TaxTMI 
TaxTMI 
2021 (4) TMI 861
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....ine claim of the appellant in respect of deduction u/s 80P(2)(a)(i) to the extent of Rs. 61,09,525.00 as claimed by the appellant. The appellant prays for grant of the deduction as claimed. 2. The Ld. Commissioner of Income Tax (Appeals) erred in law as well as on facts in applying the Judgment of Hon. Supreme Court of India in the case of Citizen Co -Operative Society, Hyderabad. As the facts of Citizen society & the assessee society is totally different. Difference in facts of the case are as under : i. Citizen Society is basically registered under Andra Pradesh Mutually Aided Co - Operative Societies Act, 1995 & subsequently registered under Multi State Co - Operative Societies Act, 2002. But the provisions of APMACS Ac....
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....s and invested in other banks with an intention to earn the interest income. A portion of deposits which are accepted from non members are used to advance the gold loan to members. Where as our society has accepted the deposits from members and used to advance the loans to members and portion of deposit is kept in banks & societies. v. Para 15 (ix) of Supreme Court judgment, the assessee society is engaged in the activity of granting loans to general public. Where as in our society, we have sanctioned the loans to members only. As per the KCS Act, to obtain the loan, a person shall be a member of the society. Therefore our society has complied the KCS Act. This judgment is not applicable as loans are not sanctioned to other than me....
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.... ix. Para 27 of the judgment, the appellant cannot be treated as a co - operative society meant only for its members and providing credit facilities to its members. Where as our society has accepted the deposits from members & loans given to members only. Therefore in totality this judgment of Hon. Supreme Court of India is not applicable to our society as the facts & objectives of the society are completely different. On plain reading of the Citizen society judgment, the society is running to earn the profit & not to pay the income tax by taking the shelter under the Income Tax Act through Section 80P(2)(a)(i). Where as our society's main objective is to promote the savings among the members & uplift the financial condition of....
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....rs. 3. The Ld. DR AO contended that as per the details furnished by the bye laws, it is observed that the assessee is dealing with non members termed as associate members termed as associate members and claimed to have admitted as per the provisions of the Karnataka Co-operative Societies Act, 1959. 4. After hearing both the parties we are of the view that the Supreme Court has reversed the decision of special Bench of Kerala High Court in the case of Mavilayi Service Co-operative Bank Ltd., Vs. CIT 414 ITR 67 wherein it was held as follows: "45. To sum up, therefore, the ratio decidendi of Citizen Cooperative Society Ltd. (supra), must be given effect to. Section 80P of the IT Act, being a benevolent provision enacted by Par....
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....mbers' as defined under the Kerala Act. This Court in U.P. Cooperative Cane Unions' Federation Ltd., Lucknow v. Commissioner of Income Tax, Lucknow-I (1997) 11 SCC 287 referred to section 80P of the IT Act and then held: "8. The expression "members" is not defined in the Act. Since a cooperative society has to be established under the provisions of the law made by the State Legislature in that regard, the expression "members" in Section 80-P(2)(a)(i) must, therefore, be construed in the context of the provisions of the law enacted by the State Legislature under which the cooperative society claiming exemption has been formed. It is, therefore, necessary to construe the expression "members" in Section 80-P(2)(a)(i) of the Ac....