IN HIGH COURT OF JUDICATURE AT MADRAS DATED: 31.01.2020 CORAM HONOURABLE DR. JUSTICE ANITA SUMANTH W.P.Nos.17, 20, 22, 23, 26, 29, 1107, 1118, 1121, 1123, 1124, 1125, 1127, 1129, 1131, 1133, 1136, 1138, 1139, 1141, 1143, 1145, 1146, 1149, 1150, 1152, 1155, 1161, 1166, 1169, 1171, 1293, 1299 & 1420 of 2020 and WMP.Nos.14, 17, 23, 25, 27, 28, 29, 31, 32, 34, 35, 36, 1340, 1342, 1345, 1346, 1350, 1351, 1357, 1358, 1359, 1360, 1361, 1362, 1365, 1366, 1368, 1369, 1370, 1371, 1373, 1374, 1381, 1383, 1384, 1386, 1387, 1388, 1389, 1390, 1394, 1395, 1397, 1399, 1400, 1401, 1402, 1403, 1405, 1406, 1407, 1408, 1412, 1413, 1419, 1420, 1421, 1426, 1429, 1431, 1432, 1433, 1551, 1555, 1560, 1562 & 1682 of 2020 W.P. No.17 of 2020: K.2058, Saravanampatti Primary Agricultural Co-operative Credit Society Ltd., Now name changed as K.2058, Saravanmpatti Urban Co-operative Credit Society Ltd., Rep. by its Secretary. ...Petitioner Vs Income Tax officer, Non Corp Ward -2 (5), CBE, No.63, Race Course Road, Coimbatore - 641 018. .. Respondent Prayer: PETITION filed under Article 226 of Constitution of India praying for issuance of Writ of Certiorari, calling for entire records relating to impugned order passed by respondent in Order No.ITBA/AST/S/143(3)/2019-20/102156681(1), dated 03.12.2019 and quash same. http://www.judis.nic.in 1/18 W.P.Nos.17 of 2020 etc. batch For Petitioner in W.P.No.17, 20, 22, 23, 26, 29, 1107, 1118, 1121, 1123, 1124, 1125, 1127, 1129, 1131, 1133, 1136, 1138, 1139, 1141, 1143, 1145, 1146, 1149, 1150, 1152, 1155, 1161, 1166, 1169, 1171, 1293 & 1299 : Mr.C.Prakasam, For Petitioner in W.P. No.1420 of 2020 : Mr.V.Elangovan For Respondent in all WPs : Mr.ANR.Jaya Prathap, Standing Counsel --------------- COMMON ORDER I. W.P.Nos.17, 20, 22, 23, 26, 29, 1150, 1155 and 1161 of 2020: This batch of nine (9) Writ Petitions have been filed by entities claiming to be Primary Agricultural Cooperative Credit Societies. Since issues that arise are common to petitioners and by consent expressed by all learned counsel, matters are taken up for adjudication and disposal finally. 2. Returns of income had been filed by petitioners claiming exemption in terms of Section 80 P of Income Tax Act, 1961 (in short 'I.T.Act'). respondent - Assessing Officer took returns up for examination and issued notices and questionnaires calling for details in regard to whether deduction was available under Chapter VIA as claimed, whether sales receipts/turnover had been correctly offered to tax and calling for explanations of assessee/petitioner in regard to investments/advances/loans. 3. petitioners responded to queries raised by Officer. One of issues that arose for consideration was eligibility to exemption claimed on interest income received by petitioner from deposits/investment of funds in banks. Such income, according to Officer, was ineligible for deduction http://www.judis.nic.in under Section 80P, since it did not form part of operational income 2/18 W.P.Nos.17 of 2020 etc. batch of petitioner/assessee and was liable to be taxed in terms of Section 56 of I.T. Act. Officer relied on judgment of Supreme Court in case of Totgars' Cooperative Sale Society Limited V. ITO, Karnataka (322 ITR 283). 4. petitioners were put to notice of proposal to bring to tax interest receipts under head 'other sources'. petitioners sought to distinguish judgment in case of Totgars (supra) on grounds that Totgars was Society engaged in sales, whereas, petitioner was Primary Agricultural Cooperative Credit Society. That apart, funds that were deposited giving rise to interest income did not constitute surplus, but mandatory statutory reserve. 5. Reliance was placed on judgment of Supreme Court in Commissioner of Income Tax, Jalandhar V. Nawanshahar Central Cooperative Bank Limited ((2007) 15 SCC 611) wherein Bench has observed that deposit effected was in nature of statutory reserve. According to petitioners, such statutory reserve would not fall within ambit of surplus funds and judgment in case of Totgars (supra) was inapplicable to their cases. 6. In addition, petitioner also stated that total amount invested, Rs.15,51,18,027/- in case of K.2058 Saravanampatti Primary Agricultural Cooperative Credit Society Limited, petitioner in W.P.No.17 of 2020, (whose facts are taken to be illustrative of facts in other Writ Petitions as well on basis of submissions of both learned counsel to effect that facts and legalities in all writ petitions are similar excepting for figures involved), comprised significantly of external borrowings. In this case, sum of Rs.12,57,23,490/- had been borrowed from Coimbatore District Central http://www.judis.nic.in 3/18 W.P.Nos.17 of 2020 etc. batch Cooperative Bank. It is not elaborated as to why this borrowal was effected. Perhaps, it was mandate of statutory reserve that compelled petitioner to effect borrowing to maintain such reserve. 7. It was also contention of petitioners before Assessing Officer that if at all interest earned was to be brought to tax, then, alternatively, interest paid on loan should be deducted from interest received or in other words, there should be netting of interest paid and received and only resultant figure be brought to tax. 8. Assessing Authority however rejected submissions cursorily stating in single line that statutory reserve can also be considered as surplus funds of assessee . judgement of Supreme Court in case of Nawanshahar (supra) has not been considered or discussed and neither has plea of petitioner for netting of interest paid and earned. 9. In Nawanshahar (supra), Supreme Court considered question of whether investments made by banking concern are part of business of banking. conclusion was that income arising from investments would be attributable to business of bank and fall under head 'profits and gains of business', deductible under Section 80P(2)(a)(i) of I.T. Act. earlier view in Bihar Coop. BankLtd. V. CIT ((1960) 39 ITR 114, CIT V. Karnataka State Coop. Apex Bank ((2001) 7 SCC 654) and CIT V. Ramanathapuram Distt. Coop.Central Bank Ltd. ((2009) 17 SCC 620) was followed. 10. At paragraph 4 of short judgment, Bench has stated that principle in those cases would cover situation where Co-operative Bank http://www.judis.nic.in 4/18 W.P.Nos.17 of 2020 etc. batch carrying on business of banking is statutorily required to place part of its funds in approved securities. 11. distinction I note, at first blush, is that this judgment has been rendered in case of Co-operative Bank, whereas, petitioners before me are Co-operative Societies. Supreme Court in Citizen Co-operative Society Limited V. Assistant Commissioner of Income-Tax, Circle -9(1), Hyderabad (397 ITR 1) has noted distinction between Co-operative Bank that would be governed by provisions of Banking Regulation Act, 1949, where its operations would include engagement of members of general public, and co-operative Society, whose operations would be confined to its members. 12. This is distinction between two kinds of co-operative societies as set out under Section 80P(2)(a)(i), that is, those carrying on business of banking and those providing credit facilities to its members. However, common mandate in both cases, though arising under different enactments, is for such entity to place part of its funds in/with specific facilities/entities. 13. One of petitioners before me (Kalikkanaickenpalayam Primary Agricultural Cooperative Credit Society Ltd.in W.P.No.29 of 2020) has specifically raised before Assessing Authority argument that Tamil Nadu Co- operative Societies Act, 1983 (in short 'TNCS Act') mandates Co-operative Societies to place portion of their funds as statutory reserve with District Co-operative Bank. argument appears to be that statutory reserve forms part of and is essential feature of operations and any interest generated therefrom would be operational income entitled to deduction under Section 80P of I.T.Act. http://www.judis.nic.in 5/18 W.P.Nos.17 of 2020 etc. batch 14. respondent officer has relied on more recent judgment of Supreme Court in Totgars' (supra), where Bench was concerned with surplus funds which assessee had invested in short term deposits with banks and Government facilities. question referred for decision was as follows: 'Whether, on facts and in circumstances of case, Tribunal was right in law in holding that income by way of interest on deposits held with scheduled banks, bonds and other securities was chargeable to tax under section 56 under head `Income from other sources' without allowing any deduction in respect of cost of funds and proportionate administrative and other expenses under section 57?' 15. Thus issue before Court in Totgars (supra) was on classification of interest generated by deposits held with scheduled banks, bonds and other securities without providing for deduction in respect of cost of funds and proportionate administrative and other expenses under Section 57. question of interest generated from deposits made by reason of statutory mandate was raised and finds reference in narration of petitioners' submissions, Court has, at para 8 of report (ITR) stated that 'At outset, important circumstance needs to be highlighted. In present case, interest held not eligible for deduction under Section 80P(2)(a)(i) of Act is not interest received from members for providing credit facilities to them. What is sought to be taxed under Section 56 of Act is interest income arising on surplus invested in short-term deposits and securities which surplus was not required for business purposes. Assessee(s) markets produce of its members whose sale proceeds at times were retained by it. In this case, we are concerned with tax treatment of such amount. Since fund created by such retention was not required immediately for business purposes, it was invested in specified securities. question, before us, is - whether interest on such deposits/securities, which strictly speaking accrues to members' account, could be taxed as business income under Section 28 of Act? In our view, such interest income would come in category of "Income from other sources",....' http://www.judis.nic.in 6/18 W.P.Nos.17 of 2020 etc. batch 16. revenue has filed counters in few writ petitions objecting to maintainability of writs sought and again relying on judgement of Supreme Court in case of Totgars (supra). Additionally, Mr.Jayapratap points out that issue in regard to classification and taxability of interest income has not been specifically raised in affidavit filed in support of Writ Petitions. Upon perusal, affidavits appear to be cut and paste exercise from Writ Petitions filed by other Co-operative Societies challenging orders of assessment rejecting claims for exemption on ground of mutuality. Though there is one general ground raised in regard to availability/entitlement to deduction under Section 80P itself, 'The respondent failed to consider that cooperative societies are entitled to seeking deduction u/s.80(P) of Income Tax Act, but same was not considered by respondent , all other grounds revolve only around aspect of mutuality and are entirely irrelevant to issue arising from present impugned order. No specific ground has been raised on classification of interest income and whether same would fall within ambit of income from business or other sources. 17. However, petitioners have responded to show cause notice issued by officer raising this issue and their response has been extracted in orders of assessment, as follows: W.P.No.17 of 2020: 'The Supreme Court judgment in Togars Cooperative Sale Society Ltd no applicable to our society as above society is sale society and ours is Primary Agricultural Co-operative Credit Society. former is dealing sale of goods and ours is dealing in credit facility extended to members. Also, as per section 80P2a, profits and gains attributable to business of society and word attributable is having elaborate meaning as derived in Commissioner of Income-tax vs. Nawanshahar Central Co-operative bank Ltd. Civil Appeal Nos.2499, 2500 of 2005 8th April 2005. http://www.judis.nic.in 7/18 W.P.Nos.17 of 2020 etc. batch So, funds deposited is not surplus fund as decided in Totgars Co- operative Sale Society Ltd., but statutory reserve maintained as decided in Commissioner of Income tax Vs. Nanshahar Central Cooperative Bank Ltd. amount in investments is Rs.15,51,18,027/- out of this Rs.12,57,23,490/0 was borrowed from Coimbatore District Central Co- operative Bank. if interest earned is taxed interest paid to such loans are deducted form interest on other sources. So, kindly drop proceeding by taxing interest income and accept returned income' W.P.No.29 of 2020: Received you show cause notice and noted contents. In this regard we wish to submit following for your consideration. Supreme Court judgement in Totgars Cooperative Sale Society Ltd., not applicable to our society as above society is sale society and ours is Primary Agricultural Cooperative Credit Society. former is dealing sale of goods and ours is dealing in credit facility extended to members. Major difference in both former is dealing sale of something and ours is dealing in money, when money involved in bank or credit society, definitely reserve must be maintained for easy liquidation purpose in case of emergency. Also, as per section 80P2A, profits and gains attributable to business of society and word attributable is having elaborate meaning as derived in COMMISSIONER OF INCOME TAX vs. NAWANSHAHAR CENTRAL COOPERATIVE BANK LTD Civil Appeal Nos.2499 2500 of 2005 8 th April, 2005, 2007 208 CTR SC 438:2007 289 ITR 6 SC:2007 160 TAXMAN 48 Also it is to be noted that every Cooperative Society is to be maintained statutory reserve of 25 percent of total deposits including savings bank account and current account balances with District Central Cooperative banks to provide proper liquidity to societies. So, funds deposited is not surplus fund as decided in Totgars Cooperative Sale Society Ltd., but statutory reserve maintained as decided in COMMISSIONER OF INCOME TAX vs. NAWANSHAHAR CENTRAL COOPERATIVE BANK LTD. following cases are also to be considered by Honorable Supreme Court of India in case of interest received on deposits etc., Supreme Court of India Commissioner Of Income-Tax vs Ramanathapuram Distt. Co-Op. ... on 30 October, 2001 Equivalent citations: 2002 255 ITR 423 SC Bench: S Bharucha, Y Sabharwal, B Kumar ORDER 1. High Court has answered against Revenue, following question : http://www.judis.nic.in 8/18 W.P.Nos.17 of 2020 etc. batch "Whether, on facts and in circumstances of case, Appellate Tribunal was correct in law in holding that interest on securities, subsidies received from Government and dividend business income of assesse entitled to deduction under Section 80P(2)(a)(i) of Income- tax Act, 1961 ?" 2. very question was considered by this court in CIT v. Karnataka State Co-operative Apex Bank [2001] 251 ITR 194 and conclusion was reiterated in Mehsana District Central Co-operative Bank Ltd. v. ITO . 3. It is now contended on behalf of Revenue that decision of this court in United Commercial Bank Ltd. v. CIT [1957] 32 ITR 688 was not considered. 4. We do not think that it is open to Revenue to urge, through different counsel, same thing again and again. We are satisfied that answer to question has been correctly given in decisions aforementioned and in order under appeal. 5. civil appeals are dismissed with costs. Also jurisdictional Madras High Court also looking into Totgars case and allowed interest received is allowed under section 80P in case of Madras High Court Commissioner Of Income Tax vs M/S. Veerakeralam Primary ... on 5 July, 2016 IN HIGH COURT OF JUDICATURE AT MADRAS Dated: 05.07.2016 CORAM : HONOURABLE MR. JUSTICE S.MANIKUMAR and HONOURABLE MR. JUSTICE D.KRISHNAKUMAR Tax Case Appeal Nos.735, 755 of 2014 and 460 of 2015 Commissioner of Income Tax, 63, Race Course Road Coimbatore. .. Appellant in all above appeals Vs M/s. Veerakeralam Primary Agricultural Co-operative Credit Society No.17, Peria Thottam Colony Veerakeralam Coimbatore 641 007. So, on basis of above kindly drop proceedings by taxing interest income and accept returned income. 18. Though all petitioners have not replied identically to notices issued by officer, above replies are illustrative of stands adopted by petitioners at time of assessment and crystallize arguments of petitioners to effect that (i) investments in question do not comprise surplus funds (ii) that investments constitute statutory reserve as mandated by TNCS Act (iii) interest generated therefrom was eligible for http://www.judis.nic.in 9/18 W.P.Nos.17 of 2020 etc. batch deduction in light of Nawanshahar (supra) (iv) at worst interest received should be netted with interest paid. These arguments ought to have been at least, considered, by Assessing Authority in deciding issue but have unfortunately been brushed aside despite being noted in order itself. 19. In my considered view, this amounts to fatal flaw as it renders impugned order entirely non-speaking and passed without application of mind. If affidavits of petitioners are looked upon as mechanical and filed in haste and without application of mind, equally so are impugned orders of assessment that simply rely on Totgars (supra) without discussing arguments put forth by petitioners. For this reason arguments of revenue based on lack of pleadings in affidavit is rejected. I am of considered view that in case such as present, petitioners should not suffer for lacunae in drafting particularly when stand of petitioners is very clear from materials on record. Thus, to balance convenience of both parties and in interests of justice, this issue is set aside for denovo and fresh examination and conclusion by respondent. 20. I make it clear that I have expressed no opinion on merits of matter and all that is stated above is only to crystallize arguments of both sides, as available on record. officers are at liberty to decide and conclude issue on merits in any manner as they may think fit, but only after proper discussion. order of assessment passed by quasi judicial officer that decides important question of law, raises significant demand and has far reaching consequences has to speak for itself and take into account, and meet, arguments raised by assessee. Mere reliance on judgement without reference to facts involved in both cases, those in case relied upon and http://www.judis.nic.in 10/18 W.P.Nos.17 of 2020 etc. batch those in case of assessee in question, would not justify conclusion arrived at. 21. For these reasons, assessments impugned in W.P.Nos.17, 20, 22, 23, 26, 29, 1150, 1155 and 1161 of 2020 are set aside and matter is remanded to file of Assessing Officer for de novo consideration. petitioners are directed to appear before their respective Assessing Officer on 14.02.2020 at 10.30 a.m. without expecting any further notice in this regard. petitioners will be heard specifically on question of classification of interest generated by investments made for purpose of statutory reserve and judgments of Supreme Court in Nawanshahar and Totgars' (supra) as well as other relevant case law shall be taken into account by Assessing Officer in framing assessments by way of speaking and detailed orders. This exercise shall be completed within period of six (6) weeks from date of conclusion of personal hearing. 22. W.P.Nos.17, 20, 22, 23, 26, 29, 1150, 1155 and 1161 of 2020 are allowed. No costs. Connected Miscellaneous Petitions are closed. II. W.P.Nos.1124, 1123, 1127, 1131, 1133, 1136, 1138, 1141, 1143, 1145, 1149, 1293, 1299 and 1420 of 2020: 23. issue that arises in W.P.Nos.1124, 1123, 1127, 1131, 1133, 1136, 1138, 1141, 1143, 1145, 1149, 1293, 1299 and 1420 of 2020 also involves entitlement of petitioners that claim to be Primary Agricultural Co-operative Credit Societies, to deduction under Section 80P. petitioners were called upon to produce various details in support of their claims and specific question raised for their response was as follows: '4. Is society having associate/nominal member. If yes, whether society is carrying on business with them? If so, please show cause why http://www.judis.nic.in 11/18 W.P.Nos.17 of 2020 etc. batch deduction u/s.80P cannot be denied in view of decision of Jurisdictional ITAT in case of M/s S1234 Udyapatti PACCS Ltd., Udyapatti P.O, Salem - 636 140 in ITA No.2332/Chny/2017. Wherein ITAT followed decision of Hon'ble Supreme Court in case of Citizen Co- operative Society Ltd Vs. Assistant Commissioner of Income-tax, Circle - 9(1), Hyderabad reported in [2017] 84 taxmann.com 114 (SC) and denied deduction u/s.80P.' 24. We are concerned in these Writ Petitions only to claim of petitioners for exemption by application of principle of mutuality and rejection of same. According to petitioner, credit facilities are offered by it to members in as well as B classes. petitioners argued before Assessing Authority that their income would be exempt on ground of application of mutuality, since inflows as well as outflows related to one common group of members with which Society is in complete identity. 25. However, officer draws distinction between two classes of members - B class members are non-shareholding members admitted only for purpose of availing loans against specified securities. Non-refundable admission fee is remitted by them and duration of their membership is restricted to maximum of three years. B class members are not allotted shares and their membership does not carry with it right to vote and participate in elections, become office bearers or participate in General Body Meetings. They also do not hold any right to profits or gains of Society, while shareholding members, i.e., class members enjoy all aforesaid rights denied to B class members. 26. Assessing Authority was thus of view that claim of petitioners is liable to be rejected in light of judgment of Supreme Court in case of Citizen (supra). Reliance was specifically placed on http://www.judis.nic.in 12/18 W.P.Nos.17 of 2020 etc. batch paragraph 24 of judgement, where distinction is made between Nominal Members and Ordinary Members. Paragraph 24 reads as follows: 'Undoubtedly, if one has to go by aforesaid definition of 'co-operative bank', appellant does not get covered thereby. It is also matter of common knowledge that in order to do business of co-operative bank, it is imperative to have licence from Reserve Bank of India, which appellant does not possess. Not only this, as noticed above, Reserve Bank of India has itself clarified that business of appellant does not amount to that of co-operative bank. appellant, therefore, would not come within mischief of sub-section (4) of Section 80P.' 27. Thus, though categorised as and B, there are vital distinctions that were drawn between members of two classes and hence principle of mutuality that was relied upon by petitioners was rejected as being inapplicable to its case. 28. Division Bench of this Court has, on identical facts as in present case, in case of Principal Commissioner of Income Tax, Salem V. M/s.S- 1303 Ammapet Primary Agricultural Cooperative Bank Ltd., Ammapet, Salem (T.C.(A)Nos.882 and 891 of 2018 dated 06.12.2018) held that assessee would be entitled to deduction under Section 80P. reasoning was that under TNCS Act, member and associate member are one and same and associate member has also been held to be holding character of member. Division Bench has taken view that as far as State of Tamil Nadu is concerned, TNCS Act equates both members and associate members and places them on par. Thus, distinction carved out by Supreme Court would not be applicable in these cases. 29. In several of orders of assessment impugned before me (W.P.Nos.1131, 1136, 1141, 1145 AND 1420 of 2020) Assessing Officer, making reference to order of Division Bench of Madras High Court, http://www.judis.nic.in 13/18 W.P.Nos.17 of 2020 etc. batch has stated that orders have not been accepted and have been challenged by way of Special Leave Petitions. 30. No counter has been filed in these writ petitions. Mr.Jayapratap however, fairly produces copy of order in SLP filed challenging order of Division Bench in Ammapet (supra) (Special Leave to Appeal (c) No.17745 of 2019 dated 17.01.2020), wherein Department has withdrawn Special Leave Petition on account of low tax effect. question of law has been kept open. In such circumstances, order of Division Bench of this Court would hold field till such time it is modified or reversed. relevant portion of order is as follows: '12. Admittedly, assessee society is registered under provisions of TNCS Act. It defines word 'members' under Section 2(16) to mean person joining in application for registration of society and person admitted to membership after registration in accordance with provisions of Act, Rules framed thereunder and By-laws and includes associate member. expression 'associate member' is defined under Section 2(6) of TNCS Act to mean member, who possesses only such privileges and rights of member and who is subject only to such liabilities of member as may be specified in this Act, Rules and By- law. 13. Thus, definition of word 'members' includes associate member and therefore, Assessing Officer fell into error in drawing distinction between Class members and B Class members. For purpose of being entitled to relief under Section 80P of Act, all that is required is that cooperative society should answer description of society engaged in carrying on business of providing credit facilities to its member. Once description is answered, then automatically, benefit of Section 80P of Act would stand attracted subject to provisions contained in Sub-Section (2) of Section 80P of Act. 14. Further, it is to be pointed out that in terms of Sub-Section (4) of Section 80P of Act, which was inserted vide Finance Act, 2006 with effect from 01.4.2007 i.e from assessment year 2007-08, 'primary cooperative agricultural and rural development bank' means 'a society having its area of operation confined to taluk, principal object of which is to provide for long term credit for agricultural and rural development activities'. What was excluded was 'cooperative banks' and admittedly, assessee society is primary agricultural cooperative credit society and therefore, would be entitled to benefit of Section 80P of Act. 15. Further, for assessment year 2014-15, decision in case of Citizen Cooperative Society Limited was relied upon by Revenue before Tribunal, which, in paragraph 6.1 of its order dated 28.2.2018 for assessment year 2014-15, extracted operative portion of that judgment. http://www.judis.nic.in 14/18 W.P.Nos.17 of 2020 etc. batch In that case, Hon'ble Supreme Court found that society carried on certain activities, which were contrary to provisions of Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995 and that they accepted deposits from third parties, who were not members in real sense and were using those deposits to advance gold loans. Therefore, Hon'ble Supreme Court pointed out that such activity of said society was that of finance business and could not be termed as cooperative society and that loans, which were disbursed, were without approval from Registrar of Mutually Aided Cooperative Societies, Ranga Reddy District. Hon'ble Supreme Court found that said society was not entitled to deduction under Section 80P of Act. 16. It is noteworthy to point out that Hon'ble Supreme Court in decision in case of Citizen Cooperative Society Limited also observed that in light of insertion of Sub-Section (4) to Section 80P of Act by Finance Act, 2006, such deduction should not be admissible to cooperative bank and that if it is primary agricultural credit society or primary cooperative agriculture and rural development bank, deduction would still be provided. 17. In preceding paragraphs, we have pointed out definitions of expressions 'members' and 'associate member' under TNCS Act and held that 'associate member' is also 'member' in terms of Section 2(16) of TNCS Act. Furthermore, Assessing Officer himself found that associate members are also admitted as members of society. In such circumstances, Assessing Officer fell into error in not granting any relief to assessee society, which was rightly granted by CIT (A) as confirmed by Tribunal. In addition to that, Assessing Officer has not pointed out that loans have been disbursed to all and sundry in terms of provisions of TNCS Act and in terms of Clause (b) to Sub-Section (4) of Section 80P of Act, society has area of operation, operates within taluk and will provide long term credit for agricultural and rural development activities as well. CIT (A) rightly granted relief to assessee as confirmed by Tribunal. We do not find any good ground to entertain these appeals. 18. Accordingly, above tax case appeals are dismissed. substantial questions of law framed are answered against Revenue. ' 31. Learned counsel for Revenue states that there are cases of other identically placed Agricultural Cooperative Marketing Societies that Revenue has carried/intends to carry to Supreme Court where stakes involved are significantly higher, such as, Tiruchengode Agricultural Producers Cooperative Marketing Society Ltd. and Veerakeralam Primary Agricultural Cooperative Credit Society, Coimbatore. In such case, questions of law would be decided in those cases. http://www.judis.nic.in 15/18 W.P.Nos.17 of 2020 etc. batch 32. In light of fact that questions of law in this regard are still at large, petitioners are directed to file statutory appeal before Commissioner of Income Tax (Appeals) within period of three(3) weeks from today. However, let no recovery of demand relating to this issue be enforced till disposal of appeals. 33. W.P.Nos.1124, 1123, 1127, 1131, 1133, 1136, 1138, 1141, 1143, 1145, 1149, 1293, 1299 and 1420 of 2020 are disposed in aforesaid terms. No costs. Connected Miscellaneous Petitions are closed. III. W.P.Nos.1107, 1118, 1121, 1125, 1129, 1139, 1146, 1152, 1166, 1169 and 1171 of 2020: 34. This batch of eleven (11) Writ petitions involves two questions, viz., i) exemption claimed on ground of principle of mutuality, wherein Assessing Authority has relied upon judgment of Supreme Court in case of Citizen (as supra) and ii) classification of interest generated by deposits made as statutory reserve, as being either 'income from business' or 'income from other sources', wherein Assessing Officer has relied upon judgment of Supreme Court in case of Totgars' (supra). 35. I have decided both these issues separately in paragraphs as aforesaid. In light of my decision in preceding paragraphs, impugned assessments in so far as they relate to Issue I, principle of mutuality, are disposed directing petitioners to file statutory appeals before Commissioner of Income Tax (Appeals) within period of three weeks from today. There shall be interim stay of recovery of demand relating to this issue till disposal of appeal by first Appellate Authority. http://www.judis.nic.in 16/18 W.P.Nos.17 of 2020 etc. batch 36. In so far as impugned orders in this batch relate to Issue II, i.e, on classification of interest generated from deposits made and held as statutory reserve for grant of deduction under Section 80P of I.T. Act, they are set aside. petitioners are directed to appear before their respective Assessing Officers on 14.02.2020 at 10.30 a.m. without expecting any further notice and my directions in this regard as set out in paragraph No.21 will apply equally in these cases. 37. W.P.Nos.1107, 1118, 1121, 1125, 1129, 1139, 1146, 1152, 1166, 1169 and 1171 of 2020 are disposed in aforesaid terms. No costs. Connected Miscellaneous Petitions are closed. 31.01.2020 Index : Yes/No Speaking Order/Non speaking Order sl http://www.judis.nic.in 17/18 W.P.Nos.17 of 2020 etc. batch DR. ANITA SUMANTH, J. W.P.Nos.17, 20, 22, 23, 26, 29, 1107, 1118, 1121, 1123, 1124, 1125, 1127, 1129, 1131, 1133, 1136, 1138, 1139, 1141, 1143, 1145, 1146, 1149, 1150, 1152, 1155, 1161, 1166, 1169, 1171, 1293, 1299 & 1420 of 2020 and WMP.Nos.14, 17, 23, 25, 27, 28, 29, 31, 32, 34, 35, 36, 1340, 1342, 1345, 1346, 1350, 1351, 1357, 1358, 1359, 1360, 1361, 1362, 1365, 1366, 1368, 1369, 1370, 1371, 1373, 1374, 1381, 1383, 1384, 1386, 1387, 1388, 1389, 1390, 1394, 1395, 1397, 1399, 1400, 1401, 1402, 1403, 1405, 1406, 1407, 1408, 1412, 1413, 1419, 1420, 1421, 1426, 1429, 1431, 1432, 1433, 1551, 1555, 1560, 1562 & 1682 of 2020 31.01.2020 http://www.judis.nic.in 18/18 K. 2058, Saravanampatti Primary Agricultural Co-operative Credit Society Ltd. v. Income-tax officer, Non Corp Ward-2(5), Coimbatore