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TMI Blog2021 (2) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... d 2017-18. 2. The assessee is a Primary Agricultural Credit Co-operative Society registered under Kerala Cooperative Act. The assessee has filed its returns of income claiming deduction under Section 80P. The same came to be denied on the ground that the assessee had not fulfilled the primary object of a Primary Agricultural Credit Society in so far as it was not providing financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities. 3. On appeal the learned CIT(A), following the decision of the Full Bench of the Hon'ble Kerala High Court in the case of The Mavilayi Service Co-operative Bank Ltd. reported in 414 ITR 67, upheld the denial of deduction under Section 80P. 4. Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... touchstone, it is clear that the impugned Full Bench judgment is wholly incorrect in its reading of Citizen Cooperative Society Ltd. (supra). Clearly, therefore, once section 80P(4) is out of harm's way, all the assessees in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i), notwithstanding that they may also be giving loans to their members which are not related to agriculture. Also, in case it is found that there are instances of loans being given to nonmembers, profits attributable to such loans obviously cannot be deducted. 46. It must also be mentioned here that unlike the Andhra Act that Citizen Cooperative Society Ltd. (supra) considered, 'nominal members' are 'members' as defined under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Kerala Act, loans given to such nominal members would qualify for the purpose of deduction under section 80P(2)(a)(i). 47. Further, unlike the facts in Citizen Cooperative Society Ltd. (supra), the Kerala Act expressly permits loans to non-members under section 59(2) and (3), which reads as follows: "59. Restrictions on loans.- (1) A society shall not make a loan to any person or a society other than a member: Provided that the above restriction shall not be applicable to the Kerala State Co-operative Bank. Provided further that, with the general or special sanction of the Registrar, a society may make loans to another society. (2) Notwithstanding anything contained in sub-section (1), a society may make a loan to a dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of The Mavilayi Service Co-operative Bank Ltd. (supra). The Hon'ble Supreme Court has also further explained the decision in the case of Citizen Co-operative Society Ltd. in so far as the deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication. In the circumstances in respectful obedience to the principles laid down by the Hon'ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd. (supra) the AO is directed to grant the assessee the benefit of deduction under Section 80P as claimed. 8. Since we have allowed the appeals of the assessee, the Stay Petitions filed by the assessee have become infructuous and are dismissed as such. 9. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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