PRINCIPAL COMMISSIONER vs. Sri. Ch. Govardhan Naidu,

MUDUR VYAVASAYA SEVA SAHAKARI SANGHA LTD., (A SOCIETY REGD., UNDER KCS ACT, 1959) H.O. MUDUR, MUDUR POST, KUNDAPURA TALUK, UDUPI DISTRICT-576233. REP. BY ITS CEO-MR. PRABHAKARA. …APPELLANT (BY SRI MAHESH R. UPPIN, ADVOCATE)

THE COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE, DELHI-110001.

THE INCOME TAX OFFICER, WARD - 2, AAYAKAR BHAVAN, MALPE ROAD, ADI-UDUPI, UDUPI-576 103. …RESPONDENTS (BY SRI M. THIRUMALESH, SENIOR STANDING COUNSEL)

This appeal is preferred by the assessee under Section 260A of the Income Tax Act, 1961 (for short, “the Act”), being aggrieved by the order dated 29.05.2024 passed in ITA No.78/Bang/2024 by the Income Tax Appellate Tribunal, Bengaluru (for short, “the ITAT”), pertaining to the Assessment Year 2017–18. 3. The following substantial questions of law are raised for consideration before this Court:

The assessee filed its return of income for the Assessment Year 2017–18 claiming deduction under Section 80P of the Act, in respect of income derived from providing credit facilities to its nominal members, as well as the interest income received on investments made with the SCDCC Bank. The Assessing Officer denied the deduction on both counts. 4.1 Aggrieved by the assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [for short, “CIT(A)”]. The CIT(A), by order dated 18.09.2023, decided the issues against the assessee. Still aggrieved, the assessee carried the matter in further appeal before the ITAT. The ITAT, by the impugned order dated 29.05.2024, remanded the matter insofar as it relates to the interest income received from nominal members. However, with respect to the interest income earned on deposits made with the SCDCC Bank, the Tribunal, applying the provisions of Section 80P(2)(d) of the Act, denied the claim for deduction. 5. At the outset, Sri M. Thirumalesh, learned Senior Standing Counsel appearing for the respondents–Revenue, submits that the questions raised in the present appeal have

Sri. Mahesh R. Uppin, learned counsel appearing for the appellant–assessee, is not in a position to dispute the said submission. 7. Having heard the learned counsel for the parties, we notice that in ITA No.55/2025, this Court has already considered the contentions raised, and that the substantial questions of law involved therein are identical to the questions raised in the present appeal. In ITA No.55/2025, it has been held as under: "7. The ITAT has remitted the matter only for the limited purpose of examining the scope of nominal/associate members and to determine the eligibility of interest income earned from loans advanced to such members for deduction under Section 80P(2)(a) of the I.T. Act. The Tribunal has directed reconsideration of the issue in the light of the decision of the Hon’ble

In view of the order of remand, we find no reason to interfere. However, we find some substance in the submission of learned counsel for the assessee that certain observations made by the ITAT may prejudice the rights of the assessee in the remand proceedings. It is therefore clarified that the remand proceedings shall be considered independently, uninfluenced by any observations or findings recorded by the ITAT on merits, and strictly in accordance with the law laid down by the Hon’ble Supreme Court in Mavilayi Service Co- operative Bank Ltd. (supra) and considering the relevant provisions of Karnataka Co-operative Societies Act.

Insofar as substantial question of law No.2 is concerned, the said question does not survive for consideration in view of the decision rendered in M/s. Judicial Employees House Building Co-operative Society Limited v. Income Tax Officer [ITA No.93/2024, dated 16.09.2025].

In view of the foregoing, the substantial questions of law raised in the present appeal do not arise for consideration. However, certain observations have been made with respect to the issue of remand concerning the interest income derived