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TMI Blog2021 (6) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... es shall be deductible in the computation of total income. The claim of assessee for deduction has been negated by the authorities below on the ground that it had admitted certain Members, described as Nominal Members , who were neither entitled to dividend nor voting rights. Taking note of the fact that the Citizen Co-operative Society Ltd. [ 2017 (8) TMI 536 - SUPREME COURT] judgment dealt with the Andhra Act wherein the term Member did not include Nominal Member, the Hon ble Supreme Court in Mavilayi Service [ 2021 (1) TMI 488 - SUPREME COURT] held that the interest on loans given to Nominal Members under the Kerala Act was eligible u/s 80P(2)(a)(i) as the term Member under the Kerala Act included Nominal Members . As evident that when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit facilities to its Members. A return of income was filed claiming deduction u/s 80P(2)(a)(i) amounting to ₹ 33,41,435. During the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee was carrying on its activities in violation of provisions of section 80P(2)(a)(i) inasmuch as it had advanced loans to persons who were not Members of the society. On being called upon to explain its stand, the assessee submitted that the loans were advanced only to the Members, be it Regular (ordinary) members or Nominal members. Relying on the judgment of the Hon'ble Supreme Court in Citizen Co-operative Society Ltd. vs. ACIT (2017) 84 taxmann.com 114 (SC), the AO repelled the assessee's claim and disallowed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above definition of 'Member', it becomes overt that the term 'Member' also includes a Nominal Member. Once it is accepted that the assessee, governed by the Maharashtra Act, made advances to certain Nominal Members from whom interest income was earned, there can be no doubt whatsoever that the deduction u/s 80P(2)(a)(i) has to be allowed. The Department has heavily relied on the judgment of Hon'ble Supreme Court in the case of Citizen Co-operative Society Ltd. vs. ACIT (supra). That was a case in which Andhra Pradesh Mutually Aided Co-operative Society Act, 1995 was under consideration, which did not admit `Nominal Member' within the ambit of the term 'Member'. Recently, the Hon'ble Supreme Court in Mavilayi Service Co-Operative Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X
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