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2021 (3) TMI 933 - AT - Income TaxDeduction u/s 80P(2)(a)(i) - credit facilities to associate or nominal members - HELD THAT:- Hon’ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] had held that the expression “members” is not defined under the Income-tax Act. Hence, it is necessary to construe the expression “members” in section 80P(2)(a)(i) of the I.T.Act as it is contained in the respective State Co-operative Act. Hon’ble Apex Court had held that providing credit facilities to associate or nominal members would be entitled to deduction u/s 80P(2)(a)(i) unless they are not considered as members of co-operative under the respective State Act. Hon’ble Apex Court has also considered the judgment in case of Citizen Co-operative Society Ltd. [2017 (8) TMI 536 - SUPREME COURT]. A.O. has merely denied the benefit of deduction u/s 80P(2)(a)(i) of the I.T.Act for the reason that the assessee was also dealing with associate / nominal members, which is against the dictum laid down by the Hon’ble Apex Court in case of Mavilayi Service Co-operative Bank Ltd. & Ors. (supra). The Hon’ble Apex Court has settled many issues. In the instant case needs to be examined by the A.O. in light of the principles enunciated by the Hon’ble Apex Court in case of Mavilayi Service Co-operative Bank Ltd. & Ors. (supra). Accordingly, the CIT(A) order on this issue is set aside and the same is restored to the files of the A.O. for examination of the case in the light of the principles laid down by the Hon’ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT (supra). Claim of deduction u/s 80P(2)(a)(i) of the I.T.Act with regard to interest income earned from fixed deposit kept with Co-operative Banks - In view of the above co-ordinate Bench order in the case of M/s.Raithara Seva Sahakara Sangh [2019 (1) TMI 282 - ITAT BANGALORE] restore the issue of claim of interest income received from other cooperative banks to the files of the A.O. for de novo consideration. The A.O. shall follow the directions of the Tribunal contained (supra). It is ordered accordingly.
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