TMI Blog2021 (4) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... Mavilayi Service Co-operative Bank Ltd., Vs. CIT [ 2019 (3) TMI 1580 - KERALA HIGH COURT] We are inclined to remit this issue to the file of AO to examine the deduction under section 80P(2)(a)(i) of the Act in the light of the decision of the Hon ble Supreme Court- Appeal of the assessee is allowed for statistical purposes. - No.3331/Bang/2018 - - - Dated:- 15-4-2021 - Shri Chandra Poojari, Accountant Member And Smt. Beena Pillai, Judicial Member For the Assessee : Shri. Ishwar S. Yanni, CA For the Revenue : Shri. Priyadarshi Mishra, Addl. CIT ORDER PER SHRI. CHANDRA POOJARI, AM: This appeal by the assessee directed against the order of CIT(A) for the Assessment Year 2016-17. The assessee has raised the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des a nominal and associate member. Therefore any member other than regular member is a non member. But here in KCS Act, it includes nominal and associate members. iii. Para 15(iii) (iv) of Supreme Court judgment, second category of persons is neither members nor nominal/associate members. That means deposits are accepted from non - members. Where as in our case deposits are accepted from members of the society. Therefore this case is not applicable. iv. Para 15 (v) (vi) of Supreme Court judgment, the assessee accepts deposits mostly from the second category these deposits are mostly kept in FDs. Investment with banks to earn maximum returns, a portion of these deposits are utilized to advance gold loans etc. to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. viii. Para 18 of the judgment, that Section 80P of the Act is a benevolent provision which is enacted by the Parliament in order to encourage and promote growth of co - operative sector in the economic life of the country. It was done pursuant to declared policy of the Government. Therefore, such a provision has to be read liberally, reasonably and in favour of the assessee (Bajaj Tempo Limited, Bombay Vs. CIT, Bombay City -III, Bombay) Supreme Court judgment. It is also treat that such a provision has to be construed as to effectuate the object of the Legislature and not to defeat it (CIT, Bombay Ors Vs Mahindra and Mahindra Limited Ors) Supreme Court judgment. Therefore the same may be applied in our case by considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is attributable to the main activity of the assessee society. 4. Each of the above grounds is without prejudice to one another and the appellant :raves leave to add, delete, amend or otherwise modify or withdraw one or more of the above grounds either before or at the time of hearing of this appeal. 2. Learned AR of the assessee submitted that assessee is a co-operative society registered under the Karnataka Co-operative Societies Act, 1959. The main object of the Society was to accept deposits from members and to provide credit facilities to its shareholder / members. Therefore, it was claimed that the Society is entitled to deduction under section 80P(2)(a)(i) of the Act as it is Cooperative Society, carrying on the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half from the RBI. Judged by this touchstone, it is clear that the impugned Full Bench judgment is wholly incorrect in its reading of Citizen Cooperative Society Ltd. (supra). Clearly, therefore, once section 80P(4) is out of harm's way, all the assessees in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i), notwithstanding that they may also be giving loans to their members which are not related to agriculture. Also, in case it is found that there are instances of loans being given to nonmembers, profits attributable to such loans obviously cannot be deducted. 46. It must also be mentioned here that unlike the Andhra Act that Citizen Cooperative Society Ltd. (supra) consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right or power or have no such liability or duty; Considering the definition of 'member' under the Kerala Act, loans given to such nominal members would qualify for the purpose of deduction under section 80P(2)(a)(i). 47. Further, unlike the facts in Citizen Cooperative Society Ltd. (supra), the Kerala Act expressly permits loans to non-members under section 59(2) and (3), which reads as follows: 59. Restrictions on loans.- (1) A society shall not make a loan to any person or a society other than a member: Provided that the above restriction shall not be applicable to the Kerala State Co-operative Bank. Provided further that, with the general or special sanction of the Registrar, a society may make l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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