| Court: | Supreme Court of India |
| Head Notes: | *THE MAVILAYI SERVICE COOPERATIVE BANK LTD. & ORS. Versus COMMISSIONER OF INCOME TAX, CALICUT & ANR.* The three judges bench of Apex Court in the above matter was dealing with the issue regarding eligibility of the assessee to get deduction u/s 80P of the Income-tax Act 1961 in view of restrictions placed in Section 80P(4) of the Income-tax Act,1961 which provided that the provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-cooperative agricultural and rural development bank. The Court noted its own decision in the case of *Citizen Co-operative Society [397 ITR 1] * by stating that It is settled law that it is only the ratio decidendi of a judgment that is binding as a precedent . Thereafter it observed that section 80P of the IT Act is a benevolent provision, which was enacted by Parliament in order to encourage and promote the growth of the co-operative sector generally in the economic This judgement will be helpful from interpretation points of view as several interpretational aspects have been dealt with in addition to deciding the interpretation of Section 80P. Ramesh Patodia |
| Law: | Income-Tax Act |
| Section(s): | Section 80P of Income-tax Act 1961 |
| Counsel(s): | Counsels |
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| Uploaded By | CA Ramesh Patodia |
| Date of upload: | January 13, 2021 |
I feel that there is a typographical error in the last sentence in page 55 (Para 34) of the judgment. The sentence start with “This puts paid to any argument …..”. The word “paid” could be a typing mistake. I think that it may be “end” instead of “paid”.
ITAT, Kochi, the jurisdictional Tribunal, had held that the ratio of the decision in the case of Citizen Co-operative Society is not applicable to the Co-operative Societies in Kerala for the reason that there is provision for enrolling nominal members in the co-operative societies as per the State Act. This fact was not disputed in any forum including High Court of Kerala.
Full Bench of Hon’ble High Court placed reliance on the decision of the Apex Court in the Citizen case not on the ratio decidenti related to enrolment of nominal membership and its impact on the eligibility of deduction u/s 80P in that case, but quoted the decision of Apex Court only as an example to establish their view that violation of provisions of the Act under which the Co-operative Society was registered would transform it into another type. High Court nowhere in its judgment says that admission of nominal members by a co-operative society in Kerala would result in disallowance of Section 80P. Therefore, I personally feel that the issue of nominal membership and the eligibility for deduction u/s 80P as far as the Co-operative Societies in Kerala were concerned was a settled position in law. How this issue came for the consideration of the Apex Court is not clear.