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TMI Blog2021 (7) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... g the concluded assessment of the Appellant and annulling the same holding it to be erroneous and prejudicial to the interest of the Revenue and directing the Assessing Officer for making fresh assessment of income of the Appellant. 2. Whether the Pr.CIT was correct in holding that the interest on investments of Rs. 4,69,497/- earned by the Appellant does not qualify for deduction u/s 80P(2)(a)(i) of the Ac and it is taxable under the head `Income from other sources' u/s 56 of the Act in the light of the decision in - Totgars Sale Co-operative Society Ltd. v. ITO. 3. It is submitted that, the Pr.CIT grossly erred in law in passing the impugned order u/s 263 of the Act as the said order is opposed to the dictum of the Hon'ble High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om Loans) but wrongly taken while finalising the financial accounts under the head 'Interest on investments' and this income is also exempt u/s. 80P of the Act, it is submitted. 5. The appellant craves leave to add, to amend, modify and / or to alter any of the foregoing grounds and also urge such other grounds at the time of hearing." 3. Brief facts of the case are as follow:- The assessee is a primary agricultural credit society. For the assessment year 2015-2016, the return of income was filed on 30.10.2015 declaring `NIL' income after claiming deduction u/s 80P(2)(a)(i) of the I.T.Act. The assessment u/s 143(3) of the I.T.Act was completed vide order dated 18.11.2017 accepting the income returned by the assessee-society. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction in the instant case. 7. We have heard rival submissions and perused the material on record. The Hon'ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT (supra) had held that when the assessee is registered as a Co-operative Society under the respective State Acts, the interest income received for providing credit facilities to its members is entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act. The relevant finding of the Hon'ble Apex Court reads as follow:- "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 cooperati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' 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, 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 Coop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 in the light of this judgment." 8. In view of the recent judgment of the Hon'ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT (supra), we remit the issues ..... X X X X Extracts X X X X X X X X Extracts X X X X
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