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TMI Blog2022 (9) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... at of providing credit facilities to its members The basis adopted by the ld. AO for the purpose of making disallowance relates to credit facilities provided to the category of members which are associate/nominal members. We note that the issue in the present appeal before us has been concluded by the decision of Hon ble Supreme Court in the case of The Mavilayi Service Co-operative Bank Ltd. [ 2021 (1) TMI 488 - SUPREME COURT] wherein it is held that full bench judgement in the case of Citizen Co-op Society Ltd. [ 2017 (8) TMI 536 - SUPREME COURT] wherein the Hon ble Supreme Court has considered the decision of Co-ordinate Bench of Supreme Court in the case of Citizen Co-operative Bank Ltd. [ 2017 (8) TMI 536 - SUPREME COURT] as held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EMBER: This appeal by the assessee is arising out of the order of Ld. CIT(A), Belgaum in ITA No.CIT(A)/BGM/10167/2017-18 dated 04.10.2018 against the order passed by ITO, Ward-1(4), Belagavi u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) dated 14.11.2017. 2. The grounds taken by the assessee in the present appeal are reproduced as under: i. The order passed by the ld. AO and confirmed by the ld. CIT(A) is not as per law and facts of the case. ii. That the ld. AO and the ld. CIT(A) have erred in denying the exemption claimed under section 80P(2)(a)(i) of the Income Tax Act, 1961 available to Co-operative Societies engaged in the business of banking or providing credit facilities to its members ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. In the course of assessment proceeding, ld. AO noted from the balance sheet that the assessee is providing credit facilities to two categories of members and thus by placing his reliance on the decision of Hon ble Supreme Court in the case of Citizen Co- Operative Society Ltd. vs ACIT in Civil Appeal No. 10245 of 2017 dated 08.08.2017 held that deduction claimed by the assessee is not admissible since the assessee is earning income not only from the members but from associate/nominal i.e. non-members who are general public and the concept of mutuality is not satisfied. 5. Aggrieved, the assessee went in appeal before the Ld. CIT(A) who confirmed the addition so made by the ld. AO. 6. Aggrieved, the assessee is in appeal be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear that the impugned Full Bench judgement 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 non-members, profits attributable to such loans obviously cannot be deducted. 8. Further, ld. counsel pointed out that Hon ble Supreme Court also held in the same decision that amendment to section 80P(4) is not applicable to co-operative societies providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted with agricultural activities. 9. Ld. Counsel further placed reliance on the decision of Hon ble Madras High Court in the case of CIT vs Ammapet Primary Agricultural Co-operative Bank Ltd. [2017] 395 ITR 55 wherein it was held that deduction u/s 80P could not be denied merely on the ground that some of its members were not entitled to receive any dividend or having any voting right as they were admitted as associate members for availing of loan only and were also being charged a higher rate of interest. 10. The ld. Sr. DR placed reliance on the order of Ld. CIT(A) and Ld. AO. 11. We have heard rival contentions, perused the material and gone through the submission made before us. We note that the assessee is a Co-operative Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in subsection (2) of section 80P must be given by way of deduction; iii. That this Court in Kerala State Cooperative Marketing Federation Ltd. and Ors. (supra) has construed section 80P widely and liberally, holding that if a society were to avail of several heads of deduction, and if it fell within any one head of deduction, it would be free from tax notwithstanding that the conditions of another head of deduction are not satisfied; iv. This is for the reason that when the legislature wanted to restrict the deduction to a particular type of co-operative society, such as is evident from section 80P(2)(b) qua milk co-operative societies, the legislature expressly says so which is not the case with section 80P(2)(a)(i); ..... X X X X Extracts X X X X X X X X Extracts X X X X
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