN SE CTION 80P(2)(A)(I) OF THE ACT OR IN SECTION 80P(2)(A)(III) OF THE ACT. ALTERNATIVELY, T HE ASSESSING OFFICER HELD THAT EVEN IF SUCH INTEREST INCOME IS PROFIT AND GAINS OF BUSINES S, EVEN THEN, THE SAME WOULD BE INELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT. HE OB SERVED THAT THE ASSESSEE DEPOSITS ITS ITA NO.31/RPR/2016 5 SURPLUS FUNDS WITH COOPERATIVE BANKS AT A CERTAIN I NTEREST RATE WHICH, IN TURN, LEND THE SAME TO ITS CUSTOMERS/THIRD PARTIES AT A HIGHER RAT E. THE DIFFERENCE OF THE INTEREST RATE CHARGED BY THE COOPERATIVE BANK FROM THE CUSTOMERS AND THAT PAID TO THE ASSESSEE SOCIETY IS THE GROSS INTEREST INCOME OF THE BANK FR OM SUCH ACTIVITY. HE NOTED THAT THE PROVISIONS OF SUB-SECTION (4) OF SECTION 80P OF THE ACT AND HELD THAT THE INTEREST INCOME DERIVED BY THE COOPERATIVE BANK BY LENDING T HE MONEY RECEIVED FROM THE ASSESSEE SOCIETY IS NOT ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT. A PART OF THE NON- ELIGIBLE INCOME IS RETAINED BY THE BANK AS ITS MARG IN AND REST IS PASSED ON TO THE ASSESSEE SOCIETY. THE INCOME IS THUS ULTIMATELY EA RNED FROM THIRD PARTIES/CUSTOMERS OF THE COOPERATIVE BANK AND NOT FROM THE ACTIVITIES WI TH THE MEMBERS OF THE ASSESSEE SOCIETY. THEREFORE, IT IS CLEARLY INELIGIBLE FOR D EDUCTION U/S 80P OF THE ACT. THE ASSESSING OFFICER ACCORDINGLY, MADE ADDITION OF RS. 23,74,716/- BEING INTEREST INCOME ON BANK DEPOSITS AND RS.2,66,499/- BEING EXCESS INT EREST FROM BANKS AS INCOME FROM OTHER SOURCES NOT ELIGIBLE FOR DEDUCTION U/S 80P(2) (A)(I). 5. BEFORE THE CIT(A), THE ASSESSEE CHALLENGED THE ADDI TION MADE BY THE ASSESSING OFFICER BY REJECTING THE CLAIM OF DEDUCTION U/S 80 P(2) OF THE IT ACT. IT WAS ARGUED THAT: (I) THE FUNDS INVESTED IN FDRS/SAVINGS ACCOUN T WITH COOPERATIVE BANKS ARE OWN FUNDS OF THE ASSESSEE SOCIETY; AND (II) MEMBERS FU NDS AND THE RELEVANT COST OF FUNDS AND DIRECT INTEREST COST SHOULD BE DEDUCTED FROM TH E GROSS INTEREST RECEIVED AT RS.26,41,215/-. THEREFORE, THE NET INTEREST INCOME EARNED BY THE ASSESSEE SOCIETY FROM THE BANKING ACTIVITIES CARRIED ON FOR ITS MEMBERS O NLY WOULD BE RS.13,34,957/- WHICH ITA NO.31/RPR/2016 6 IS CLEARLY ELIGIBLE FOR THE DEDUCTION U/S 80P(2)(A) (I). IT WAS ARGUED THAT THE ASSESSING OFFICER HAS WRONGLY APPLIED THE DECISION OF THE HON 'BLE SUPREME COURT IN THE CASE OF TOTGARS COOPERATIVE SALE SOCIETY (SUPRA) WHICH IS ON DIFFERENT SET OF FOOTINGS AND NOT APPLICABLE TO THE CASE OF THE ASSESSEE SOCIETY. IT WAS ARGUED THAT IN THAT CASE, IT WAS HELD THAT WHERE THE ASSESSEE COOPERATIVE SOCIETY, A PART FROM PROVIDING CREDIT FACILITIES TO ITS MEMBERS, WAS ALSO IN THE BUSINESS OF MARKETI NG OF AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS, THE SALE CONSIDERATION RECEIVED FROM M ARKETING AGRICULTURAL PRODUCE TO ITS MEMBERS WAS RETAINED IN MANY CASES AND THE SAID RET AINED AMOUNT, WHICH WAS PAYABLE TO ITS MEMBERS, FROM WHOM PRODUCE WAS BOUGHT WAS IN VESTED IN A SHORT-TERM DEPOSIT/SECURITY AND SUCH AN AMOUNT WHICH WAS RETAI NED BY THE ASSESSEE SOCIETY WAS A LIABILITY AND WAS SHOWN IN THE BALANCE SHEET ON THE LIABILITY SIDE. THEREFORE, TO THAT EXTENT SUCH INTEREST INCOME CANNOT BE SAID TO BE AT TRIBUTABLE EITHER TO THE ACTIVITIES MENTIONED IN SECTION 80P(2)(A)(I) OR SECTION 80P(2) (A)(III). IT WAS ARGUED THAT THE ASSESSEE SOCIETY IS NOT ENGAGED IN OR INVOLVED IN P URCHASE AND SALE OF AGRICULTURAL PRODUCE I.E., PADDY FROM ITS MEMBERS AND HAS NOT SH OWN ANY KIND OF LIABILITY IN ITS BALANCE SHEET ON THIS COUNT. THEREFORE, THE SAID DE CISION IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 6. HOWEVER, THE LD.CIT(A) WAS NOT SATISFIED WITH THE A RGUMENTS ADVANCED BY THE ASSESSEE AND CONFIRMED THE ACTION OF THE ASSESS ING OFFICER BY OBSERVING AS UNDER:- 2.3. THUS AS SEEN IN ABOVE FACTS, THE APPELLANT HA S FILED APPEAL AGAINST THE DISALLOWANCE OF DEDUCTION UNDER SECTION 80P IN RESPECT OF INTEREST OF ITA NO.31/RPR/2016 7 RS.26,41,215/- AND DIVIDEND OF RS. 1,40,839/- ON IN VESTMENTS . IT CONTENDS THAT INCOME COMPUTED BY THE AO IS TOTALLY WRONG AND ON WRONG INTERPRETATION OF THE PROVISIONS OF THE ACT. ITS CO NTENTIONS ARE IN SHORT, THAT THE INTEREST INCOME IS OUT OF THE INVESTMENTS MADE OUT OF ITS OWN SURPLUS FUNDS AND THE FACTS IN TOTGARS (SUPRA) ARE DIFFEREN T. REGARDING THE PADDY PROCUREMENT BUSINESS, THE AO HAS PRESUMED THAT 35% BUSINESS IS DONE IN RESPECT OF NON-MEMBERS. AS PER THIS PRESUMPTION IS NOT CORRECT. FURTHER, DIVIDEND INCOME IS SPECIFICALLY EXEMPT U/S 80P(2)(D ). LASTLY THE AO HAS NOT ALLOWED GENERAL DEDUCTION OF RS. SECTION 80P PROVIDES FOR DEDUCTION FROM CERTAIN IN COME OF COOPERATIVE SOCIETIES. THESE INCOME ARE LISTED IN SUB-SECTION ( 2). INTEREST RECEIVED FROM BANKS AND DIVIDEND HAS NOT BEEN LISTED AS INCOME EX EMPT UNDER THE SAID SECTION. ALTHOUGH INTEREST AND DIVIDEND FROM INVEST MENT WITH ANOTHER COOPERATIVE SOCIETY IS EXEMPT AS PER CLAUSE (D) OF SUB-SECTION (2), BUT IN THE PRESENT CASE THESE INCOMES ARE NOT FROM ANOTHER COO PERATIVE SOCIETY. APPELLANT CLAIMS THAT THE INVESTMENTS WERE MADE OUT OF OWN FUNDS, THEREFORE INTEREST AND DIVIDEND SHOULD BE TREATED A S INCOME FROM ITS ACTIVITIES. HOWEVER, I FIND THAT INTEREST AND DIVID END RECEIVED BY THE APPELLANT IS NOT ENTITLED TO DEDUCTION UNDER SECTIO N 80P(2)(A)(I) BECAUSE, DEDUCTION UNDER SAID CLAUSE IS AVAILABLE IN RESPECT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO THE ACTIVITY OF THE CO-OPE RATIVE SOCIETY WHEREAS THE INTEREST AND DIVIDEND INCOME IS NOT THE INCOME FROM CARRYING ON OF ACTIVITY OF THE CO-OPERATIVE SOCIETY WHICH ARE ACCEPTING OF DEPOSITS AND ADVANCING OF LOANS TO ITS MEMBERS AND WORKING AS AGRICULTURAL COOPERATIVE SOCIETY. THE APPELLANT IS NOT A COOPERATIVE BANK BUT IS A CO OPERATIVE SOCIETY AND ITS ACTIVITY IS RECEIVING DEPOSITS FROM MEMBERS AND PRO VIDING THEM CREDIT FACILITIES. INCOME FROM THIS ACTIVITY HAS BEEN DULY ALLOWED BY THE AO AS EXEMPTION. BUT THE SAME EXEMPTION CANNOT BE ALLOWED TO THE INCOME ON INVESTMENTS WITH BANKS WHICH IS NOT INTEREST INCOME RECEIVED FROM MEMBERS. MOREOVER, THE APPELLANT ALSO PROVIDES OTHE R SERVICES OF PADDY PROCUREMENT, PDS ETC. AND SURPLUS IS GENERATED OUT OF THESE ACTIVITIES. THERE ARE MANY DECISIONS PRONOUNCED BY VARIOUS COUR TS IN THE CASES OF COOPERATIVE BANKS IN WHOSE CASE THESE INCOMES HAVE BEEN HELD AS DERIVED IN THE COURSE OF NORMAL BUSINESS ACTIVITIES. HOWEVE R, THESE ARE APPLICABLE TO COOPERATIVE BANKS AND NOT A COOPERATIVE SOCIETY WHI CH IS THE STATUS OF THE ASSESSEE. THESE DECISIONS ARE CIT VS NAWANSHAHAR CE NTRAL COOPERATIVE BANK LTD (2007) 289 ITR 6 (SC), BIHAR STATE COOPERA TIVE BANK LTD (1960) 39 ITR 114(SC), CIT VS KARNATAKA STATE COOPERATIVE APEX BANK (2001) SUPP.(2) SCR 35;(2001)251 ITR 194(SC) AND CIT VS RA MANATHAPURAM DISTRICT COOPERATIVE CENTRAL BANK LTD (2002) 255 IT R 423 (SC) WHICH ARE ALL IN THE STATUS OF COOPERATIVE BANKS. IN NONE OF THE CASES OF ANY COOPERATIVE SOCIETY, INCOME OF INTEREST AND DIVIDEN D HAS BEEN HELD AS ITA NO.31/RPR/2016 8 EXEMPT U/S 80P. IT IS DUE TO THE REASON THAT COOPER ATIVE SOCIETIES DO NOT STAND ON THE SAME FOOTING AS COOPERATIVE BANKS. THE APPELLANT HAS, DURING THE HEARING CONTENDED THAT COOPERATIVE BANKS ARE AL SO COOPERATIVE CREDIT SOCIETIES DUE TO WHICH ANY DECISION WHICH IS APPLIC ABLE TO A COOPERATIVE BANK WOULD ALSO BE APPLICABLE IN CASE OF COOPERATIV E SOCIETY. THIS CONTENTION ON BEHALF OF APPELLANT IS MISPLACED. IT IS TRUE THAT COOPERATIVE BANKS ARE ALSO COOPERATIVE SOCIETIES BUT THESE ARE THE COOPERATIVE SOCIETIES WHICH HAVE BEEN GIVEN BANKING LICENSE AND ARE SUBJE CTED TO STRINGENT COMPLIANCE. ASSESSEE IS A CREDIT COOPERATIVE SOCIET Y AND ITS CASE WILL NOT BE COVERED BY THESE DECISIONS. ON CAREFUL PERUSAL OF T HE SUB-CLAUSE (I) TO CLAUSE (A) OF SECTION 80P(2) I.E. CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IT CAN BE UNDERSTOOD THAT THE PROVISIONS INDICATES THAT THE DEDUCTION IS AVAILABL E IN RESPECT OF A CO- OPERATIVE SOCIETY WHICH IS ENGAGED IN (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBE RS. THE WORD OR HAS BEEN USED BETWEEN CARRYING ON THE BUSINESS OF BANK ING THE SCOPE OF THIS EXPRESSION IS MUCH WIDER AND IS APPLICABLE TO THE C O-OPERATIVE BANKS CARRYING ON ALL THE ACTIVITIES MENTIONED IN THE BAN KING REGULATION ACT, 1949 WHICH A BANK IS ENTITLED TO CARRY ON. WHEREAS, THE SCOPE OF THE EXPRESSION - PROVIDING CREDIT FACILITIES TO ITS ME MBERS IS RESTRICTED AND NARROW, & CONFINED ONLY TO PROVIDING CREDIT FACILIT IES TO ITS MEMBERS WHICH IS APPLICABLE TO THE COOPERATIVE SOCIETIES. THUS TH E LEGISLATURE HAS KEPT BOTH THE ENTITIES DISTINCT BY USING THE WORD OR I N BETWEEN THE TWO ACTIVITIES. AS A RESULT OF INSERTION OF SECTION 80P (4) BY THE FINANCE ACT, 2006 W.E.F. 01.04.2007, THE CO-OPERATIVE BANKS HAVE BEEN DEPRIVED OF THE BENEFITS OF SECTION 80P, WHEREAS THE CO-OPERATIVE S OCIETIES ARE ENJOYING THE BENEFITS OF THE SAID SECTION. ACCORDING TO THE SECTION 5(B) OF THE BANKING REGULA TION ACT, 1949, BANKING IS THE ACCEPTING FOR THE PURPOSE OF LENDING OR INVEST MENT OF DEPOSITS OF MONEY FROM THE PUBLIC REPAYABLE ON DEMA ND OR OTHERWISE AND WITHDRAWABLE BY CHEQUE DRAFT OR OTHERWISE, AND ACCORDING TO THE SECTION 6 OF THE BANKING REGULATION ACT, 1949 THE BUSINESS A BANK CAN CARRY ON ARE SUMMARIZED INTO THREE CATEGORIES: I. MAIN BUSINESS I.E. BANKING I.E. BORROWING, TAK ING OR LENDING MONEY, DEALING IN BILL OF EXCHANGE, BILLS OF LENDIN G AND DEBENTURES, ISSUING LETTERS OF CREDIT, BUYING/SELLI NG FOREIGN EXCHANGE, ACQUIRING OR UNDERWRITING STOCKS. II. ALLIED BUSINESS: ACTING AS AGENT / TRUSTEE/ ADMINISTRATOR, CARRYING ON GUARANTEE BUSINESS, PROV IDING SAFE CUSTODY. ITA NO.31/RPR/2016 9 III. DEALING IN PROPERTY IS RESTRICTED TO (I) PROPERTY C OMING IN SATISFACTION OF CLAIMS OR AS SECURITY AND (II) PROP ERTY NECESSITY FOR ITS OWN SAKE. THUS IT IS CRYSTAL CLEAR THAT THE CO-OPERATIVE BANK S CARRY ON THE BANKING BUSINESS WHICH NORMALLY INCLUDES ALL THE ACTIVITIES OF A BANKING BUSINESS AS ENUMERATED ABOVE & THAT TOO WITH THE PUBLIC AT LARG E; WHEREAS THE CO- OPERATIVE SOCIETIES CARRY ON THE BUSINESS ACTIVITY OF PROVIDING CREDIT FACILITY THAT TOO IS RESTRICTED ONLY TO ITS MEMBERS. THUS IT IS OBVIOUS THAT CO-OPERATIVE BANKS CANNOT B E SAID TO BE AT PAR WITH THE CO-OPERATIVE SOCIETIES. AS SUCH, THE INTEREST I NCOME AND INCOME FROM DIVIDEND EARNED ON THE INVESTMENTS MADE IN SINDHUDU RG CENTRAL CO- OPERATIVE BANK IS HEREBY DISQUALIFIED. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. 8. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLENGE D THE ORDER OF THE CIT(A). REFERRING TO PAGE 5 OF THE PAPER BOOK, HE SUBMITTED THAT THE ASSESSEE HAS RECEIVED INTEREST INCOME FROM THE JILLA SAHAKARI KENDRIYA BA NK AMOUNTING TO RS.23.74 LAKHS AND THE ASSESSING OFFICER HAS ADDED THE WHOLE OF TH E AMOUNT WITHOUT NETTING THE SAME BY DEDUCTING THE INTEREST PAID TO MEMBERS ON DEPOSI T OF RS.13.06 LAKHS. REFERRING TO PAGE 31 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO PROVISIONS OF SECTION 2(D) OF THE NABARD ACT, 1981 AND SUBMITTED THAT CEN TRAL COOPERATIVE BANK IS A COOPERATIVE SOCIETY. REFERRING TO THE PROVISIONS O F SECTION 2(19) OF THE INCOME-TAX ACT, 1961, HE SUBMITTED THAT COOPERATIVE SOCIETY M EANS A COOPERATIVE SOCIETY REGISTERED UNDER THE COOPERATIVE ACT, 1912 OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE IN ANY STATE FOR THE REGISTRATION OF COOPE RATIVE SOCIETIES. HE SUBMITTED THAT THE ITA NO.31/RPR/2016 10 DEFINITION OF DISTRICT CENTRAL COOPERATIVE BANK IS NOT GIVEN IN THE INCOME-TAX ACT, BUT, THEY ARE GIVEN UNDER THE BANKING REGULATION ACT. H E ALSO DREW THE ATTENTION OF THE BENCH TO SECTIONS 2, 3, 56, 56(A)(I) AND 56(C)(I) (CCI), (CCII), (CCVII) OF THE BANKING REGULATION ACT, 1949. HE DREW THE ATTENTION OF THE BENCH TO PROVISIONS OF SECTION 2(D) OF THE NABARD ACT, 1981 WHICH DEFINES CENTRAL COOPERATIVE BANK AND WHICH READ AS UNDER:- CENTRAL CO-OPERATIVE BANK MEANS THE PRINCIPAL CO-O PERATIVE SOCIETY IN A DISTRICT IN A STATE, THE PRIMARY OBJECT OF WHICH IS THE FINANCING OF OTHER CO-OPERATIVE SOCIETIES IN THAT DISTRICT: PROVIDED THAT IN ADDITION TO SUCH PRINCIPAL SOCIETY IN A DISTRICT, OR WHERE THERE IS NO SUCH PRINCIPAL SOCIETY IN A DISTRICT, T HE STATE GOVERNMENT MAY DECLARE ANY ONE OR MORE COOPERATIVE SOCIETIES CARRY ING ON THE BUSINESS OF FINANCING OTHER CO-OPERATIVE SOCIETIES IN THAT DIST RICT TO BE ALSO OR TO BE A CENTRAL CO-OPERATIVE BANK OR CENTRAL CO-OPERATIVE B ANKS WITHIN THE MEANING OF THIS DEFINITION. 9. SIMILARLY, HE DREW THE ATTENTION OF THE BENCH TO PR OVISIONS OF SECTION 2(F) OF NABARD ACT, 1981 WHICH DEFINES COOPERATIVE SOCIETY AS UNDER:- CO-OPERATIVE SOCIETY MEANS A SOCIETY REGISTERED OR DEEMED TO BE REGISTERED, UNDER THE CO-OPERATIVE SOCIETIES ACT, 1 912 OR ANY OTHER LAW RELATING TO CO-OPERATIVE SOCIETIES FOR THE TIME BEI NG IN FORCE IN ANY STATE. 10. RELYING ON THE FOLLOWING DECISIONS, HE SUBMITTED T HAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DENYING THE CLAIM OF DEDUCTION U/S 80P (2)(A)(I):- TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LIMITE D. VS. ITO ITA NO. 307 OF 2014 KARNATAKA HC DT. 28.10.2014 LALITAMBA PATTINA SOUHARDA SAHAKARI NIYAMITA VS. IT O ITA NO. 100004 OF 2018 KARNATAKA HC DT. 19.02.2018 THE VAVVERU CO-OPERATIVE RURAL BANK LTD. VS. CCIT WP NO. 12727 OF 2016 DT. 15.03.2017 APHC ITA NO.31/RPR/2016 11 LOKNETE SHANKARRAO BALAJI WAJE GRAMIN BIGERSHETI SA HAKARI PATSANSTHA ITA NO. 1631 /PN 72016 IT AT PUNE DT. 11.11.2016 SBI OFFICERS COOP. CREDIT SOCIETY LTD. HYDERABAD VS . ITO HYDERABAD. ITA NO. 673/HYD/2017 DT. 15.12.2017 HYDERABAD BENCH THE PADNE SERVICE CO-OPERATIVE BANK LTD. VS. ITO ITA NO. 584, 585 / COCH/2017 COCHIN ITAT DT. 11.01. 2018 THE TOTGARS CO-OPERATIVE SALE SOCIETY LTD. VS. ITO (2010) 322 TTR 0283 SC KALIANDAS UDYOG BHAVAN PREMISES CO-OP SOCIETY LTD. VS. ITO MUMBAI ITA 6547 / MUM/2017 DT. 25.04.2018 ITAT MUMBAI. BROACH DIST. CO-OPERATIVE COTTON SALES, GINNING & P RESSING SOCIETY LTD., 177 ITR 0418 (1989) SC. 11. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED ON TH E ORDER OF THE CIT(A). 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE HAVE ALS O CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSEE IN THE INSTAN T CASE IS A PRIMARY AGRICULTURAL COOPERATIVE SOCIETY ENGAGED IN CARRYING OUT BUSINES S OF BANKING APART FROM OTHER BUSINESSES WHICH HAVE ALREADY BEEN MENTIONED IN THE PRECEDING PARAGRAPHS. WHILE DOING THE ACTIVITY OF BANKING BUSINESS, THE ASSESSE E HAS EARNED INTEREST ON LOANS AND ADVANCES FROM MEMBERS OF RS.16,63,105/-, INTEREST O N DEPOSIT WITH THE BANKS & RS.23,74,716/- AND EXCESS INTEREST RECEIVED FROM DI STRICT COOPERATIVE BANK AT RS.2,66,499/-. SIMILARLY, THE ASSESSEE IN ITS P&L ACCOUNT HAS DEBITED INTEREST PAID ON LOANS AT RS.8,68,505/-, INTEREST ON DEPOSITS RS.13, 06,258/- AND INTEREST ON RAKSHIT NIDHI RS.11,768/-. WE FIND THE ASSESSING OFFICER R EJECTING THE VARIOUS EXPLANATIONS ITA NO.31/RPR/2016 12 GIVEN BY THE ASSESSEE BROUGHT TO TAX THE INTEREST O N DEPOSITS RECEIVED FROM JILLA SAHAKARI KENDRIYA BANK AT RS.23,74,716/- AND EXCESS INTEREST FROM BANKS RS.2,66,499/- ON THE GROUND THAT THE SAME ARE INCO ME FROM OTHER SOURCES SINCE IT WAS EARNED FROM THIRD PARTIES/CUSTOMERS OF COOPERAT IVE BANK AND NOT FROM THE ACTIVITIES WITH THE MEMBERS OF THE ASSESSEE SOCIETY AND, THEREFORE, NOT ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT. WE FIND THE LD.CIT(A ) UPHELD THE ACTION OF THE ASSESSING OFFICER THE REASONS OF WHICH HAVE ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPHS. IT IS THE SUBMISSION OF THE LD. COUNSE L FOR THE ASSESSEE THAT NETTING SHOULD HAVE BEEN ALLOWED TO THE ASSESSEE. IN HIS ALTERNATI VE CONTENTION, IT IS ALSO HIS ARGUMENT THAT THE CENTRAL COOPERATIVE BANK IS ALSO A COOPERA TIVE SOCIETY. THE DEFINITION OF DISTRICT CENTRAL COOPERATIVE BANK WAS NOT GIVEN IN THE INCOME-TAX ACT, BUT, IT HAS BEEN GIVEN IN THE NABARD ACT. WE FIND THE ASSESSEE HAS NOT ARGUED THIS ASPECT BEFORE THE LOWER AUTHORITIES FOR WHICH THEY DID NOT HAVE THE BENEFIT OF DISCUSSING THIS ISSUE ELABORATELY. FURTHER, ALTHOUGH THE ASSESSEE H AS ARGUED FOR NETTING OF INTEREST INCOME, HOWEVER, THIS ASPECT WAS ALSO NOT THOROUGHL Y EXAMINED BY THE LOWER AUTHORITIES SINCE THE ASSESSEE HAS NOT GIVEN THE NE XUS BETWEEN EARNING OF THE INTEREST FROM DEPOSIT WITH THE BANKS AND PAYMENT OF INTEREST TO MEMBERS ON DEPOSITS. ALTHOUGH THE ASSESSING OFFICER HAD GIVEN THE ITEMS APPEARING IN THE RECEIPT SIDE AND EXPENDITURE SIDE, HOWEVER, THE NEXUS HAS NEITHER BE EN PROVED BY THE ASSESSEE NOR ADJUDICATED BY THE ASSESSING OFFICER. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, WE DEEM IT PROPER T O RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO ADJUDICATE TH E ISSUE AFRESH BY GIVING AN ITA NO.31/RPR/2016 13 OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE THE NEX US BETWEEN EARNING OF SUCH INCOME AND THE INCURRING OF EXPENDITURE. THE GROUND OF AP PEAL NO.1 OF THE ASSESSEES APPEAL IS, ACCORDINGLY, ALLOWED FOR STATISTICAL PURPOSES. 13. GROUND NO.2 OF THE ASSESSEE READS AS UNDER:- 2. PADDY PROCUREMENT BUSINESS: UNDER THE FACTS & LAWS THE LD. CIT (APPEALS) FURTHE R ERRED IN CONFIRMING THE DISALLOWANCE @ 35% OUT OF INCOME IN PADDY PROCU REMENT BUSINESS MADE BY THE LD. AO CLAIMED BY THE APPELLANT U/S 80P (2)(A)(III) OUT OF RS. 11,65,714 OBSERVING THAT PADDY IS ALSO PROCURED FROM OTHER THAN THE MEMBERS. PRAYED THAT PADDY HAS BEEN PROCURED FROM MEMBERS OF APPELLANT SOCIETY & THEREFORE PROVISION OF SEC. 80P(2)(A)(III) IS APP LICABLE, DISALLOWANCE OF RS. 4,08,000/- BEING 35% OF RS 11,65,714/- BE DELET ED. 14. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT HAS SHOWN GROSS PROFIT UNDER THE HEAD PADDY PROCUREMEN T BUSINESS AT RS.8,46,794/-. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HA S CLAIMED AN AMOUNT OF RS.3,18,920/- IN THE TRADING ACCOUNT ON ACCOUNT OF TDS WHICH BEING A DISALLOWABLE ITEM FOR ARRIVING AT THE GP WAS ADDED BACK AND THE GP FROM PADDY PROCUREMENT WAS ARRIVED AT RS.11,54,612/-. ON BEING QUESTIONED BY THE ASSESSING OFFICER, IT WAS STATED THAT THE GOVERNMENT PURCHASES PADDY FROM AGRICULTUR ISTS THROUGH ITS AGENCY, NAMELY, CHATHISGARH MARKETING FEDERATION. THE ASSESSING OF FICER NOTED THAT PRIMARY AGRICULTURAL CREDIT SOCIETIES ACT AS AN AGENT OF MA RKETING FEDERATION FOR PROCUREMENT OF PADDY AND FOR SUCH SERVICES THE MARKFED PAY A FIXED COMMISSION TO THE SOCIETY AT THE RATE PRESCRIBED BY THE GOVERNMENT. THE ASSESSE E HAS CLAIMED THE INCOME FROM THE ITA NO.31/RPR/2016 14 ABOVE BUSINESS AS DEDUCTIBLE U/S 80P(2)(A)(III) OF THE IT ACT. SINCE THE ASSESSEE HAS CLAIMED THE ENTIRE INCOME FROM PADDY PROCUREMENT BU SINESS AS INCOME EXEMPT, THE ASSESSING OFFICER HELD THAT THE ONUS WAS ON THE ASS ESSEE TO PROVE WITH POSITIVE EVIDENCE THAT ALL SUCH TRANSACTIONS WERE WITH MEMBE RS OR IF IT CLAIMS THAT ONLY 25% OF SUCH TRANSACTIONS WERE WITH NON-MEMBERS, THE ONUS W AS ALSO ON THE ASSESSEE TO SUBSTANTIATE SUCH CLAIM WITH POSITIVE EVIDENCE. SI NCE THE ASSESSEE FAILED IN DISCHARGING THE ONUS CAST ON IT, THE ASSESSING OFFI CER HELD THAT 1/3 OF THE GROSS PROFIT FROM PADDY PROCUREMENT BUSINESS I.E., RS.4,08,000/- IS NOT ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT. IN APPEAL, THE LD.CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER. 15. THE LD. COUNSEL FOR THE ASSESSEE, AT THE TIME OF HE ARING, FILED CERTAIN ADDITIONAL EVIDENCES SUCH AS THE DETAILS OF PADDY PROCURED FRO M MEMBERS AND NON-MEMBERS. HE SUBMITTED THAT THESE ADDITIONAL EVIDENCES WHICH GO TO THE ROOT OF THE MATTER SHOULD BE ADMITTED AND THE MATTER MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AND ADJUDICATION OF THE ISSUE AFRESH. 16. THE LD. DR, ON THE OTHER HAND, WHILE OPPOSING THE F ILING OF THE ADDITIONAL EVIDENCES, SUBMITTED THAT HE HAS NO OBJECTION IF TH E MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER. 17. AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ADMIT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE UNDER RULE 29 OF THE ITAT RULES. SINCE THESE EVIDENCES WERE NOT EXAMINED BY THE ASSESSING OFFICE R, THEREFORE, CONSIDERING THE ITA NO.31/RPR/2016 15 TOTALITY OF THE FACTS OF THE CASE AND IN THE INTERE ST OF JUSTICE, WE DEEM IT APPROPRIATE TO RESTORE THE ABOVE ISSUE TO THE FILE OF THE ASSESSIN G OFFICER WITH A DIRECTION TO ADJUDICATE THE ISSUE AFRESH. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL GIVE DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND DECI DE THE ISSUE AS PER FACTS AND LAW. WE HOLD AND DIRECT ACCORDINGLY. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 18. GROUND NO.3 RAISED BY THE ASSESSEE READS AS UNDER:- 3. PDS BUSINESS THAT THE LD. CIT (APPEALS) FURTHER ERRED IN CONFIRM ING THE ADDITION OF RS. 43,970/- WHICH IS GROSS PROFIT IN PDS A/C MADE BY THE LD. AO. PRAYED THAT IN PDS ACCOUNT, AFTER CONSIDERING PROPO RTIONATE EXPENSE OF RS. 1,06,122/-, THERE IS LOSS OF RS. 62,153/-. PRAY ED THAT ADDITION OF RS. 43,950/- IS UNJUSTIFIED & BE DELETED. 19. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSI NG OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTED THAT THE ASSESSEE SOC IETY HAS ALSO UNDERTAKEN PDS ACTIVITY DURING THE YEAR I.E., DISTRIBUTING ESSENTI AL COMMODITIES TO THE RATION CARD HOLDERS THROUGH FAIR PRICE SHOPS. THE GROSS PROFIT UNDER THE HEAD WAS RS.43,970/- WHICH WAS CLAIMED AS EXEMPT U/S 80P. SINCE THIS AC TIVITY DOES NOT QUALIFY FOR DEDUCTION U/S 80P OF THE ACT, THE ASSESSING OFFICER REJECTED THE CLAIM U/S 80P. WHILE HOLDING SO, HE FURTHER NOTED THAT THE ASSESSEE IS N OT A CONSUMER COOPERATIVE SOCIETY AND, THEREFORE, THE PROVISIONS OF SECTION 80P(2)(C) (I) DOES NOT APPLY. ITA NO.31/RPR/2016 16 20. IN APPEAL, THE LD.CIT(A) UPHELD THE ACTION OF THE A SSESSING OFFICER ON THE GROUND THAT IT IS NOT AN ACTIVITY BETWEEN THE SOCIE TY AND ITS MEMBERS. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 21. AFTER HEARING BOTH THE SIDES, WE DO NOT FIND ANY IN FIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE. IT IS AN ADMITTED FACT THAT PDS ACTIVITY IS NOT AN ACTIVITY BETWEEN THE ASSESSEE AND ITS MEMBERS, THEREFORE, THE PROVIS IONS OF SECTION 80P WILL NOT BE APPLICABLE TO THIS BUSINESS. HOWEVER, THE LD. COUNS EL FOR THE ASSESSEE IN HIS ALTERNATE SUBMISSION ARGUED THAT THE EXPENSES ATTRIBUTABLE TO SUCH PDS BUSINESS SHOULD BE ALLOWED AND ONLY PROFIT, IF ANY, HAS TO BE ADDED BA CK TO THE TOTAL INCOME OF THE ASSESSEE. SINCE THIS ASPECT HAS NOT BEEN CONSIDERE D BY THE LOWER AUTHORITIES, THEREFORE, WE DEEM IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE PROPORTIONATE EXPENSES WHIC H HAS GOT DIRECT NEXUS WITH EARNING OF SUCH PDS BUSINESS INCOME AND ALLOW THE SAME AS A DEDUCTION FROM SUCH BUSINESS ACTIVITY. THE ASSESSEE SHALL SUBSTANTIATE TO THE S ATISFACTION OF THE ASSESSING OFFICER REGARDING THE NEXUS OF SUCH EXPENDITURE INCURRED FO R EARNING THE PDS BUSINESS INCOME. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY AL LOWED FOR STATISTICAL PURPOSES. 22. GROUND NO.4 OF THE ASSESSEE READS AS UNDER:- 4. DIVIDEND INCOME: THAT THE LD CIT(APPEALS) FURTHER ERRED IN CONFIRMIN G THE REJECTION OF CLAIM OF EXEMPTION OF DIVIDEND RECEIVED FROM JILA S AHKARI KENDRIYA BANK LTD., RAIPUR AT RS. 1,40,839/- U/S 80P(2)(D). ITA NO.31/RPR/2016 17 PRAYED THAT DIVIDEND IS EXEMPT AND THE ADDITION OF RS 1,40,839/- BE DELETED. 23. THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE DURING THE YEAR UNDER CONSIDERATION EARNED DIVIDEND INCOME OF RS.1,40,83 9/- ON ACCOUNT OF DIVIDEND FROM SHARES OF THE JILLA SAHAKARI BANK. THE ASSESSING O FFICER HELD THAT AS PER THE PROVISIONS OF SECTION 80P(2)(D) OF THE IT ACT, INTE REST OR DIVIDEND DERIVED BY THE COOPERATIVE SOCIETY FROM ITS INVESTMENT WITH ANY OT HER COOPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME SHALL BE DEDUCTIBLE. HE HELD THAT J ILLA SAHAKARI BANK IS NOT A COOPERATIVE SOCIETY AND, THEREFORE, NO DEDUCTION IS ALLOWABLE. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE, THE ASSESSING O FFICER ADDED BACK THE AMOUNT OF RS.1,40,839/- TO THE TOTAL INCOME OF THE ASSESSEE. 24. IN APPEAL, THE LD.CIT(A) UPHELD THE ACTION OF THE A SSESSING OFFICER ON THE GROUND THAT THE ASSESSEES FUNDS HAVE NOT BEEN KEPT WITH A COOPERATIVE SOCIETY. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT COOPERATIVE BANK IS ALSO A COOPERATIVE SOCIETY. THEREFORE, THE DIVIDEND INCOM E EARNED BY THE ASSESSEE SHOULD BE GIVEN THE BENEFIT OF SECTION 80P OF THE IT ACT. WE FIND THE ASSESSEE HAS NOT ARGUED BEFORE THE LOWER AUTHORITIES THAT THE COOPERATIVE B ANK IS ALSO A COOPERATIVE SOCIETY. WE, THEREFORE, RESTORE THIS ISSUE TO THE FILE OF TH E ASSESSING OFFICER WITH A DIRECTION TO THE ASSESSEE TO SUBSTANTIATE BEFORE THE ASSESSING O FFICER THAT THE JILLA SAHAKARI BANK, FROM WHERE THE ASSESSEE HAS RECEIVED OR EARNED DIVI DEND INCOME, IS A COOPERATIVE SOCIETY. IF THE ASSESSEE IS ABLE TO SATISFY THE ASS ESSING OFFICER WITH EVIDENCE THAT THE ITA NO.31/RPR/2016 18 JILLA SAHAKARI BANK FROM WHICH THE ASSESSEE HAS EAR NED DIVIDEND INCOME FROM SHARES PURCHASED BY IT IS A COOPERATIVE SOCIETY, THE ASSES SING OFFICER, SUBJECT TO HIS SATISFACTION, WILL ALLOW THE CLAIM AS PER FACT AND LAW. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PUR POSES. 25. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 2 2.10.2018. SD/- SD/- (SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMFBER DATED: 22 ND OCTOBER, 2018 DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR SR. PRIVATE SECRETARY FOR ASSTT. REGISTRAR, ITAT, RAIPUR