ITO 17(2)(1), MUMBAI V. JANSAGAR KAMGAR SAHAKARI PATPEDHI MARYADIT, MUMBAI

ITA 3567/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0177 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2013-2014
• Appeal Filed On: 16-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: V G GINDE
• Keywords: Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3567 /MUM/2017 (ASSESSMENT YEAR: 2013-14) INCOME TAX OFFICER - 17(2 )( 1 ) VS. M/S. JANSAGAR KAMGAR SAHAKARI ROOM NO. 134 , 1 ST FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400020 PATPEDHI MARYADIT 143, 1 ST FLOOR, KAZI SAYYAD ST. MATHADI CHOWK, KHAND BAZAR MASJIT BUNDER, MUMBAI 400003 PAN AAAAJ6747J APPELLANT RESPONDENT APPELLANT BY: SHRI V. VIDHYADHAR RESPONDENT BY: SHRI V.G. GINDE DATE OF HEARING: 04.09.2017 DATE OF PRONOUNCEMENT: 04.09.2017 O R D E R PER P.K. BANSAL, VICE PRESIDENT THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)-28, MUMBAI DATED 01.02.2017 FOR A.Y. 2013-14 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 80P(2)(A)(I) OF RS.49,66,626/- WITHOUT APPRECIATING THE FACT THAT T HE ASSESSEE IS NOT A CO-OPERATIVE CREDIT SOCIETY, BUT A CO-OPERATI VE BANK, AS THE ASSESSEE IS INVOLVED IN THE ACTIVITIES OF LENDING O F MONEY AND EARNING INTEREST, WHICH IS NOTHING BUT A NORMAL BAN KING ACTIVITY ON COMMERCIAL BASIS TO BENEFIT COMMERCIALLY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 80P(2)(D) WITH RESPECT TO DIVIDEND INCOME OF RS.1,01,581/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS NOT A CO-OPERATIVE CR EDIT SOCIETY, BUT A CO-OPERATIVE BANK, AS THE ASSESSEE IS INVOLVED IN THE ACTIVITIES OF MONEY LENDING AND EARNING INTEREST AND DIVIDEND, WHICH IS NOTHING BUT A NORMAL BANKING ACTIVITY ON COMMERCIAL BASIS TO BENEFIT COMMERCIALLY. ITA NO. 3567/MUM/2017 JANSAGAR KAMGAR SAHAKARI PATPEDHI MARYADIT 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 80P(2)(A)(I) AND U/S. 80P(2)(D) TO THE ASSESSEE WITHOUT APPRECIA TING THE FACT THAT THE ISSUE OF ALLOWABILITY OF DEDUCTIONS UNDER U/S. 80P(2)(A)(I) AND U/S. 80P(2)(D) HAVE NOT REACHED ITS FINALITY AS THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE HON 'BLE BOMBAY HIGH COURT IN THE CASE OF QUEPEM URBAN CO-OP. CREDI T SOCIETY (2015)(58 TAXMANN.COM 113 (BOM) AND SLP BEFORE THE HON'BLE APEX COURT HAS BEEN FILED WHICH IS PENDING FOR FINA L ORDERS.' 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 80P(2)(A)(I) AND U/S. 80P(2)(D) TO THE ASSESSEE WITHOUT APPRECIA TING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION O F THE HON'BLE CIT(A) IN THE ASSESSEE'S OWN CASE FOR A.Y. 2012-13 AND APPEAL BEFORE THE ITAT HAS BEEN FILED WHICH IS PENDING FOR DECISION.' 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE S UBMITTED THE RETURN OF INCOME DECLARING NIL INCOME ON 12.09.2013 WHICH WAS ASSESSED AT RS.50,68,210/-. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AGAINST THE DENIAL OF DEDUCTION UNDER SECTION 80P(2)(A)(I) AND 80P(2)(D). THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AND DIRECTED THE AO TO ALLOW THE DEDUCTION UNDER SECTION 80P(2)(A)(I) AS WELL AS DED UCTION UNDER SECTION 80P(2)(D) IN RESPECT OF THE DIVIDEND RECEIVED BY TH E ASSESSEE FROM ITS SHARE HOLDINGS IN OTHER CO-OPERATIVE SOCIETIES. THE REVEN UE IS IN APPEAL AGAINST ALLOWING BOTH THE GROUNDS OF THE ASSESSEE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY C ONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES B ELOW. BEFORE US THE LEARNED A.R. HAS VEHEMENTLY RELIED ON THE ORDER OF THE D BENCH OF THIS TRIBUNAL IN ITA NO. 4994/MUM/2016 IN THE CASE OF TH E ASSESSEE IN WHICH VIDE ORDER DATED 11.04.2017 THE TRIBUNAL HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT THE ASSESSEE WILL BE ENTI TLED FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) BUT SUBSEQUENT TO THE DECISION WE NOTED THAT THERE HAD BEEN A DECISION OF THE HON'BLE SUPREME COURT RECENT LY ON WHICH THE LEARNED D.R. VEHEMENTLY RELIED UPON AND THE LEARNED D.R. HAS CONTENDED THAT THE CIT(A) IN THE IMPUGNED ASSESSMENT YEAR AND THE TRIBUNAL IN THE ASSESSMENT YEAR 2012-13 HAS NOT EXAMINED THIS ISSUE IN ACCORDANCE WITH THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F THE CITIZEN CO- ITA NO. 3567/MUM/2017 JANSAGAR KAMGAR SAHAKARI PATPEDHI MARYADIT 3 OPERATIVE SOCIETY LIMITED VS. ACIT, CIRCLE-9(1), HY DERABAD IN CA NO. 10245/2017 DATED 08.08.2017. THE ORDER OF THE CIT( A) BE SET ASIDE AND THE ISSUE BE RESTORED TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CASE OF THE ASSESSEE IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF THE CITIZEN CO-OPERATIVE SOCIETY LIMITED VS . ACIT, CIRCLE-9(1), HYDERABAD (SUPRA). 4. LEARNED A.R. EVEN THOUGH RELIED ON THE ORDER OF CIT(A) BUT DID NOT OBJECT IF THE MATTER BE RESTORED TO THE FILE OF THE ASSESSING OFFICER TO BE EXAMINED IN THE LIGHT OF THE DECISION OF HON'BLE SU PREME COURT IN THE CASE OF THE CITIZEN CO-OPERATIVE SOCIETY LIMITED VS. ACI T, CIRCLE-9(1), HYDERABAD (SUPRA). WE HAVE GONE THROUGH THE DECISI ON OF HON'BLE SUPREME COURT IN THE CASE OF THE CITIZEN CO-OPERATI VE SOCIETY LIMITED VS. ACIT, CIRCLE-9(1), HYDERABAD (SUPRA) IN CIVIL APPEA L NO.10245 OF 2017 IN WHICH HON'BLE SUPREME COURT VIDE ITS ORDER DATED 08 /08/2017 WHILE DEALING WITH THE SIMILAR ISSUE HAS HELD AS UNDER: 17. WE HAVE CONSIDERED THE SUBMISSIONS OF THE COUNSEL FOR THE PARTIES WITH REFERENCE TO THE RECORD OF THIS CASE. 18. WE MAY MENTION AT THE OUTSET THAT THERE CANNOT BE ANY DISPUTE TO WHICH IS ENACTED BY THE PARLIAMENT IN ORDER TO ENCO URAGE AND PROMOTE. GROWTH OF CO-OPERATIVE SECTOR IN THE ECONOMIC LIFE OF THE COUNTRY. IT WAS DONE PURSUANT TO DECLARED POLICY OF THE GOVERNMENT. THEREFORE, SUCH A PROVISION HAS TO BE READ LIBERALLY, REASONABLY AND IN FAVOUR OF THE ASSESSEE (SEE - BAJAJ TEMPO LIMITED, BOMBAY V. COMMISSIONER OF INCOME TAX, BOMBAY CITY-11}, BOMBAY}. IT IS ALSO TRITE THAT SUCH A PROVISION HAS TO BE CONSTRUED AS TO EFFECTUATE THE OBJECT OF THE LEGISLATURE AND NOT TO DEFEAT IT (SEE - COMMISSIONER OF INCOME TAX, BOMBAY & ORS. V. MAHINDRAAND MAHINDRA LIMITED & QRS .). THEREFORE, IT HARDLY NEEDS TO BE EMPHASIZED THAT AL L THOSE CO-OPERATIVE SOCIETIES WHICH FALL WITHIN THE PURVIEW OF SECTION SOP OF THE ACT ARE ENTITLED TO DEDUCTION IN RESPECT OF ANY INCOME REFE RRED TO IN SUB-SECTION (2) THEREOF. CLAUSE (A) OF SUB-SECTION (2) GIVES EX EMPTION OF WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABL E TO ANYONE OR MORE OF SUCH ACTIVITIES WHICH ARE MENTIONED IN SUB-SECTI ON (2). 19 ) SINCE WE ARE CONCERNED HERE WITH SUB-SECTION (I ) OF CLAUSE (A) OF SUB-SECTION (2), IT RECOGNIZES TWO KINDS OF CO-OP ERATIVE SOCIETIES, NAMELY: (I) THOSE CARRYING ON THE BUSINESS OF BANKING AND; (II) THOSE PROVIDING CREDIT FACILITIES TO ITS MEMBERS. (1992) 3 SCC 78 ( 1983) 4 SCC 392. 20 ) IN THE CASE OF KERALA STATE COOPERATIVE MARKETING FEDERATION LIMITED & ORS. V. COMMISSIONER OF INCOME TAX , THIS ITA NO. 3567/MUM/2017 JANSAGAR KAMGAR SAHAKARI PATPEDHI MARYADIT 4 COURT, WHILE DEALING WITH CLASSES OF SOCIETIES COVE RED BY SECTION 80P OF THE ACT, HELD AS FOLLOWS: '6. THE CLASSES OF SOCIETIES COVERED BY SECTION 8 0-P OF THE ACT ARE AS FOLLOWS: (A) ENGAGED IN BUSINESS OF .BANKING AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS; 7. WE MAY NOTICE THAT THE PROVISION IS INTRODUCED W ITH A VIEW TO ENCOURAGING AND PROMOTING GROWTH OF COOPERATIVE SECTOR IN THE ECONOMIC LIFE OF THE COUNTRY AND IN PURSUANCE O F THE DECLARED POLICY OF THE GOVERNMENT. THE CORRECT WAY OF READING THE DIFFERENT HEADS OF EXEMPTION ENUMERATED IN THE SECTION WOULD BE TO TREAT EACH AS A SEPARATE AND DI STINCT HEAD OF EXEMPTION. WHENEVER A QUESTION ARISES AS TO WHETHER ANY PARTICULAR CATEGORY OF AN INCOME OF A COOPERATI VE SOCIETY IS EXEMPT FROM TAX WHAT HAS TO BE SEEN IS WHETHER I NCOME FELL WITHIN ANY OF THE SEVERAL HEADS OF EXEMPTION. IF IT FELL WITHIN ANY ONE HEAD OF EXEMPTION, IT WOULD BE FREE FROM TA X NOTWITHSTANDING THAT THE CONDITIONS OF ANOTHER HEAD OF EXEMPTION ARE NOT SATISFIED AND SUCH INCOME IS NOT FREE FROM TAX UNDER THAT HEAD OF EXEMPTION...' 21. IN THE CASE OF COMMISSIONER OF INCOME TAX V. PUNJAB STATE CO-OPERATIVE BANK LTD, WHILE DEALING WITH AN IDENTICAL ISSUE, THE HIGH COURT OF PUNJAB AND HARYANA HELD AS FOLLOWS: '8. THE PROVISIONS OF SECTION 8OP WERE INTRODUCED W ITH A VIEW TO ENCOURAGING AND PROMOTING THE GROWTH OF THE CO-O PERATIVE SECTOR IN THE ECONOMIC LIFE OF THE COUNTRY AND IN P URSUANCE OF THE DECLARED POLICY OF THE GOVERNMENT THE DIFFERENT HEADS OF EXEMPTION ENUMERATED IN THE SECTION ARE SEPARATE AN D DISTINCT HEADS OF EXEMPTION AND ARE TO BE TREATED A S SUCH. WHENEVER A QUESTION ARISES AS TO WHETHER ANY PARTIC ULAR CATEGORY OF AN INCOME OF A CO-OPERATIVE SOCIETY IS EXEMPT FROM TAX, THEN IT HAS TO BE SEEN WHETHER SUCH INCOME FEL L WITHIN ANY OF THE SEVERAL HEADS OF EXEMPTION. IF IT FELL W ITHIN ANY ONE HEAD OF EXEMPTION, IT MEANS THAT A CO-OPERATIVE SOC IETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING AND A CO- OPERATIVE SOCIETY PROVIDING CREDIT FACILITIES TO IT S MEMBERS WILL BE ENTITLED FOR EXEMPTION UNDER THIS SUB CLAUSE. TH E CARRYING ON THE BUSINESS OF BANKING BY A COOPERATIVE SOCIETY OR PROVIDING CREDIT FACILITIES TO ITS' MEMBERS ARE TWO DIFFERENT TYPES OF ACTIVITIES WHICH ARE COVERED UNDER THIS SU B-CLAUSE. XX XX XX XX XX XX XX 13. SO, IN OUR VIEW, IF THE INCOME OF A SOCIETY IS FALLING WITHIN ANY ONE HEAD OF EXEMPTION, IT HAS TO BE EXEMPTED FR OM TAX NOTWITHSTANDING THAT THE CONDITION OF OTHER HEADS O F EXEMPTION ARE NOT SATISFIED. A READING OF THE PROVI SIONS OF SECTION SOP OF THE ACT WOULD INDICATE THE MANNER IN WHICH ITA NO. 3567/MUM/2017 JANSAGAR KAMGAR SAHAKARI PATPEDHI MARYADIT 5 THE EXEMPTION UNDER THE SAID PROVISIONS IS SOUGHT T O BE EXTENDED. WHENEVER THE LEGISLATURE WANTED TO RESTRI CT THE EXEMPTION TO A PRIMARY CO-OPERATIVE SOCIETY, IT WAS SO MADE CLEAR AS IS EVIDENT FROM CLAUSE (F) WITH REFERENCE TO A MILK CO- OPERATIVE SOCIETY THAT A PRIMARY SOCIETY ENGAGED IN SUPPLYING MILK IS ENTITLED TO SUCH EXEMPTION WHILE DENYING TH E SAME TO A FEDERAL MILK CO-OPERATIVE SOCIETY.' 22. THE AFORESAID JUDGMENT OF THE HIGH COURT CORRECTLY ANALYSES THE PROVISIONS OF SECTION SOP OF THE ACT AND IT IS IN T UNE WITH THE JUDGMENT OF THIS COURT IN KERALA STATE COOPERATIVE MARKETING FEDERATION LIMITED (SUPRA). 23. WITH THE INSERTION OF SUB-SECTION (4) BY THE FINAN CE ACT, 2006, WHICH IS IN THE NATURE OF A PROVISO TO THE AFORESAI D PROVISION, IT IS MADE CLEAR THAT SUCH A DEDUCTION SHALL NOT BE ADMIS SIBLE TO A CO- OPERATIVE BANK. HOWEVER, IF IT IS A PRIMARY AGRICUL TURE CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURE AND RURAL DEVELO PMENT BANK, THE DEDUCTION WOULD STILL BE PROVIDED. THUS, CO-OPERATI VE BANKS ARE NOW SPECIFICALLY EXCLUDED FROM THE AMBIT OF SECTION 80P OF THE ACT. 24. UNDOUBTEDLY, IF ONE HAS TO GO BY THE AFORESAID DEF INITION OF 'CO- OPERATIVE BANK', THE APPELLANT DOES NOT GET COVERED THEREBY. IT IS ALSO A MATTER OF COMMON KNOWLEDGE THAT IN ORDER TO DO TH E BUSINESS OF A CO-OPERATIVE BANK, IT IS IMPERATIVE TO HAVE A LICEN CE FROM THE RESERVE BANK OF INDIA, WHICH THE APPELLANT DOES NOT POSSESS . NOT ONLY THIS, AS NOTICED ABOVE, THE RESERVE BANK OF INDIA HAS ITSELF CLARIFIED THAT THE BUSINESS OF THE APPELLANT DOES NOT AMOUNT TO THAT O F A CO-OPERATIVE BANK. THE APPELLANT, THEREFORE, WOULD NOT COME WITH IN THE MISCHIEF OF SUB-SECTION (4) OF SECTION 80P. 25. SO FAR SO GOOD. HOWEVER, IT IS SIGNIFICANT TO POINT OUT THAT THE MAIN REASON FOR DISENTITLING THE APPELLANT FROM GET TING THE DEDUCTION PROVIDED UNDER SECTION SOP OF THE ACT IS NOT SUB-SE CTION (4) THEREOF. WHAT HAS BEEN NOTICED BY THE ASSESSING OFFICER, AFT ER DISCUSSING IN DETAIL THE ACTIVITIES OF THE APPELLANT, IS THAT THE ACTIVITIES OF THE APPELLANT ARE IN VIOLATIONS OF THE PROVISIONS OF TH E MACS A UNDER WHICH IT IS FORMED. IT IS POINTED OUT BY THE ASSESS ING OFFICER THAT THE ASSESSEE IS CATERING TO TWO DISTINCT CATEGORIES OF PEOPLE, THE FIRST CATEGORY IS THAT OF RESIDENT MEMBERS OR ORDINARY ME MBERS. THERE MAY NOT BE ANY DIFFICULTY AS FAR AS THIS CATEGORY IS CO NCERNED. HOWEVER, THE ASSESSEE HAD CARVED OUT ANOTHER CATEGORY OF 'NO MINAL MEMBERS'. THESE ARE THOSE MEMBERS WHO ARE MAKING DEPOSITS WIT H THE ASSESSEE FOR THE PURPOSE OF OBTAINING LOANS, ETC. AND, IN FA CT, THEY ARE NOT MEMBERS IN REAL SENSE. MOST OF THE BUSINESS OF THE APPELLANT WAS WITH THIS SECOND CATEGORY OF PERSONS WHO HAVE BEEN GIVING DEPOSITS WHICH ARE KEPT IN FIXED DEPOSITS WITH A MOTIVE TO E ARN MAXIMUM RETURNS. A PORTION OF THESE DEPOSITS IS UTILIZED TO ADVANCE GOLD LOANS, ETC. TO THE MEMBERS OF THE FIRST CATEGORY. IT IS FO UND, AS A MATTER OF FACT, THAT HE DEPOSITORS AND BORROWERS ARE QUIET DI STINCT. IN REALITY, SUCH ACTIVITY OF THE APPELLANT IS THAT OF FINANCE B USINESS AND CANNOT ITA NO. 3567/MUM/2017 JANSAGAR KAMGAR SAHAKARI PATPEDHI MARYADIT 6 BE TERMED AS CO-OPERATIVE SOCIETY. IT IS ALSO FOUND THAT THE APPELLANT IS ENGAGED IN THE ACTIVITY OF GRANTING LOANS TO GENERA L PUBLIC AS WELL. ALL THIS IS DONE WITHOUT ANY APPROVAL FROM THE REGISTRA R OF THE SOCIETIES. WITH INDULGENCE IN SUCH KIND OF ACTIVITY BY THE APP ELLANT, IT IS REMARKED BY THE ASSESSING OFFICER THAT THE ACTIVITY OF THE APPELLANT IS IN VIOLATION OF THE CO-OPERATIVE SOCIETIES ACT. MOR EOVER, IT IS A CO- OPERATIVE CREDIT SOCIETY WHICH IS NOT ENTITLED TO D EDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. 26. IT IS IN THIS BACKGROUND, A SPECIFIC FINDING IS ALS O RENDERED THAT THE PRINCIPLE OF MUTUALITY IS MISSING IN THE INSTAN T CASE. THOUGH THERE IS A DETAILED DISCUSSION IN THIS BEHALF IN THE ORDE R OF THE ASSESSING OFFICER, OUR PURPOSE WOULD BE SERVED BY TAKING NOTE OF THE FOLLOWING PORTION OF THE DISCUSSION: 'AS VARIOUS COURTS HAVE OBSERVED THAT THE FOLLOWING THREE CONDITIONS MUST EXIST BEFORE AN ACTIVITY COULD BE B ROUGHT UNDER THE CONCEPT OF MUTUALITY; THAT NO PERSON CAN EARN FROM HIM; THAT THERE A PROFIT MOTIVATION; AND THAT THERE IS NO SHARING OF PROFIT. IT IS NOTICED THAT THE FUND INVESTED WITH BANK WHIC H ARE NOT MEMBER OF ASSOCIATION WELFARE FUND, AND THE INTERES T HAS BEEN EARNED ON SUCH INVESTMENT FOR EXAMPLE, ING MUT UAL FUND [AS SAID BY THE MD VIDE HIS STATEMENT DATED 20.12.2010]. [THOUGH THE BANK FORMED THE THIRD PART Y VIS-A- VIS THE ASSESSEE ENTITLED BETWEEN CONTRIBUTOR AND R ECIPIENT IS LOST IN SUCH CASE. THE OTHER INGREDIENTS OF MUTUALI TY ARE ALSO FOUND TO BE MISSING AS DISCUSSED IN FURTHER PARAGRA PHS]. IN THE PRESENT CASE BOTH THE PARTIES TO THE TRANSAC TION ARE THE CONTRIBUTORS TOWARDS SURPLUS, HOWEVER, THERE ARE NO PARTICIPATORS IN THE SURPLUSES. THERE IS NO COMMON CONSENT OF WHATSOEVER FOR PARTICIPATORS AS THEIR IDENTITY IS N OT ESTABLISHED. HENCE, THE ASSESSEE FAILS TO SATISFY T HE TEST OF MUTUALITY AT THE TIME OF MAKING THE PAYMENTS THE NU MBER IN REFERRED AS MEMBERS MAY NOT BE THE MEMBER OF THE SO CIETY AS SUCH THE AOP BODY BY THE SOCIETY IS NOT COVERED BY CONCEPT OF MUTUALITY AT ALL.' 27. THESE ARE THE FINDINGS OF FACT WHICH HAVE-REMAINED- UNSHAKEN TILL THE STAGE OF THE HIGH COURT. ONCE WE KEEP THE AFORESAID ASPECTS IN MIND, THE CONCLUSION IS OBVIOUS, NAMELY, THE APPELLANT CANNOT BE TREATED AS A CO-OPERATIVE SOCIETY MEANT O NLY FOR ITS MEMBERS AND PROVIDING CREDIT FACILITIES TO ITS MEMB ERS. WE ARE AFRAID SUCH A SOCIETY CANNOT CLAIM THE BENEFIT OF SECTION 80P OF THE ACT. 5. WE NOTED THAT IN THIS DECISION HON'BLE SUPREME C OURT HAS CLEARLY LAID DOWN THAT THE CITIZEN CO-OPERATIVE SOCIETY LIM ITED WAS CATERING TO ITA NO. 3567/MUM/2017 JANSAGAR KAMGAR SAHAKARI PATPEDHI MARYADIT 7 TWO DISTINCT CATEGORIES OF PEOPLE. THE FIRST CATEGO RY IS THAT OF RESIDENT MEMBERS OR ORDINARY MEMBERS AND THE OTHER CATEGORY IS TERMED AS NOMINAL MEMBER. THE NOMINAL MEMBERS WERE MAKING DE POSIT WITH THE ASSESSEE FOR THE PURPOSE OF OBTAINING LOAN ETC. AND THEY WERE NOT MEMBERS IN REAL SENSE. MOST OF THE BUSINESS OF THE ASSESSE E WAS WITH NOMINAL MEMBERS WHO HAVE BEEN GIVING DEPOSITS FOR FIXED DEP OSITS TO EARN MAXIMUM RETURNS WHILE THESE DEPOSITS ARE UTILIZED T O ADVANCE GOLD LOANS, ETC. TO THE RESIDENT MEMBERS OR ORDINARY MEMBERS. AS A MATTER OF FACT, IN THIS CASE IT WAS FOUND THAT THE DEPOSITORS AND BORR OWERS ARE QUIET DISTINCT AND IN REALITY, THE ACTIVITY OF THE ASSESSEE WAS TH AT OF FINANCE BUSINESS AND THEREFORE, TOOK THE VIEW THAT IT CANNOT BE TERMED A S CO-OPERATIVE SOCIETY. IN THAT CASE IT WAS ALSO NOTED BY HON'BLE SUPREME C OURT THAT THE ASSESSEE IS ENGAGED IN THE ACTIVITY OF GRANTING LOAN TO GENE RAL PUBLIC WITHOUT GETTING ANY APPROVAL IN THIS REGARD FROM THE REGISTRAR OF S OCIETIES WHICH IS IN VIOLATION OF CO-OPERATIVE SOCIETIES ACT. IN VIEW O F THESE FACTS, HON'BLE SUPREME COURT TOOK THE VIEW THAT THE ASSESSEE IS NO T ENTITLED TO DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. SINCE THESE FACTS WHE THER THE ASSESSEE HAS DIFFERENT CATEGORIES OF MEMBERS; FIRST RESIDENT MEM BERS OR ORDINARY MEMBERS AND SECOND NOMINAL MEMBERS AND WHETHER THE ASSESSEE IS GETTING THE DEPOSITS FROM NOMINAL MEMBERS AND ADVAN CING LOAN TO THE RESIDENT MEMBERS/ORDINARY MEMBERS ARE NOT ON RECORD AND HAS NOT BEEN EXAMINED BY THIS TRIBUNAL IN THE ASSESSMENT YEAR 20 12-13 WHETHER THE FACT THAT THE ASSESSEE IS ENGAGED IN THE ACTIVITY O F GRANTING LOAN TO GENERAL PUBLIC HAS ALSO NOT BEEN EXAMINED BY THE AUTHORITIE S BELOW WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH TH E PARTIES, RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER BY SETTING ASI DE THE ORDER OF THE CIT(A) WITH THE DIRECTION THAT THE ASSESSING OFFICER SHALL EXAMINE THIS ISSUE AND DECIDE AFRESH IN VIEW OF THE OBSERVATION OF HON'BLE SUPREME COURT MADE IN THE CASE OF THE CITIZEN CO-OPERATIVE SOCIETY LIMITE D VS. ACIT, CIRCLE-9(1), HYDERABAD (SUPRA) IN PARA 25 OF ITS ORDER AS REPROD UCED HEREIN ABOVE. THUS GROUND NO. 1 IS ALLOWED FOR STATISTICAL PURPOS ES. ITA NO. 3567/MUM/2017 JANSAGAR KAMGAR SAHAKARI PATPEDHI MARYADIT 8 6. SO FAR AS THE SECOND GROUND IN RESPECT OF CLAIM OF DEDUCTION UNDER SECTION 80P(2)(D) ON DIVIDEND INCOME OF RS.1,01,581 /- RECEIVED FROM THE CO-OPERATIVE SOCIETY IS CONCERNED, IN OUR OPINION T HIS ISSUE WILL DEPEND UPON THE OUTCOME OF THE FIRST ISSUE. IF THE ASSESSE E IS ENTITLED TO DEDUCTION UNDER SECTION 80P(2)(A)(I) THE ASSESSEE WILL ALSO B E ENTITLED FOR DEDUCTION UNDER SECTION 80P(2)(D). SINCE THE ISSUE IS CONSEQU ENTIAL TO THE ISSUE INVOLVED ABOUT THE CLAIM OF THE ASSESSEE UNDER SECT ION 80P(2)(A)(I), THEREFORE, THE ORDER OF THE CIT(A) IS ALSO SET ASID E ON THIS ISSUE AND THIS ALSO IS RESTORED TO THE FILE OF THE AO WITH THE DIR ECTION THAT THE AO SHALL RE- DECIDE THIS ISSUE AFTER GIVING THE FINDING IN RESPE CT OF THE FIRST ISSUE WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDE R SECTION 80P(2)(A)(I) IN VIEW OF THE RECENT DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY LTD. VS. ACIT. THUS, T HIS GROUND ALSO IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH SEPTEMBER, 2017. SD/ - SD/ - (PAWAN SINGH) (P.K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT MUMBAI, DATED: 4 TH SEPTEMBER, 2017 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -28, MUMBAI 4. THE PR. CIT - 17, MUMBAI 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.