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TMI Blog2021 (3) TMI 944X X X X Extracts X X X X X X X X Extracts X X X X ..... nominal members, which is against the dictum laid down by the Hon ble Apex Court in case of Mavilayi Service Cooperative Bank Ltd. Ors. (supra). The Hon ble Apex Court has settled many issues. The instant case needs to be examined by the A.O. in light of the principles enunciated by the Hon ble Apex Court in case of Mavilayi Service Co-operative Bank Ltd. Ors. (supra). Accordingly, the CIT(A) order on this issue is set aside and the same is restored to the files of the A.O. for examination of the case in the light of the principles laid down by the Hon ble Apex Court in the case of The Mavilayi Service Co-operative Bank Ltd. Ors. v. CIT (supra). It is ordered accordingly. Claim of deduction u/s 80P(2)(a)(i) of the I.T.Act with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 32,800 after claiming deduction u/s 80P of the I.T.Act amounting to ₹ 39,95,146. The return was selected for scrutiny and assessment was completed u/s 143(3) of the I.T.Act vide order dated 19.12.2018. The Assessing Officer treated the interest received from other Co-operative Banks as income from other sources assessable u/s 56 of the I.T.Act by placing reliance on the judgment of the Hon ble jurisdictional High Court in the case of Pr.CIT Anr. v. Totagars Co-operative Sale Society reported in [(2017) 395 ITR 611 (Kar.)] . As regards the interest income earned from providing credit facilities to assessee s members, the Assessing Officer stated that the assessee is not only have regular members but also associate and nominal me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) had held that the expression members is not defined under the Income-tax Act. Hence, it is necessary to construe the expression members in section 80P(2)(a)(i) of the I.T.Act as it is contained in the respective State Co-operative Act. The Hon ble Apex Court had held that providing credit facilities to associate or nominal members would be entitled to deduction u/s 80P(2)(a)(i) of the I.T.Act unless they are not considered as members of co-operative under the respective State Act. The Hon ble Apex Court has also considered the judgment in case of Citizen Co-operative Society Ltd. (supra). The A.O. has merely denied the benefit of deduction u/s 80P(2)(a)(i) of the I.T.Act for the reason that the assessee was also dealing with ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.CIT v. Totagars Co-operative Sale Society Ltd. (supra). I notice that on identical facts the co-ordinate bench of the Tribunal in the case of M/s.Raithara Seva Sahakara Sangh v. ITO in ITA No.1992 2596/Bang/2018 (order dated 02.01.2019) had restored the matter to the A.O. for de novo consideration. The relevant finding of the co-ordinate Bench order of the Tribunal in the case of M/s.Raithara Seva Sahakara Sangh v. ITO (supra) reads as follow:- 5. We have heard the rival submissions. The learned AR relied on the decision of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-operative Society Ltd. Vs. ITO 230 taxman 309 (Karn) wherein the Hon'ble Karnataka High Court considered the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome by way of interest or dividends derived by a Co-operative Society from its investments with any other Co-operative Society is entitled to deduction of the whole of such interest or dividend income. The claim of the Assessee was that Co-operative Bank is essentially a Co-operative Society and therefore deduction has to be allowed under Clause (d) of Sec.80P(2) of the Act. The Hon'ble Karnataka High Court followed the decision of the supreme Court in The Totgars Co-operative Sales Society Ltd. (supra) and held that interest earned from Schedule bank or cooperative bank is assessable under the head income from other sources and therefore the provisions of Sec.80P(2)(d) of the Act was not applicable to such interest income. It is thus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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