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2023 (4) TMI 743 - ITAT COCHINDeduction u/s 80P - true interpretation of sec 80-P in the context of cooperative societies engaged in the business of banking or provision of credit facilities to their Members - As per revenue the assessee, though registered under the Kerala Act as PACS has lost all characteristics thereof 93-99% of its lending is for non-agricultural purposes, it is engaged in accepting the deposits as well as providing all types of loans, to members of the public, by being compulsorily required to become nominal members either under category ‘C’ or ‘D’ and invests in shares of District Co-operative Bank and also different co-op. societies, i.e., with a view to earn profit, diluting mutuality. HELD THAT:- Cooperative societies engaged in lending to their members, or predominantly so, for whatever purpose, could stand to be excluded on the principle of mutuality. Income by way of interest or dividend on investment in another cooperative society stands exempted u/s. 80P(2)(d), being only an extension of the principle of mutuality. It is this, we would like to think, that prompted the Apex Court in Citizen CS Ltd. [2017 (8) TMI 536 - SUPREME COURT] to state the assessee-appellant as being not a cooperative society meant for its members and providing credit facilities thereto. Even as we consider it proper to bring on record our understanding of the decision in The Citizen CS Ltd. (supra), i.e. , qua both the aspects of the Revenue’s case, the same having been explained in Mavilayi Service Co-op. Bank Ltd [2019 (3) TMI 1580 - KERALA HIGH COURT] have no hesitation in, respectfully following the same, holding that the appellant-societies in the instant case/sas eligible for deduction u/s. 80P as claimed. In this, we also take into account the absence of any finding of the lending being in violation of s. 59 of the Kerala Act, as well as the decision in CIT v. Peroorkada Service Co-op. Bank Ltd. [2021 (12) TMI 1084 - KERALA HIGH COURT] holding investment in cooperative banks as not impeding the deduction on interest thereon. Decided in favour of assessee.
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