TMI Blog2021 (10) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... roviso. It was stated by the Hon ble Apex Court that section 80P(4) of the I.T.Act now specifically excludes only co-operative banks which are co-operative societies engaged in the business of banking i.e. engaged in lending money to members of the public, which have a licence in this behalf from the RBI. The Hon ble Apex Court had enunciated various principles in regard to deduction u/s 80P - We restore the issue of claim of deduction u/s 80P of the I.T.Act to the files of the A.O. for de novo consideration. Denial of alternative claim of deduction u/s 80P(2)(d) of the I.T.Act stating that since section 80P(4) of the I.T.Act is invoked, the assessee is not entitled to any deduction u/s 80P - We direct the A.O. to verify whether intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in filing this appeal and proceeded to dispose of the case on merits. 3. The grounds raised read as follows:- 1. The order of the Hon ble Commissioner of Income Tax (Appeals) is opposed to law and facts of the case. 2. The Hon ble Commissioner of Income Tax (Appeals) ought to have appreciated that the appellant is a Cooperative Society registered under the Karnataka Souharda Sahakari Act, 1997 and the appellant is eligible for deduction u/s 80P(2)(a)(i) of the Act. 3. The Hon ble Commissioner of Income Tax (Appeals) ought to have granted the deduction u/s 80P(2)(a)(i) as claimed by the Appellant. 4. The Hon ble Commissioner of Income Tax (Appeals) ought to have held t hat the interest earned / accrued on the deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he I.T.Act. 5. Aggrieved, the assessee preferred an appeal to the first appellate authority. The CIT(A) partly allowed the appeal of the assessee. As regards the claim of deduction u/s 80P(2)(a)(i) of the I.T.Act is concerned, the CIT(A) directed the A.O. to verify and allow the deduction u/s 80P(2)(a)(i) of the I.T.Act in respect of income earned by providing credit facilities to its regular members (regular members means members having equal voting and dividend rights). In giving the above direction, the CIT(A) followed the judgment of the Hon ble Apex Court in the case of The Citizen Co-operative Society Ltd. v. ACIT reported in 397 ITR 1 (SC). As regards the interest income earned from saving banks, fixed deposits and investments, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated the term member has not been defined under the Income-tax Act. It was, therefore, stated by the Hon ble Apex Court that the term member in the respective State Co-operative Societies Acts under which the societies are registered have to be taken into consideration. The Hon ble Apex Court held that if nominal / associate member is not prohibited under the said Act, for being taken as a member, the income earned on account of providing credit facilities to such member also qualify for deduction u/s 80P(2)(a)(i) of the I.T.Act. It was further held by the Hon ble Apex Court that section 80P(4) of the I.T.Act is to be read as a proviso. It was stated by the Hon ble Apex Court that section 80P(4) of the I.T.Act now specifically excludes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avilayi Service Cooperative Bank Ltd. (surpa). Accordingly, we remit this issue of deduction u/s 80P(2)(a)(i) of the Act to the files of Ld.AO to examine the same de novo in the light of the above judgment. Needless to say that proper opportunity of being heard is to be granted to assess in accordance with law. 8.1 In view of the order of the ITAT, which is identical to the facts of the case, I restore the issue of claim of deduction u/s 80P of the I.T.Act to the files of the A.O. for de novo consideration. 8.2 As regards the claim of deduction u/s 80P(2)(d) of the I.T.Act, I direct the A.O. to verify whether interest / dividend is received by the assessee out of investments made with Cooperative Societies. If the assessee earns int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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