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TMI Blog2023 (6) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... tore the issue to the AO to determine the proportionate deduction under section 80P(2)(a)(i) of the Act with regard to the income earned from the assessee s dealings with its regular members. Interest income received from Cooperative Banks / Scheduled Banks - whether it is income from business or income from other sources? - HELD THAT:- Assessee is not entitled to the claim of deduction either under section 80P(2)(a)(i) or 80P(2)(d) of the Act.Judgment of the Hon ble jurisdictional High Court in the case of Totagars Co-operative Sale Society [ 2017 (7) TMI 1049 - KARNATAKA HIGH COURT ] relied upon. Appeal filed by the assessee is partly allowed for statistical purposes. - ITA No. 292/Bang/2023 - - - Dated:- 7-6-2023 - Shri Georg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the reason that assessee was primarily dealing with non-members and in view of the Hon ble Apex Court s judgment in the case of Citizen Co-operative Society Ltd., reported in 397 ITR 1, the assessee is not entitled to claim deduction under section 80P(2)(a)(i) of the Act. Further, the AO has held that interest income earned from scheduled banks amounting to Rs. 16,217/- would not be entitled to deduction either under sections 80P(2)(a)(i) or 80P(2)(d) of the Act. 4. Aggrieved by the order of the AO, assessee preferred the appeal before the First Appellate Authority (FAA). Before the FAA, the assessee relied on the judgment of the Hon ble Apex Court in the case of Mavilayi Service Cooperative Bank Ltd., Ors. Vs. CIT, reported in 431 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Standing Counsel Shri. Ganesh R. Ghale submitted that assessee is essentially dealing with non-members, and therefore would not be entitled to deduction under section 80P(2)(a)(i) of the Act. In this context, learned AR relied on the order of the Bangalore Bench of the Tribunal in the case of Shri Parvati Parameshwar Pattin Sahakari Sangh Niyamit Vs. ITO in ITA No.172/Bang/2020 for Assessment Year 2016-17, order dated 21.01.2021. As regards the claim of deduction on interest income from scheduled banks, the learned AR submitted that the assessee is not entitled to deduction either under section 80P(2)(a)(i) or under 80P(2)(d) of the Act and relied on the judgment of the Hon ble jurisdictional High Court in the case of Totagars Co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g more than 15% of their total membership as associate nominal members, the excess associate nominal members shall be either made as member, if eligible under the section 16 or shall be removed from the associate nominal membership within six months from the date of commencement of the Karnataka Co- operative Societies (Amendment) Act, 2014. 9. As per the above amendment, w.e.f. 01.06.2014, Co-operative Societies registered under the Karnataka Co-operative Societies Act, 1959, is allowed to have nominal / associate members (non-members) upto 15% of its total membership. In the instant case, as mentioned earlier, the assessee society is providing credit facilities to non-members exceeding 15% of its total membership. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chstone, 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 non-members, profits attributable to such loans obviously cannot be deducted. (emphasis supplied) 11. From the last sentence of the above extracted portion of the Hon ble Apex Court judgment, it is clear that only profits attributable to non-mem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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