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TMI Blog2022 (3) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... because of the fact that the assessee had admitted Nominal Members - HELD THAT:- The Hon ble Supreme Court has settled many issues in the decision rendered by it in the case of Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] and since the facts prevailing in the instant case needs to be examined afresh in the light of the principles enunciated by Hon ble Supreme Court in the above said case, we are of the view that the issue of deduction u/s 80P(2)(a)(i) of the Act requires fresh examination at the end of the A.O. We set aside the order passed by Ld. CIT(A) for the year under consideration and restore them to the file of the A.O. for examining it afresh based on the principles laid down by Hon ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in not granting the benefit of deduction u/s 80P(2)(d) for the interest received from co-operative banks 3. The assessee society is registered under the Cooperative Societies Act, 1959 and complied with The Karnataka Co-operative Societies Act, 1959, the Karnataka Co-operative Societies Rules, 1960 and bye laws of the society as well. The Karnataka Co-operative Societies Act, 1959 for the year under appeal permits to do the transaction with ordinary members, associate members and nominal members. Hence all the borrowers are members (regular or associate or nominal) of the appellant society and business was conducted with the above category of members and not with the general public as observed by the assessing officer. Section 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers as alleged by the assessing officer and confirmed by the learned First Appellate Authority, the profit attributable to such business can only be taxed. Therefore in the case of the appellant if nominal members are not considered as members as alleged by the assessing officer, only such portion of profit attributable to the business with nominal members could be taxed. The Judgement passed by the Honourable Supreme Court in CIVIL APPEAL NOS. 7343-7350 OF 2019 with CIVIL APPEAL NO.8315 OF 2019 AND CIVIL APPEAL NO. OF 2021 (@ SLP(C) NO.________OF 2021) (DIARY NO. 31268 OF 2019) supports the contention of the appellant. 6. The appellant has been assessed as a co-operative society and such being the case all benefits available to the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. M/s Citizen Co-operative Society, Hyderabad dt 08.08.2017 in Civil Appeal No. 10245 of 2017 . 5. The AO denied the deduction u/s 80P(2)(a)(i) amounting to ₹ 60,91,244/- [ income from lending of credit facility to Members ] and u/s 80P(2)(d) amounting to ₹ 53,58,654/- towards interest earned on Term Deposits with SCDCC Bank / Other Co Op Societies and Dividend Income from Investment in Shares with SCDCC Bank / Other Co Op Societies. 6. The Ld.AO denied entire deduction of Section 80P to the assessee thereby making an addition of ₹ 8,74,992/- merely because of the fact that the assessee had admitted Nominal Members. The AO ought to have appreciated the fact that the bye laws of the assessee Society and the Karnataka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be allowed deduction u/s 80P(2)(a)(i) of the Act. The Ld. D.R., on the contrary, submitted that the issue of deduction needs to be examined afresh in the light of decision rendered by Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. (supra). Accordingly, he submitted that this issue may be restored to the file of the A.O. 9. We heard the parties on this issue and perused the record. We find merit in the submission made by Ld. D.R. Since the Hon'ble Supreme Court has settled many issues in the decision rendered by it in the case of Mavilayi Service Co-operative Bank Ltd. (supra) and since the facts prevailing in the instant case needs to be examined afresh in the light of the principles enunciated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t;Income from other sources" and denied deduction claimed u/s 80P(2)(d) of the Act. The Ld CIT(A) confirmed the action of the AO on this issue. 8. The Ld. A.R. submitted that the assessee is entitled to claim deduction allowable u/s 57 of the Act in respect of cost of funds and proportionate administrative and other expenses. In support of this submission, the Ld. A.R. placed reliance on the decision rendered by Hon'ble High Court of Karnataka in the case of Totgars Co-operative Sale Society Ltd. Vs. ITO (2015) 58 taxmann.com 35 (Karn). The Ld. A.R. submitted that the assessee in the above said case had put forth identical claim claim before Hon'ble Supreme Court in the case reported as Totgars Cooperative Sale Society Ltd. V ..... X X X X Extracts X X X X X X X X Extracts X X X X
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