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TMI Blog2021 (4) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s 80P(2)(a)(i) to the extent of Rs. 61,09,525.00 as claimed by the appellant. The appellant prays for grant of the deduction as claimed. 2. The Ld. Commissioner of Income Tax (Appeals) erred in law as well as on facts in applying the Judgment of Hon. Supreme Court of India in the case of Citizen Co -Operative Society, Hyderabad. As the facts of Citizen society & the assessee society is totally different. Difference in facts of the case are as under : i. Citizen Society is basically registered under Andra Pradesh Mutually Aided Co - Operative Societies Act, 1995 & subsequently registered under Multi State Co - Operative Societies Act, 2002. But the provisions of APMACS Act is applied, while passing an order. Where as our society is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted from non members are used to advance the gold loan to members. Where as our society has accepted the deposits from members and used to advance the loans to members and portion of deposit is kept in banks & societies. v. Para 15 (ix) of Supreme Court judgment, the assessee society is engaged in the activity of granting loans to general public. Where as in our society, we have sanctioned the loans to members only. As per the KCS Act, to obtain the loan, a person shall be a member of the society. Therefore our society has complied the KCS Act. This judgment is not applicable as loans are not sanctioned to other than members. vi. Para 15(xi) of the judgment, the society both in form and substance, the activity is in violation of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its members. Where as our society has accepted the deposits from members & loans given to members only. Therefore in totality this judgment of Hon. Supreme Court of India is not applicable to our society as the facts & objectives of the society are completely different. On plain reading of the Citizen society judgment, the society is running to earn the profit & not to pay the income tax by taking the shelter under the Income Tax Act through Section 80P(2)(a)(i). Where as our society's main objective is to promote the savings among the members & uplift the financial condition of members by granting the loans on their need basis. 3. The Ld. Commissioner of Income Tax (Appeals) erred in law and on facts in not following the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sociate members and claimed to have admitted as per the provisions of the Karnataka Co-operative Societies Act, 1959. 4. After hearing both the parties we are of the view that the Supreme Court has reversed the decision of special Bench of Kerala High Court in the case of Mavilayi Service Co-operative Bank Ltd., Vs. CIT 414 ITR 67 wherein it was held as follows: "45. To sum up, therefore, the ratio decidendi of Citizen Cooperative Society Ltd. (supra), must be given effect to. Section 80P of the IT Act, being a benevolent provision enacted by Parliament to encourage and promote the credit of the co-operative sector in general must be read liberally and reasonably, and if there is ambiguity, in favour of the assessee. A deduction that is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d then held: "8. The expression "members" is not defined in the Act. Since a cooperative society has to be established under the provisions of the law made by the State Legislature in that regard, the expression "members" in Section 80-P(2)(a)(i) must, therefore, be construed in the context of the provisions of the law enacted by the State Legislature under which the cooperative society claiming exemption has been formed. It is, therefore, necessary to construe the expression "members" in Section 80-P(2)(a)(i) of the Act in the light of the definition of that expression as contained in Section 2(n) of the Cooperative Societies Act. The said provision reads as under: "2. (n) 'Member' means a person who joined in the application f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified by the Registrar." Thus, the giving of loans by a primary agricultural credit society to nonmembers is not illegal, unlike the facts in Citizen Cooperative Society Ltd. (supra). 48. Resultantly, the impugned Full Bench judgment is set aside. The appeals and all pending applications are disposed of accordingly. These appeals are directed to be placed before appropriate benches of the Kerala High Court for disposal on merits in the light of this judgment." 5. In view of the above, 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. 6. In the result, appeal of the assessee is allowed for statistical purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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