Vividhoddesha Prathamika Grameena Krashi Sahakara Sangha Niyamita Vs ITO (ITAT Bangalore)
ITAT Bangalore held that interest/ dividend from co-operative society is eligible for deduction u/s. 80P(2)(d) of the Income Tax Act. However, if payer bank is co-operative bank then deduction u/s. 80P(2)(d) is not available.
Facts- The assessee is a primary agricultural cooperative society registered on 27.4.1979 under the Karnataka Co-operative Societies Act, 1959. The assessee field return of income declaring Nil income and claimed amount of Rs.27,28,085 as deduction u/s. 80P of the Act.
The case was selected for scrutiny. It was noticed that assessee earned interest out of investments from Karnataka Dist. Central Coop. Bank Ltd. (KDCC) of Rs.4,21,606, from Axis Bank Rs.25,045 and Rs.32,992 from Totgars Co-op. Sale Society totalling to Rs.4,79,643 and claimed deduction u/s. 80P(2)(a)(i) of the Act. The AO noted that earning of interest from bank and other receipts is not business activity of cooperative society associated with its members. Deduction u/s. u/s. 80P(2)(d) is also not to be allowed since the interest received by the assessee is from bank which is not an income earned from investments with any other co-op. society. The AO treated Rs.4,46,650 as income from other sources and completed the assessment.
