INCOME TAX ACT 1961

Section 80P(2)(a)(i)

Deduction under section 80P(2)(a)(i) - Co-operative society - Allowability - Assessee also dealing with associate / nominal members

Assessee, a Co-operative Society, providing credit facilities to its members claimed deduction under section 80P(2)(a)(i). AO denied benefit of deduction claimed for the reason that assessee was also dealing with associate / nominal members. Held: In the case of Mavilayi Service Co-operative Bank Ltd. [(2021) 431 ITR 1 (SC) : 2021 TaxPub(DT) 0273 (SC)], it was held that the expression “members” is not defined under the IT Act. Hence, it is necessary to construe the expression “members” in section 80P(2)(a)(i) as it is contained in the respective State Co-operative Act. Also providing credit facilities to associate or nominal members would be entitled to deduction under section 80P(2)(a)(i), unless they are not considered as members of co-operative society under the respective State Act. AO had merely denied the benefit of deduction under section 80P(2)(a)(i) for the reason that the assessee was also dealing with associate / nominal members, which was against the dictum laid down in case of Mavilayi Service Co-operative Bank Ltd. [(2021) 431 ITR 1 (SC) : 2021 TaxPub(DT) 0273 (SC)]. Thus, the instant case needs to be examined by AO in light of the principles enunciated in case of Mavilayi Service Co-operative Bank Ltd. [(2021) 431 ITR 1 (SC) : 2021 TaxPub(DT) 0273 (SC).

Followed:Mavilayi Service Co-operative Bank Ltd. [(2021) 431 ITR 1 (SC) : 2021 TaxPub(DT) 0273 (SC).

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2016-17

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