Deduction u/s 80P(2)(a)(i) was denied by the Assessing Officer...

Deduction u/s 80P(2)(a)(i) was denied by the Assessing Officer on grounds that the assessee society cannot be termed a mutual concern and principles of mutuality cannot apply since transactions with associate/nominal members result in income/advantages benefiting regular members. However, the Supreme Court in Mavilayi Service Co-operative Bank Ltd. case held that co-operative societies providing credit facilities to members are entitled to deduction u/s 80P(2)(a)(i), clarifying that section 80P(4) excludes only co-operative banks engaged in lending to the public. Following this precedent, the issue was remanded for fresh consideration by the Assessing Officer. Regarding deduction u/s 80P(2)(d), the Assessing Officer was directed to verify if interest/dividend was received from investments in co-operative societies, which would qualify for deduction as per the Supreme Court's decision in Kerala State Co-operative Agricultural and Rural Development Bank Ltd. case. The disallowance u/s 57 was also restored for fresh adjudication in accordance with law if interest from banks is considered income from other sources.