ITAT : Grants Sec. 80P benefit, distinguishes Citizens Society SC-ruling; Assessee, not co-operative bank

Cochin ITAT dismisses Revenue’s appeal against CIT(A) order allowing deduction u/s 80P to assessee (primary agricultural co-operative society), distinguishes SC ruling in Citizens Co-operative Society; Notes that SC had denied deduction u/s 80P to assessee therein as its activities were in violation of the Provisions of the Mutually Aided Cooperative Societies Act, 1995 (MACSA) under which it was formed and substantial deposits were from `nominal members’ who were actually non-members as per the relevant provisions; Observes that definition of a 'member' as provided in Sec 2(1) of the Kerala Cooperative Societies Act includes ‘nominal member’, holds that “deposits from such nominal members cannot be considered or treated as from the non-members or from public as was noted by the aforementioned SC ruling’; Also Refers to SC ruling in U.P. Co-operative Cane Union which had held that the term ‘member’ u/s 80P(2) has to be construed in terms definition under State cooperative law; Relies on jurisdictional HC ruling in Chirakkal Service Co-operative Bank Limited & Ors., wherein it was held that a primary agricultural credit Society registered as such under the Kerala Co-operative Societies Act, 1969 is entitled to the benefit of deduction u/s 80P(2); Holds that AO is not competent to decide issue whether assessee is a primary co-operative society or a co-operative bank, notes that RBI has issued letter to societies similar to assessee stating that they are primary agricultural credit societies and thus, rejects AO’s contention that assessee is not entitled to deduction in view of provisions of Sec. 80P(4) (denying benefit to co-operative bank):ITAT