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2019 (5) TMI 1654 - AT - Income TaxDeduction u/s 80P (2) (a) - whether allowable only in respect of income earned from regular members and not on income earned from others - HELD THAT:- As per the facts of the present case, the interest income from nominal members is ₹ 36,90,730/- out of the total interest earned ₹ 133,14,319/- and hence although it is substantial, it cannot be said that most of the business of the assessee was with nominal members. There was one more objection in that case that the depositors and borrowers are quite distinct and because of this, this was the observation in that case that such activity of the assessee is that of finance business and cannot be termed as co operative society. There was one more objection in that case that the assessee is engaged in the activity of granting loans to general public as well. These various objections were considered cumulatively and it was held that the assessee is not eligible for deduction u/s 80P at all and his was not a ratio of this judgment that deduction is to be allowed in respect of earning from regular member but to be disallowed in respect of income from nominal members. In fact, in the present case, apart from this objection that about 28% of interest income is from nominal members, there is no observation about any other aspect of various objection raised in the case of Citizen Co – Operative Society Limited vs. ACIT [2017 (8) TMI 536 - SUPREME COURT] and it is held by CIT (A) that deduction should be disallowed in respect of interest earned from nominal members by stating that this is the ratio of this judgment of Hon’ble Supreme Court rendered in the case of Citizen Co – Operative Society Limited vs. ACIT (Supra) but in my considered opinion as evident from relevant paras of this judgment reproduced above, this is not the ratio of this judgment. Thus the mater should go back to the file of CIT (A) for a fresh decision - restore this matter back to his file for a fresh decision with the direction that sufficient opportunity should be provided by him to both sides and the assessee should provide complete detail with cogent evidence in respect of business carried out by the assessee with nominal members and general public, if any. The assessee should also demonstrate about the difference in facts of the present case and facts in the case of Citizen Co – Operative Society Limited vs. ACIT (Supra) - Decided in favour of assessee for statistical purposes.
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