Kodavoor Vyavasaya Seva Sahakari Sangha Niyamitha , Udupi V. Income Tax Officer Ward-1 & TPS , Udupi

ITA 707/BANG/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4513 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 09-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIVIKAS SURYAVAMSHI
• Assessee Lawyers: SHRIMAHESH R UPPIN
• Keywords: Business income; Source of fund; Competent authority
• Section: 6; 143(3); 142(1); 80P; 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BENCH: BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. & A.Y. APPELLANT RESPONDENT 707/BANG/2019 2016 - 17 M/S. KODAVOOR VYAVASAYA SEVA SAHAKARI SANGHA NIYAMITHA, 16 - 62, KODAVOOR, UDUPI - 576 106 PAN AACAK 6235E INCOME TAX OFFICER, WARD - 1 & TPS, UDUPI. 762/BANG/2019 2016 - 17 SHRI MALLIKARJUNA CREDIT CO - OP. SOCIETY LTD., SHIROOR, VANDARU POST, UDUPI - 576 223 PAN AAIAS 2725B INCOME TAX OFFICER, WARD - 2, UDUPI. 765/BANG/2019 2016 - 17 M/S. GANAPATHI AGRICULTURAL CO - OP. SOCIETY LTD., SAHAKARI SADANA, MAIN ROAD, KEMMANNU, UDUPI - 576 115 PAN AACAG 0236F - DO - 942/BANG/2019 2015 - 16 SHRI MANGALAJYOTHI VIVIDHODDESHA SAHAKARA SANGHA LTD., NO.W 3310/3, EDEN PARADISE, BATTAGUDDA, BEJAI, MANGALURU - 575 004 INCOME TAX OFFICER, WARD 1(3), MANGALURU. 1190/BANG/2019 2015 - 16 M/S. VARANGA SAHAKARI VYAVASAYIKA SANGHA LTD., VARANGA, KARKALA - 576 144 PAN : AABAV1321R INCOME TAX OFFICER, WARD - 3, UDUPI - 576 103 1191 /BANG/2019 2016 - 17 - DO - - DO - ASSESSEE BY: SHRI MAHESH R UPPIN, ADVOCATE. REVENUE BY: SHRI VIKAS SURYAVAMSHI, ADDL. CIT. DATE OF HEARING : 30.07 .2019 DATE OF PRONOUNCEMENT : 26 .08 .2019 O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE ASSESSEE S HA VE FILED APPEAL S AGAINST DIFFERENT ORDERS OF CIT (APPEALS). WE FIND THE ISSUES IN THE APPEALS ARE SIMILAR AND 2 ITA NOS.707, 762, 765,942, 1190 & 1191/BANG/2019 IDENTICAL, HENCE THEY ARE CLUBBED AND HEARD AND CONSOLIDATED ORDER IS PASSED. FOR THE SAKE OF CONVENIENCE, WE SHALL TAKE UP THE CONCISED GROUNDS OF APPEALS AND FACTS NARRATED IN ITA 707/BANG/2019, M/S. KODAVOOR VYAVASAYA SEVA SAHAKARI SANGHA NIYAMITHA FOR THE ASST. YEAR 2016 - 17. THE ASSESSEE IN THE COURSE OF HEARING HAS FILED THE CONCISE GROUNDS OF APPEAL WHICH R EAD AS UNDER : 2. THE ASSESSEE IS ASSOCIATION OF PERSONS (AOP) REGISTERED AS A PRIMARY AGRICULTURE CREDIT CO - OPERATIVE SOCIETY UNDER THE PROVISIONS OF KARNATAKA CO - OPERATIVE SOCIETIES ACT, 1959 AND ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIE S TO ITS MEMBERS FOR AGRICULTURE RELATED ALLIED ACTIVITIES, SELLING OF FERITLISERS, PDF DISTRIBUTION AND ALLIED ACTIVITIES AS PER THE BYE - LAWS APPROVED BY REGISTRAR FOR CO - OPERATIVE SOCIETIES. THE 3 ITA NOS.707, 762, 765,942, 1190 & 1191/BANG/2019 ASSESSEE HAS FILED THE RETURN OF INCOME ON 29.09.2016 WIT H GROSS TOTAL INCOME OF RS.54,07,562 AFTER CLAIMING DEDUCTION UNDER SECTION 80P(2) OF THE ACT OF RS.53,38,391 AND DISCLOSED TOTAL INCOME OF RS.72,171. SUBSEQUENTLY, THE CASE WAS SELECTED FOR LIMITED SCRUTINY THROUGH CASS AND NOTICE UNDER SECTION 143(2) & 142(1) OF INCOME TAX ACT, 1961 (THE ACT) WERE ISSUED CALLING FOR DETAILS OF LIST OF MEMBERS, LOANS AND DEPOSITS AND EVIDENCE S IN SUPPORT OF THE CLAIM. THE ASSESSING OFFICER FOUND VARIOUS DISCREPANCIES IN THE CLAIMS AND DEALT ON THREE DISPUTED ISSUES BEIN G INTE REST ON DEPOSITS WITH NATIONALISED BANKS, RENTAL INCOME AND LOSS FROM PD SYSTEM. IN THE COURSE OF HEARING, THE ASSESSEE SOCIETY PRODUCED CERTIFICATE ISSUED BY ASST. REGISTRAR OF CO - OPERATIVE SOCIT IES , KUNDAPURA. THE ASSESSEE CLAIMED DEDUCTION UND ER SECTION 80P(2)(A)(I) OF THE ACT IN RESPECT OF INCOME FROM CO - OPERATIVE SOCIETY ENGAGED IN CARRYING ON BUSINESS OF BANKING OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. WHEREAS THE ASSESSING OFFICER OBSERVED THAT THE INTEREST INCOME OF THE ASSESSEE HAS TO BE ASSESSED UNDER INCOME FROM OTHER SOURCES AND NOT UNDER B USINESS INCOME AND SHOW CAUSE NOTICE WAS ISSUED. IN RESPONSE, 4 ITA NOS.707, 762, 765,942, 1190 & 1191/BANG/2019 THE ASSESSEE FILED THE REPLY ON 14.12.2008 REFERRED AT PARA 6.4.1 OF THE ORDER. SIMILARLY, THE ASSESSING OFFICER DEALT ON THE DEFINITION OF THE MEMBERS AS DEFINED IN CHAPTER 5 OF BYE - LAWS OF THE SOCIETY AND THE CLARIFICATION SOUGHT O N ISSUES REFERRED AT PARAS 8.3 TO 8.12. WHEREAS THE ASSESSEE SUBSEQUENTLY HAS FILED DETAILED INFORMATION ON 14.12.2018 WITH SUPPORTING THE JUDICIAL DE CISIONS REFERRED AT PARA 8.13 OF THE ORDER . BUT THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE E X P L A N A T IONS AND RELIED ON THE JUDICIAL DECISIONS AND FINALLY COMPUTED THE INCOME OF THE SOCIETY IN THE STATUS OF AOP DECLINING THE CLAIM OF DEDUCTION UNDER 80 P (2)(A)( I ) AND ASSESSED THE TOTAL INCOME OF RS.65,63,380 AND PASSED ORDER UNDER SECTION 143(3) OF THE ACT DT.22.12.2018. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED AN APPEAL IN FORM 35 WITH THE CIT (APPEALS). IN THE APPELLATE PROCEEDINGS, THE ASSESSE E HAS FILED SUBMISSIONS O N THE DISPUTED ISSUE S SUPPORTED WITH JUDICIAL DECISIONS WHEREAS CIT (APPEALS) FOUND THAT THE ASSESSING OFFICER WAS CORRECT IN HIS ACTION IN DISALLOWING THE CLAIM S AND CONFIRMED THE ADDITIONS AND DISMISSED THE ASSESSEE'S APPEAL. AG GRIEVED BY THE CIT (APPEALS) ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE TRIBUNAL. 5 ITA NOS.707, 762, 765,942, 1190 & 1191/BANG/2019 3. AT THE TIME OF HEARING, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE CIT (APPEALS) HAS ERRED IN CONFIRMING THE DENIAL OF DEDUCTION OF CLAIM UNDER SECTION 80P(2) OF THE ACT TO THE ASSESSEE AND THE DECISION S RELIED BY CIT (APPEALS) ARE D ISTINGUISHABLE AND FURTHER SUBMITTED THAT THE ASSESSEE SOCIETY IS PROVIDING CREDIT FACILITIES TO ITS MEMBERS WHICH INCLUDE NOMINAL MEMBERS AND RELIED ON THE JUDICIAL D ECISION S OF TRIBUNAL AND THE JURISDICTIONAL HIGH COURT AND PRAYED FOR ALLOWING THE APPEAL. CONTRA THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF CIT (APPEALS). 4. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE, THE SOLE DISPUTED ISSUE BEING DE NIAL OF CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(II) OF THE ACT. THE ASSESSING OFFICER HAS DEALT ON THE INTEREST INCOME FROM INVESTMENT / DEPOSITS IN BANK S, WHERE AS THE ASSESSEE SOCIETY IS ENGAGED IN BUSINESS OF CARRYING ON BANKING AND PROVIDING CREDIT FACILITIES. IN THE PRESENT ASSESSMENT YEAR, THE ASSESSEE HAS MADE FIXED DEPOSITS WITH KARNATAKA DCC BANK AND RECEIVED INTEREST INCOME AND THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 6 ITA NOS.707, 762, 765,942, 1190 & 1191/BANG/2019 80P( 2)(A)(I) OF THE ACT FURTHER ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS PROVIDED BANKING FACILITIES TO THE NOMINAL MEMBERS. WHEREAS THE LD. AR HAS RESTRICTED HIS A R GUMENTS TO THE EXTENT OF DENIAL OF DEDUCT I ON UNDER SECTION 80P(2) OF THE ACT AND FURTHE R SUBMITTED THAT THE NOMINAL MEMBERS HAS BEEN CATEGORIZED AS MEMBERS AND ARE ELIGIBLE FOR BENEFITS . WHEREAS CIT (APPEALS) HAS RELIED ON THE JUDICIAL DECISIONS , WHICH SHALL APPLY TO A SOCIETY WHICH IS ENGAGED IN NUMEROUS ACTIVITIES BUT IN THE PRESENT CAS E THE ASSESSEE SOCIETY IS ENGAGED IN PROVIDING FACILITIES OF BANKING BUSINESS OR CREDIT FACILITIES TO ITS MEMBERS. WE FOUND THE ISSUE OF DENIAL OF DEDUCTION UNDER SECTION 80P(2) AND TREATMENT OF I N T E R E S T ON DEPOSITS AND ALSO NOMINAL MEMBERS A RE TREATED AS ME MBERS FOR THE PURPOSE OF BENEFIT OF SECTION 80P(2) WAS DEALT BY THE JUDICIAL FORUMS. WE CONSIDER IT PROPER TO REFER TO THE DECISION OF THE CO - ORDINATE BENCH OF TH E TRIBUNAL IN THE CASE OF THE JAYANAGAR CO - OPERATIVE SOCIETY VS. ITO IN ITA NO.3254/BANG/20 18 IN RESPECT OF INTEREST INCOME EARNED BY THE SOCIETY WERE THE ASSESSING OFFICER DENIED THE CLAIM OF THE ASSESSEE OBSERVING THAT INTEREST INCOME EARNED ON INVESTMENT OF 7 ITA NOS.707, 762, 765,942, 1190 & 1191/BANG/2019 SURPLUS FUNDS HAS TO BE ASSESSED AS INCOME FROM OTHER SOURCES AND NOT FROM BUSINESS AT PAGE NO.3 PARAS 4 & 5 HELD WHICH READ AS UNDER : 4. THE ISSUES THAT ARISE FOR CONSIDERATION IN THIS APPEAL BY THE ASSESSEE ARE AS TO WHETHER THE REVENUE AUTHORITIES WERE JUSTIFIED IN HOLDING THAT THE ASSESSEE WAS NOT ENTITLED TO THE BENEFIT OF DEDUC TION UNDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON INTEREST INCOME EARNED AND UNDER SECTION 80P(2)(D) OF THE ACT IN RESPECT OF INTEREST RECEIVED FROM CO - OPERATIVE INSTITUTIONS. THE ASSESSING OFFICER (AO) DENIED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT INTEREST INCOME EARNED BY MAKING INVESTMENT OF SURPLUS FUNDS HAS TO BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES AND NOT INCOME FROM BUSINESS AND SINCE INTEREST INCOME IS NOT ASSESSED AS BUSINESS INCOME, THE CLAIM FOR DEDUCTION UNDER SECTION 57 OF THE ACT CANNOT BE ALLOWED. IN UPHOLDING THE ABOVE CONCLUSIONS, THE CIT(A), INTER ALIA, RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF THE TOTGARS CO - OPERATIVE SALES SOCIETY LTD., VS. ITO 322 ITR 283 ( SC) WHEREIN THE HONBLE SUPREME COURT HELD THAT THE BENEFIT OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT IS ONLY ON INCOME WHICH IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS. INTEREST EARNED ON INVESTMENT OF SURPLUS FUNDS NOT IMMEDIATELY REQUI RED IN SHORT TERM DEPOSITS AND SECURITIES BY A CO - OPERATIVE SOCIETY PROVIDING CREDIT FACILITIES TO MEMBERS OR MARKETING AGRICULTURAL PRODUCE TO MEMBERS IS NOT BUSINESS INCOME BUT INCOME FROM OTHER SOURCES AND THE SOCIETY IS NOT ENTITLED TO SPECIAL DEDUCTI ON. 5. WHILE LEARNED AR RELIED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF TUMUKUR MERCHANTS SOUHARDA CREDIT CO - OPERATIVE LTD., 230 TAXMAN 309 (KARN), THE DR RELIED ON A SUBSEQUENT DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF PCIT VS. TOTGARS CO - OPERATIVE SALE SOCIETY LTD., 395 ITR 611 (KARN.). WE HAVE CAREFULLY GONE THROUGH THE SAID JUDGMENT. THE FACTS OF THE CASE BEFORE THE HONBLE KARNATAKA HIGH COURT WAS THAT THE HONBLE COURT WAS CONSIDERING A CASE RELATING TO ASSE SSMENT YEARS 2007 - 08 TO 2011 - 12. IN CASE DECIDED BY THE HONBLE SUPREME COURT IN THE CASE OF THE VERY SAME ASSESSEE, THE ASSESSMENT YEARS INVOLVED WAS ASSESSMENT YEARS 1991 - 92 TO 1999 - 2000. THE NATURE OF INTEREST INCOME FOR ALL THE ASSESSMENT YEARS WAS IDE NTICAL. THE BONE OF CONTENTION OF THE ASSESSEE IN AY 2007 - 08 TO 2011 - 12 WAS THAT THE DEDUCTION UNDER SECTION 80P(2) OF THE ACT IS CLAIMED BY THE RESPONDENT ASSESSEE UNDER SECTION 80P(2)(D) OF THE ACT AND NOT UNDER SECTION 80P(2)(A) OF THE ACT WHICH WAS THE CLAIM IN AY 1991 - 92 TO 1999 - 2000. THE REASON GIVEN BY THE ASSESSEE WAS THAT IN AY 2007 - 08 TO 2011 - 12 INVESTMENTS AND DEPOSITS AFTER THE SUPREME COURT'S DECISION AGAINST THE ASSESSEE TOTGAR'S CO - OPERATIVE SALE SOCIETY LTD. (SUPRA), WERE SHIFTED FROM SCHED ULE BANKS TO COOPERATIVE BANK. U/S.80P(2)(D) OF THE ACT, INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY A CO - OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO - OPERATIVE SOCIETY IS ENTITLED TO DEDUCTION OF THE WHOLE OF SUCH INTEREST OR DIVIDEND IN COME. THE CLAIM OF THE ASSESSEE WAS THAT 8 ITA NOS.707, 762, 765,942, 1190 & 1191/BANG/2019 CO - OPERATIVE BANK IS ESSENTIALLY A CO - OPERATIVE SOCIETY AND THEREFORE DEDUCTION HAS TO BE ALLOWED UNDER CLAUSE (D) OF SEC.80P(2) OF THE ACT. THE HON'BLE KARNATAKA HIGH COURT FOLLOWED THE DECISION OF THE SUPREME COUR T IN THE TOTGARS CO - OPERATIVE SALES SOCIETY LTD. (SUPRA) AND HELD THAT INTEREST EARNED FROM SCHEDULE BANK OR COOPERATIVE BANK IS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AND THEREFORE THE PROVISIONS OF SEC.80P(2)(D)OF THE ACT WAS NOT APPLICABLE TO SUCH INTEREST INCOME. IT IS THUS CLEAR THAT THE SOURCE OF FUNDS OUT OF WHICH INVESTMENTS WERE MADE REMAINED THE SAME IN AY 2007 - 08 TO 2011 - 12 AND IN AY 1991 - 92 TO 1999 - 2000 DECIDED BY THE HON'BLE SUPREME COURT. THEREFORE WHETHER THE SOURCE OF FUNDS WER E ASSESSEE'S OWN FUNDS OR OUT OF LIABILITY WAS NOT SUBJECT MATTER OF THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE DECISION CITED BY THE LEARNED DR. TO THIS EXTENT THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF TUMUKUR MERCHANTS SOUHARDA CO - OPERATIVE LTD. (SUPRA) STILL HOLDS GOOD. HENCE, ON THIS ASPECT, THE ISSUE SHOULD BE RESTORED BACK TO THE AO FOR A FRESH DECISION AFTER EXAMINING THE FACTS IN THE LIGHT OF THESE JUDGMENT OF THE HON'BLE APEX COURT RENDERED IN THE CASE OF THE TOTG ARS CO - OPERATIVE SALE SOCIETY LTD. (SUPRA) AND OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TUMUKUR MERCHANTS SOUHARDA CO - OPERATIVE LTD. (SUPRA). 5. SIMILARLY, O N THE ISSUE OF DEFINITION OF THE MEMBER WHERE NOMINAL MEMBERS ARE ALSO ELIGIB LE FOR BENEFITS. THE MEMBER DEFINED UNDER THE CO - OPERATIVE SOCIETY ACT BYE - LAWS INCLUDES NOMINAL MEMBER. WE FOUND AHMEDABAD BENCH OF ITAT IN ITA NO.1328/AH M D/2018 FOR ASST. YEAR 2015 - 16 IN THE CASE OF TRAPAJ VIBHAGEEYA KHET UDYOG MAL RUPANTAR FOOD PROC ESSING SAHAKARI MANDALI LTD. VS. DCIT (SUPRA) AT PARA 7 HAS HELD AS UNDER : 7. WE HAVE HEARD LD.DR AND GONE THROUGH THE RECORD. WE HAVE ALSO GONE THROUGH CASE LAWS CITED BOTH THE SIDES BEFORE LD.CIT(A). WE FIND THAT FUNDAMENTAL FACTS WHICH ARE NOT DI SPUTED BY THE REVENUE AUTHORITIES ARE THAT THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE GUJARAT COOPERATIVE SOCIETIES ACT, 1961. IT IS ENGAGED IN PROVIDING CREDIT FACILITIES TO THE FARMERS IN THE REGION OF BHAVNAGAR DISTRICT. AS PER THE AO, MEMBERS OF THE ASSESSEE - SOCIETY CONSISTED OF TWO TYPES VIZ. REGULAR MEMBER AND NOMINAL MEMBERS. IT IS THE CASE OF THE REVENUE THAT ASSESSEE IS DOING MORE BUSINESS WITH NOMINAL MEMBERS THAN THE REGULAR MEMBER IN ORDER TO EARN MORE PROFIT, WHI CH IS AGAINST THE LAW, AND THEREFORE, THERE IS A BREAK - DOWN OF PRINCIPLE OF MUTUALITY RESULTING DISENTITLEMENT 9 ITA NOS.707, 762, 765,942, 1190 & 1191/BANG/2019 OF EXEMPTION UNDER SECTION 80P. THE LD.AO RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CITIZENS COOPERATIVE SOCIETY LTD. (SUP RA) TO SUPPORT HIS VIEW. WHILE THE CASE OF THE ASSESSEE IS THAT BEING A PRIMARY AGRICULTURE CREDIT SOCIETY, IT IS ENTITLED FOR EXEMPTION UNDER SUB - SECTION (4) OF SECTION 80P. JUDGMENT OF HONBLE APEX COURT RELIED UPON BY THE REVENUE IS DISTINGUISHABLE ON FACTS. IN THAT CASE ASSESSEE WAS A COOPERATIVE SOCIETY REGISTERED UNDER MULTI STATE COOPERATIVE SOCIETIES ACT, 2002, WHILE IN THE PRESENT CASE, ASSESSEE IS A PRIMARY AGRICULTURE CREDIT SOCIETY REGISTERED UNDER GUJARAT STATE COOPERATIVE SOCIETIES ACT. THE H ONBLE SUPREME COURT DISENTITLED THE ASSESSEE FROM CLAIMING EXEMPTION UNDER SECTION 80P DUE TO VIOLATION OF PROVISIONS OF MACSA, UNDER WHICH IT WAS FORMED, AND MOST OF THE BUSINESS OF THE ASSESSEE WAS WITH CARVED OUT CATEGORY OF PERSONS WITHOUT APPROVAL OF REGISTRAR OF THE SOCIETIES. WEIGHING POINT OF VIEW OF BOTH SIDES, WE FIND THAT BALANCE TILT IN FAVOUR OF THE ASSESSEE. WE FIND THAT BY VIRTUE OF SUB - SECTION (4) OF SECTION 80P, THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80P(2). FURTHER, INCOME T AX ACT DOES NOT DEFINE MEMBER, NOR HAS PROVIDED DISTINCTION BETWEEN REGULAR MEMBER AND NOMINAL MEMBER AND THEREFORE, ITS MEANING AND OBJECTS HAS TO BE UNDERSTOOD IN THE CONTEXT OF DEFINITION GIVEN IN THE STATE ACT. THE REVENUE AUTHORITIES ARE TRYING TO EXTRAPOLATE THE MEANING OF EXPRESSION MEMBER CONTRARY TO THE SPIRIT OF THE ACT. IT IS EVIDENT FROM THE DEFINITION OF MEMBER PROVIDED IN SECTION 2(13) OF THE GUJARAT COOPERATIVE SOCIETIES ACT THAT MEMBER INCLUDES NOMINAL, ASSOCIATE OR SYMPATHIZER M EMBER. THEREFORE, IN THE PRESENT CASE, THE NOMINAL MEMBERS ARE MEMBERS AS PROVIDED IN THE ACT AND THAT DEPOSITS RECEIVED AND LOAN ADVANCED TO THE NOMINAL CANNOT BE TREATED AS FROM NON - MEMBERS OR FROM PUBLIC AND IN THE NATURE OF BANKING BUSINESS. THAT BEING SO, THEN, AN ASSESSEE ENGAGED IN PRIMARY AGRICULTURE ACTIVITIES AND PROVIDING CREDIT FACILITIES AND AGRICULTURE FACILITIES TO THE FARMER - MEMBERS OF A PARTICULAR REGION, CLAIM OF DEDUCTION UNDER SECTION 80P(2) CANNOT BE DENIED. IT IS NOT DENIED BY THE REVE NUE THAT THE ACTIVITIES OF THE ASSESSEE SOCIETY ARE OF PRIMARY AGRICULTURE ACTIVITIES. COMPETENT AUTHORITY HAS ALSO RECOGNIZED THE ASSESSEE AS PRIMARY AGRICULTURE CREDIT SOCIETY. IN THE EARLIER ASSESSMENT YEAR ALSO, REVENUE HAS ACCEPTED THIS FACT AND ALLOW ED THE CLAIM OF THE ASSESSEE. JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CITIZENS CO - OPERATIVE SOCIETY LTD. (SUPRA) IS DISTINGUISHABLE ON FACTS. IN THAT CASE, STATUS OF THE ASSESSEE IS THAT OF CO - OPERATIVE BANK, WHEREAS ASSESSEE IN THE PRESENT CASE I S A PRIMARY AGRICULTURE CREDIT SOCIETY AND APPLICABILITY OF SECTION 80P(2)(4) OF THE ACT. CONSIDERING ALL THESE FACTS, WE ARE NOT CONVINCED WITH THE REASONING AND FINDING GIVEN BY THE REVENUE AUTHORITY IN DENYING CLAIM OF THE ASSESSEE UNDER SECTION 80P(2). WE ALLOW THE CLAIM OF THE ASSESSEE AND DIRECT THE LD.AO TO RE - COMPUTE INCOME OF THE ASSESSEE BY ALLOWING CLAIM UNDER SECTION 80P(2)(4) OF THE ACT. ALSO IN TAX CASE APPEAL NO.882 AND 891 OF 2018 OF HON'BLE MADRAS HIGH COURT IN THE CASE OF THE PRIN. COM MISSIONER OF INCOME TAX VS. S - 1308 AMMAPET PRIMARY AGRICULTURAL CO - OPERATIVE BANK LTD. HELD IN PARAS 11 TO 18 AS UNDER : 10 ITA NOS.707, 762, 765,942, 1190 & 1191/BANG/2019 11 ITA NOS.707, 762, 765,942, 1190 & 1191/BANG/2019 WE FOUND THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE DECISION RENDERED BY THE CO - ORDINATE BENCH AND THE JURISDICTIONAL HIGH COURT IN RESPECT OF MEMBERS DEFINITION AND CHARGEABILITY OF INTEREST INCOME UNDER INCOME FROM OTHER SOURCES . WE FOLLOW THE JUDICIAL PRECEDENCE AND RESTORE THE ENTIRE DISPUTED ISSUE TO THE FILE OF ASSESSING OFFICER TO ADJUDICATE AFRESH IN THE LIGHT OF THE DECISIO N OF CHARGEABILITY OF INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AND THE OBSERVATIONS OF HON'BLE SUPREME COURT IN THE CASE OF TOTGAR S CO - OPERATIVE SALES SOCIETY LTD. VS. ITO 322 ITR 283 (SC) AND HON'BLE KARNATAKA HIGH COURT DECISION IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT 12 ITA NOS.707, 762, 765,942, 1190 & 1191/BANG/2019 CO - OPERATIVE LTD. 230 TAXMAN 309 (KAR) A S DISCUSSED IN ABOVE PARAS . WHEREAS IN RESPECT OF THE CLAIM OF NOMINAL MEMBERS INCLUDED IN THE DEFINITION OF MEM BER WE FIND SUPPORT ON OUR VIEW RELY ON THE DECISION OF TRAPAJ VIBHAGEEYA KHET UDYOG MAL RUPANTAR FOOD PROCESSING SAHAKARI MANDALI LTD. VS. DCIT (SUPRA) AND PRIN. CIT VS. S - 1308 AMMAPET PRIMARY AGRICULTURAL CO - OPERATIVE BANK LTD. (SUPRA) WHICH IS COVERED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, WE ARE OF THE SUBSTANTIVE OPINION THAT THE NOMINAL MEMBERS ARE ALSO ELIGIBLE FOR THE B ENEFIT S OF CREDIT SOCIETY . ACCORDINGLY WE RESTORE ENTIRE DISPUTED ISSUE TO THE FILE OF ASSESSING OFFICER TO GRANT THE BENEFIT TO THE NOMINAL MEMBERS AND THE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNITY OF HEARING AND CO - OPERATE IN SUBMITTING THE INFORMATION FOR EARLY DISPOSAL OF THE CASE AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSES. 6. SIMILARLY THE APPEALS FILED IN ITA NOS.762, 765, 942, 1190 & 1191/BANG/2019 ARE SIMILAR AND IDENTICAL. HENCE THE DECISION RENDERED IN ITA NO.707/BANG/2019 AT PARAS 4 & 5 A BOVE SHALL APPLY MUTADIS MUTANDIS. ACCORDINGLY THE DISPUTED ISSUE IN THESE 13 ITA NOS.707, 762, 765,942, 1190 & 1191/BANG/2019 APPEALS ARE REMITTED TO THE FILE OF ASSESSING OFFICER AS INDICATED AND ALLOW THE GROUNDS OF APPEAL OF ASSESSEES. 7 . IN THE RESULT, APPEAL S OF THE ASSESSEE IN ITA NOS. 70 7, 762, 765, 942, 1190 & 1191/BANG/2019 ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 6 T H AUG., 2019. S D / - S D / - (A.K. GARODIA) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 6 .08. 2019. *REDDY GP COPY TO I) THE APPELLANT II) THE RESPONDENT III) CIT (APPEALS) IV) PR. CIT V) DR, ITAT, BANGALORE VI) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE