BSNL Employees Co-operative Society Ltd Vs ACIT (ITAT Bangalore)
ITAT Bangalore held that BSNL Employees Co-operative Society Ltd. are eligible for deduction under section 80P(2) of the Income Tax Act for interest earned from deposits with Co-operative Banks.
Facts- The assessee is a cooperative society and filed its return declaring Nil income on 26.9.2012 and claimed deduction u/s. 80P(2)(a)(i) of the Act of Rs.67,80,387. The case was selected for scrutiny and statutory notices issued to the assessee. In response to notice, assessee filed details as called for. The AO noted that the assessee has not satisfied the primary requirement for claim of deduction u/s. 80P(2)(a)(i) and it falls within the provision of section 80P(4) r.w.s. 2(24) of the Act. The assessee was held to be a primary cooperative bank and not eligible for deduction. Accordingly the amount of Rs.67,80,387 was added back to total income of assessee. The CIT(Appeals) upheld the order of the AO. Aggrieved, the assessee is in appeal before the ITAT.
Conclusion- Held that the assessee is registered under the Karnataka Co-operative Society Act. 1959 and formed by the BSNL Employees’ for the benefit of the BSNL Employees’. As per the submissions of the ld. AR that the assessee is accepting deposit only who are members and extending credit facility to its members. It has no saving bank deposit or current account deposit facilities nor cheques and demand draft facilities. The assessee is not involved in banking activity and does not come under the definition of Bank as per RBI and it has not obtained any licence for RBI for functioning of bank. The assessee is eligible for deduction under chapter VI-A u/s 80P(2) of the Act. During the course of hearing the ld. AR of the assessee has relied on the judgment of the coordinate bench noted supra. Considering the judgment of Alnavar Credit Souharda Co-op Ltd noted above the AO is directed to decide the issue afresh regarding the claim of deduction made by the assessee.
