Aa.226, Modakurichi Primary Agriculturalcooperative Credit Society,Rep. By Its President,P.v.saravanan, M/54 v. The Additional/Joint/Deputy/Assistant Commissioner Of Income Tax/Income Tax Officer,National E-Assessment Centre,Delhi

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 14.12.2021CORAM: THE HONOURABLE MR.JUSTICE C.SARAVANAN W.P.NOS.6829 & 7155 OF 2021ANDW.M.P.NOS.7383, 7388, 7676 & 7677 OF 2021 W.P.No.6829 of 2021 AA.226, Modakurichi Primary AgriculturalCooperative Credit Society,Rep. by its President,P.V.Saravanan, M/54,S/o.Venkatachalam,Perumapalayam, Modakuruchi Post,Erode District. ....Petitioner -Vs- The Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer,National e-Assessment Centre,Delhi. .....Respondent Prayer :- Writ Petition filed under Article 226 of the Constitution ofIndia to issue a Writ of Certiorari, calling for the entirerecords relating to the impugned order passed by the RespondentinDINNo.ITBA/AST/S/143(3)/2020-21/1030898123(1),dated23.02.2021 and quash the same and pass such further or otherorders as this Court may deem fit. W.P.No.7155 of 2021K.2065 Kalikkanaickenpalayam PrimaryAgricultural Cooperative Credit Society Ltd.,Rep. by its Secretary,S.Sivaswamy, M/57,S/o.S.Subramaniam,No.1/136, Vinayagar Nagar, Kasthurinaickenpalayam,Vadavalli Post,Coimbatore 641 041....Petitioner The Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer,National e-Assessment Centre,Delhi. .....Respondent Prayer :- Writ Petition filed under Article 226 of the Constitution ofIndia to issue a Writ of Certiorari, calling for the entirerecords relating to the impugned order passed by the RespondentinDINNo.ITBA/AST/S/143(3)/2020-21/1030727983(1),dated17.02.2021 and quash the same and pass such further or otherorders as this Court may deem fit. The petitioner in W.P.No.6829 of 2021 has challenged theimpugned assessment order in DIN No.ITBA/AST/S/143(3)/2020-21/1030898123(1), dated 23.02.2021. ThepetitionerinW.P.No.7155 of 2021 has challenged the impugned assessment orderinDINNo.ITBA/AST/S/143(3)/2020-21/1030727983(1),dated17.02.2021. 2.The petitioners have challenged the impugned assessmentorders. The issue before the respondent while passing theaforesaid orders was whether the petitioners were entitled tobenefit of deduction under Section 80P falling under Chapter VI-A of the Income Tax Act, 1961. The respondent denied the benefitof deduction under Section 80P of the Income Tax Act, 1961. 3.It is the case of the petitioner that the petitioners areAgricultural Co-operative Credit Societies and that the mainbusiness is to lend money to the members of the societies andthat the excess income earned by the petitioners are invested inthe Fixed Deposit before the Co-operative Banks, which entitledthe petitioners to get income on the Fixed Deposits made in theCo-operative banks. It is the specific case of the petitionersthat the issue had attained finality before this Court and thatthere is no basis on which the impugned order could have beenpassed. The learned counsel for the petitioners further submitsthat the issue is now covered by the decision of the Hon'bleSupreme Court in the case of Mavilayi Service Co-operative BankLtd., vs. Commissioner of Income Tax, Calicut reported in [2021]123 taxmann.com 161 (SC). In this connection, reference was madeto Paragraph 45 of the order which reads as under: “45. To sum up, therefore, the ratio decidendi ofCitizen Cooperative Society Ltd. (supra), must be giveneffect to. Section 80P of the IT Act, being abenevolent provision enacted by Parliament to encourageand promote the credit of the co-operative sector ingeneral must be read liberally and reasonably, and ifthere is ambiguity, in favour of the assessee. Adeduction that is given without any reference to anyrestriction or limitation cannot be restricted orlimited by implication, as is sought to be done by theRevenue in the present case by adding the word“agriculture” into Section 80P(2)(a)(i) when it is notthere. Further, section 80P(4) is to be read as aproviso, which proviso now specifically excludes co-operative banks which are co-operative societiesengaged in banking business i.e. engaged in lendingmoney to members of the public, which have a licence inthis behalf from the RBI. Judged by this touchstone, itis clear that the impugned Full Bench judgment iswholly incorrect in its reading of Citizen CooperativeSociety Ltd. (supra). Clearly, therefore, once section80P(4) is out of harm’s way, all the assessees in thepresent case are entitled to the benefit of thedeductioncontainedinsection80P(2)(a)(i),notwithstanding that they may also be giving loans to their members which are not related to agriculture.Also, in case it is found that there are instances ofloans being given to non-members, profits attributableto such loans obviously cannot be deducted.” 4.Opposing the prayer, the learned Junior Standing Counselfor the respondent would submit that though the issue hasattained finality before this Court in TCA.No.882 of 2018, dated16.12.2018 and the Income Tax Department has preferred an Appealbefore the Hon'ble Supreme Court in S.L.A.(C).No.17745 of 2019,however later withdrew the same on account of the monetarypolicy and that the Hon'ble Supreme Court has left the issueopen. The learned Junior Standing Counsel would further submitthat the issue is still open and the petitioners should work outthe remedy before the Appellate Commissioner against theimpugned orders, as the appellate remedy is more efficacious. 5.It is further submitted that even as per the decision ofthe Hon'ble Supreme Court cited by the learned counsel for thepetitioner reported in Mavilayi Service Co-operative Bank Ltd.,vs. Commissioner of Income Tax, Calicut, the burden of proof ison the petitioners. In this connection, reference was made toParagraphs 32 and 39 of the order which reads as under: “32. Fifthly, as has been held in Udaipur SahkariUpbhokta Thok Bhandar Ltd. v. CIT (2009) 8 SCC 393 atparagraph 23, the burden is on the assessee to show, byadducing facts, that it is entitled to claim thededuction under Section 80P. Therefore, the assessingofficer under the IT Act cannot be said to be goingbehind any registration certificate when he engages in afact-finding enquiry as to whether the co-operativesociety concerned is in fact providing credit facilitiesto its members. Such fact finding enquiry (see section133(6) of the IT Act) would entail examining allrelevant facts of the co-operative society in questionto find out whether it is, as a matter of fact,providing credit facilities to its members, whatever beits nomenclature. Once this task is fulfilled by theassessee, by placing reliance on such facts as wouldshow that it is engaged in providing cre dit facilitiesto its members, the assessing officer must thenscrutinize the same, and arrive at a conclusion as towhether this is, in fact, so.” “39. The above material would clearly indicate that thelimited object of section 80P(4) is to exclude co-operative banks that function at par with othercommercial banks i.e. which lend money to members of thepublic. Thus, if the Banking Regulation Act, 1949 is nowto be seen, what is clear from section 3 read withsection 56 is that a primary co-operative bank cannot bea primary agricultural credit society, as such co-operative bank must be engaged in the business ofbanking as defined by section 5(b) of the BankingRegulation Act, 1949, which means the accepting, for thepurpose of lending or investment, of deposits of moneyfrom the public. Likewise, under section 22(1)(b) of theBanking Regulation Act, 1949 as applicable to co-operative societies, no co-operative society shall carryon banking business in India, unless it is a co-operative bank and holds a licence issued in that behalfby the RBI. As opposed to this, a primary agriculturalcredit society is a co-operative society, the primaryobject of which is to provide financial accommodation toits members for agricultural purposes or for purposesconnected with agricultural activities.” 6.I have considered the arguments advanced by the learnedcounsel for the petitioners and the learned Junior StandingCounsel appearing on behalf of the respondent. 7.The issue as on date, on merits appears to be covered bythe two decisions of the Division Bench of this Court and isbinding on this Court. Even though the Hon'ble Supreme Court hasleft the issue open to be decided at the future point of time,the respondents cannot deviate and pass any orders. Be that asit may, the issue as to whether the petitioner is entitled tobenefit of deduction under Section 80P of the Income Tax Act,1961 is concerned, the decision of the Hon'ble Supreme Courtwhich is relied by both the petitioners as well as therespondent has to be properly adjudicated which has not beconsidered while passing the impugned orders. 8.Therefore, the cases are remitted back to the respondentto pass appropriate orders on merits and in accordance with law,within a period of 45 days from the date of receipt of a copy ofthis order. If required the petitioners may be given the benefitof personal hearing through video conferencing, if thepetitioners so desires. 9.These Writ Petitions stand disposed of with the aboveobservations. No costs. Consequently connected MiscellaneousPetitions are closed. Sd/- Assistant Registrar(CO) pgpTo //True Copy// Sub Assistant Registrar The Additional/Joint/Deputy/Assistant Commissioner of Income Tax/Income Tax Officer,National e-Assessment Centre,Delhi. +2ccs to Mr.A.P.Srinivas, Advocate, S.R.No.66546 W.P.Nos.6829 & 7155 of 2021 and W.M.P.Nos.7383, 7388, 7676 & 7677 of 2021 AK II(CO)PM/19/01/2022