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2021 (3) TMI 1210 - AT - Income TaxEligibility of Deduction u/s 80P - CIT(A) held that the interest income earned by the appellant from investment of surplus funds with co-operative banks is not eligible for deduction u/s 80P(2)(d) or 80P(2)(a)(i) - assessee is a co-operative credit society and doing banking business ; it collects deposits from members from various schemes ; its major source of income as evident from the profit and loss account is on account of interest on loan given to members and interest on deposits with banks - HELD THAT:- In CIT v. Kalpadi Co-operative Township Ltd. [2016 (9) TMI 952 - MADRAS HIGH COURT] the Hon’ble Madras High Court held that “a Cooperative Credit Society providing credit facilities to its members alone and not to general public large nor it did receive moneys by way of deposits on general public, would not be treated as Co-operative Bank ; it would be entitled to deduction u/s 80P.” As per Mavilayi Service Co-operative Bank Ltd. v. CIT [2021 (1) TMI 488 - SUPREME COURT] limited object of section 80P(4) is to exclude Co-operative Banks that function at par with other commercial banks i.e. which lend money to members of the public . To sum up: In Totagars Co-operative Sale Society [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] the Hon’ble Karnataka High Court has held that for purpose of section 80P(2)(d) a Co-operative Bank should be considered as a Co-operative Society. In Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] the Hon’ble Supreme Court has held that “Section 80P of the IT Act, being benevolent provision enacted by Parliament to encourage and promote the credit of the co-operative sector in general must be liberally and reasonably, and if there is any ambiguity, in favour of the assessee.
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