Thannirupantha Primary Agricultural Credit Co-opeartive Society Ltd. Vs ITO (ITAT Bangalore)
Bangalore ITAT Slams Flip-Flop by AO; Grants Full 80P Deduction Including Bank Interest to Credit Co-operative Society
In a significant ruling, the Bangalore ITAT allowed the claim of Thannirupantha Primary Agricultural Credit Co-operative Society Ltd. under Section 80P(2)(a)(i) and held that interest income earned from deposits with banks and co-operative banks was eligible for deduction as income attributable to the society’s business of providing credit facilities to its members.
The Assessing Officer had denied deduction by alleging that the society dealt with nominal and associate members, thereby destroying the principle of mutuality, and further treated interest and dividend income from bank deposits as “Income from Other Sources” relying upon the Totgars line of decisions. The CIT(A) affirmed the disallowance.
The Tribunal, however, noted that in the assessee’s own case for AY 2015-16, the very same Assessing Officer, after detailed verification pursuant to an earlier ITAT remand, had accepted that the society was eligible for deduction under Section 80P and had even allowed deduction on interest and dividend income earned from co-operative banks. The ITAT found it difficult to understand how a diametrically opposite view could be taken in later years on identical facts without any distinguishing feature.
