TMI Blog2021 (4) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal to the file of A.O. The A.O. is directed to examine the deduction u/s 80P(2)(a)(i) of the I.T.Act in the light of the dictum laid down in the case of Mavilayi Service Cooperative Bank Ltd. v. CIT (supra) - Appeal filed by the assessee allowed for statistical purposes. - ITA No.569/Bang/2020 - - - Dated:- 15-4-2021 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER For the Assessee : None For the Revenue : Shri. Pradeep Kumar, CIT(DR)(ITAT), Bengaluru ORDER Per Shri. Chandra Poojari, AM: This appeal by the assessee directed against the order of CIT(A) dated 06.03.2020 for the Assessment Year 2015-16. The assessee has raised the following grounds: 2. Brief facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the business of banking or lending credit to the members of the society. Thus, the interest earned is also not eligible for deduction U/s. 80P(2)(a)(i) of the IT Act, 1961. Further, as per the ratio of Karnataka High Court decision dated 16.06.2017 in the case of M/s. Totagars Co-operative Sale Society, Sirsi, interest earned from any bank not being a Cooperative Society, is not deductible U/s. 80P(2)(d) of the Act. 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 Soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Citizen Cooperative Society Ltd. (supra) considered, `nominal members' are 'members' as defined under the Kerala Act. This Court in U.P. Cooperative Cane Unions' Federation Ltd., Lucknow v. Commissioner of Income Tax, Lucknow-I (1997) 11 SCC 287 referred to section 80P of the IT Act and 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society may make loans to another society. (2) Notwithstanding anything contained in sub-section (1), a society may make a loan to a depositor on the security of his deposit. (3) Granting of loans to members or to non-members under subsection (2) and recovery thereof shall be in the manner as may be specified 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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