TMI Blog2021 (10) TMI 1263X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] considering the expression member as defined in Section 2(l) of the Kerala Co-operative Societies Act, 1969 and the said Act expressly permitting loans to non-members under Section 59(2) and (3), held that loans given to nominal members would qualify for the purpose of deduction under Section 80P(2)(a)(i) of the Act. In the wake of this judgment, the matter requires re-consideration by the Assessing Officer with reference to Section 2(f) and 60 of the Karnataka Co-operative Societies Act, 1959 read with Section 80P(2)(a)(i) of the Act. The order of the Tribunal impugned being adjudicated and this Court having formed an opinion that the matter requires re-c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and in law, was it correct in holding that the ratio decidendi in The Citizen Co-operative Society Ltd. Hyderabad vs. ACIT (Civil Appeal No.10245 of 2017 ) is squarely applicable to the appellant? 3. I.A.No.1/2020 filed by the assessee to amend the memorandum of appeal was allowed on 28.09.2020, permitting the assessee to incorporate the necessary amendment as sought for in the memorandum of appeal and accordingly, amended appeal memo has been filed by the assessee. 4. In view of the amendment now made, additional substantial questions of law are admitted for consideration and the same reads thus: 3. Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in remanding the matter to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd., and others vs. Commissioner of Income Tax, Calicut and another reported in 2021 SCC Online SC 16, submitted that considering the definition of Member under the Karnataka Co-operative Societies Act, 1959 r/w Section 80P(2)(a)(i) of the Act, the assessee is qualified for the purpose of deduction under Section 80P(2)(a)(i) of the Act. Learned counsel argued that the assessee as observed by the Assessing Officer has four Class of members namely, A, B, C, D as per the Byelaws of the Society. In terms of the said definition clause of Member , A Class membership is for permanent members of Co-operative Societies operating in the jurisdictional area of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintainable. Learned counsel further submitted that even on merits, the finding of the assessing officer deserves to be upheld. 9. We have carefully considered the arguments advanced by the learned counsel appearing for the parties and perused the material on record. 10. Sections 80P(1) and (2)(a)(i) of the Act reads thus:- Deduction in respect of income of co-operative societies. 80P. (1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in subsection (2), in computing the total income of the assessee. (2) The sums refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin a reasonable time. It was further observed that the major portion of the business of the assessee was with the second category of persons who were noted to be nominal members and the assessee was getting deposits from such nominal members and the same were kept in Fixed Deposit with a motive to earn maximum returns and a portion of these deposits was utilized to advance gold loans etc., to the members of the first category i.e., ordinary members. Having regard to these aspects, the Tribunal held that even if the assessee is not found to be a Co-operative Bank, the factual aspects requires to be analysed and thereafter final decision has to be made. 13. On such remand made, the Assessing Officer has re-done the assessment and held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter to the file of the Assessing Officer to re-consider the matter in the light of the observations made hereinabove. 16. Hence, the following ORDER i) The appeal is allowed in part. ii) The or der dated 31.12.2018 passed in ITA No.396/Bang/2018 by the Income Tax Appellate Tribunal, B Bench, Bangalore as well as the order dated 30.12.2019 passed by the Income Tax Officer, Udupi, Ward-3 in case bearing F.No. AAAJL0987F/ITO/W-3/UDP/2019-20 relating to the assessment year 2013-14 are set aside. iii) The matter is restored to the file of the Assessing Officer to redo the assessment considering Sections 2(f) and 60 of the Karnataka Co-operative Societies Act, 1959 vis- -vis the judgment of the Hon ble Apex Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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