INCOME TAX ACT, 1961

Section 80P(2)(a)(i)

Deduction under section 80P(2)(a)(i) - Co-operative society - Rejection on the ground of no mutuality as regards deposits received from 'B' Class Members -

Assessee is a co-operative credit society having 'A' class Members as well as 'B' Class Members as its Society's Members. The case of AO was that in so far as deposits received from 'B' class Members, there was no mutuality and they were only 'nominal members'. By following the judgment in the case of Citizen Co-operative Society Limited v. Asstt. CIT [Civil Appeal No. 10245 of 2017 dated 8-8-2017], AO held that assessee was not entitled for claiming exemption under section 80P(2)(a)(i). Held: There was no banking activity and assessee was not registered as a Bank and it did not hold any license issued by the Reserve Bank of India. The assessee being a Primary Agriculture Credit Society was a Co-operative Society. The primary object of which was to provide financial accommodation to its members, i.e., members as well as Associate Members for agriculture purposes or for purpose connected with the agricultural activities. Further, provision of section 80P(4) is to be read as a proviso, which proviso now specifically excludes cooperative banks which are co-operative societies engaged in the banking business, i.e., engaged in lending money to members of the public, which have a license in this behalf from the Reserve Bank of India. Clearly, therefore, assessee's case was out of provisions of section 80P(4). Therefore, assessee was entitled for the claim of deduction under section 80P(2)(a)(i) irrespective of the fact whether assessee was having 'A' Class Members or 'B' Class Members.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2016-17

INCOME TAX ACT, 1961

Section 80P(2)(a)(i)

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