Case Law Details
Uppinangady Catholic Multipurpose Co-operative Society Ltd Vs ITO(ITAT Bangalore)
ITAT Bangalore held that deduction under section 80P(2)(a)(i) or 80P(2)(d) of the Income Tax Act is not available in respect of interest income earned from scheduled banks.
Facts- Assessee is a credit co-operative society registered under the Karnataka Cooperative Societies Act, 1959. The assessment was completed u/s. 143(1) r.w.s. 147 of the Act, vide order dated 16.12.2019, wherein the claim of deduction u/s. 80P(2)(a)(i) of the Act was denied for the reason that assessee was primarily dealing with non-members and in view of the Hon’ble Apex Court’s judgment in the case of Citizen Co-operative Society Ltd., the assessee is not entitled to claim deduction u/s. 80P(2)(a)(i) of the Act. Further, the AO has held that interest income earned from scheduled banks amounting to Rs.16,217/- would not be entitled to deduction either under sections 80P(2)(a)(i) or 80P(2)(d) of the Act.
Aggrieved by the order of the AO, assessee preferred the appeal, however, the same was dismissed. Being aggrieved, the present appeal is filed.
Conclusion- Held that only profits attributable to non-members alone would not be entitled to deduction under section 80P(2)(a)(i) of the Act. Thereby meaning proportionate deduction is to be allowed in respect of the income arising out of business with the members of the assessee society. In the light of the above said judgment of the Hon’ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd., (supra), I restore the issue to the AO to determine the proportionate deduction under section 80P(2)(a)(i) of the Act with regard to the income earned from the assessee’ s dealings with its regular members. It is ordered accordingly.
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