Nava Karnataka Souhard Credit Co-operative Limited Vs ITO (ITAT Bangalore)
ITAT Bangalore held that the co-operative societies providing credit facilities to its members is entitled to deduction u/s 80P(2)(a)(i) of the Income Tax Act. Thus, income earned on account of providing credit facilities is allowable as deduction u/s. 80P(2)(a)(i).
Facts- The assessee society, Nava Karnataka Souhard Credit Co-operative Limited being a credit cooperative society registered under Karnataka Souhardha Sahakari Act, 1997. AO relying on the decision of Hon’ble Apex Court in the case of Citizen Co-operative Society Ltd. (2017) 397 ITR 1 is of the view that that the assessee was not capable of having the right to claim the deduction u/s 80P2(a)(i) as it has failed in satisfying the appropriate conditions. Accordingly, the entire deduction claimed by the assessee society u/s 80P(2) of the Act was disallowed by the AO. AO further noticed that the assessee has claimed deduction u/s 80P(2)(a)(i) of the Act on the interest income Rs. 2,92,14,754/- received, however, the same was rejected.
Conclusion- Hon’ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr. has held that the co-operative societies providing credit facilities to its members is entitled to deduction u/s 80P(2)(a)(i) of the Act. Also, held that if nominal / associate member is not prohibited under the said Act, for being taken as a member, the income earned on account of providing credit facilities to such member also qualify for deduction u/s 80P(2)(a)(i) of the Act.
