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2024 (5) TMI 851 - ITAT BANGALOREExemption u/s. 80P(2)(a)(i) - deduction was claimed in respect of the amount of profits attributable to the activity of providing credit facilities to its members - AO disallowed the entire claim as the assessee had not earned investments from its members of the society but also from general public and in respect of the interest income of co-operative society, the disallowance was made by holding that the claim is not found to be eligible for deduction u/s. 80P(2)(d) and therefore treated the same as income from other sources. HELD THAT:- We note that the disallowance has been made in the hands of the assessee as assessee was also having nominal members from whom deposits were taken and credit facilities were provided. In respect of associate/nominal members, in the case of Mavilayi Service Cooperative Bank Ltd [2021 (1) TMI 488 - SUPREME COURT] has held that the expression "Members" is not defined in the Income-tax Act. Hence, it is necessary to construe the expression "Members" in section 80P(2)(a)(i) of the Act in the light of definition of that expression as contained in the concerned co- operative societies Act. As held in UP CO-OPERATIVE CANE UNION FEDERATION LIMITED [1997 (1) TMI 7 - SUPREME COURT] definition of 'member' under the Kerala Act, loans given to such nominal members would qualify for the purpose of deduction u/s 80P(2)(a)(i) - Grounds raised by the assessee stands allowed.
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