TMI Blog2021 (3) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to tax u/s 56 of the I.T.Act. 3. The brief facts of the case are as follow: The assessee is a Co-operative Society, registered under the Karnataka Co-operative Societies Act. It is providing credit facilities to its members. For the assessment year 2016-2017, the return of income was filed declaring `Nil income after claiming deduction u/s 80P of the I.T.Act amounting to ₹ 26,86,206. The return was selected for scrutiny and assessment was completed u/s 143(3) of the I.T.Act vide order dated 17.12.2018. The Assessing Officer treated the interest received from other Co-operative Banks as income from other sources assessable u/s 56 of the I.T.Act by placing reliance on the judgment of the Hon ble jurisdictional High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible for deduction u/s 80P(2)(a)(i) of the I.T.Act. 6. The learned Standing Counsel relied on the assessment order and the CIT(A) s order. 7. I have heard rival submission and perused the material on record. The Hon ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. Ors. v. CIT (supra) 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. The 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) of the I.T.Act unless they are not considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f The Totagar s Co-operative Sales Society (supra) and held that interest income in respect of temporary parking of own surplus funds not immediately required is eligible for deduction u/s 80P(2)(a)(i) of the Act. The learned DR relied on a subsequent decision of the Hon ble Karnataka High Court in the case of Pr.CIT v. Totagars Co-operative Sale Society Ltd. (supra). I notice that on identical facts the co-ordinate bench of the Tribunal in the case of M/s.Raithara Seva Sahakara Sangh v. ITO in ITA No.1992 2596/Bang/2018 (order dated 02.01.2019) had restored the matter to the A.O. for de novo consideration. The relevant finding of the co-ordinate Bench order of the Tribunal in the case of M/s.Raithara Seva Sahakara Sangh v. ITO (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in AY 1991-92 to 1999-2000. The reason given by the Assessee was that in AY 2007-08 to 2011-12 investments and deposits after the Supreme Court's decision against the assessee Totgar's Cooperative Sale Society Ltd. (supra), were shifted from Schedule Banks to Co-operative Bank. U/s.80P(2)(d) of the Act, income by way of interest or dividends derived by a Co-operative Society from its investments with any other Co-operative Society is entitled to deduction of the whole of such interest or dividend income. The claim of the Assessee was that Co-operative Bank is essentially a Co-operative Society and therefore deduction has to be allowed under Clause (d) of Sec.80P(2) of the Act. The Hon'ble Karnataka High Court followed the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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