Case Law Details
West Coast Paper Mill Employees Souhardha Credit Co-op. Ltd Vs National e-Assessment Centre (ITAT Bangalore)
ITAT Bangalore held that deduction u/s. 80P(2)(a)(i) of the Income Tax Act in respect of credit facilities provided by Souharda Co-operative Society to its members if requirement of mandatory maintaining of funds as per Karnataka Souharda Sahakari Act, 1997 is satisfied.
Facts- The assessee filed its return of income declaring gross total income of Rs.68,98,443 and after claiming deduction u/s. 80P(2)(a)(i) of the same amount, NIL income was declared. The case was selected for scrutiny and statutory notices were issued to the assessee. From the documents furnished, the AO observed that the assessee is a Souhard Co-operative registered under the Karnataka Souhard Sahakari Act, 1997 and not under the Karnataka Co-op. Societies Act, 1959. The assessee had maintained books of accounts and obtained audit report u/s. 44AB as per the provisions of Karnataka Souhard Sahakari Act, 1997.
AO noted that assessee has claimed deduction u/s. 80P(2)(a)(i) of the Act and assessee submitted that society is providing credit facilities to its members which is claimed as deduction. AO noted that deduction u/s. 80P(2)(a)(i) of the Act is provided to a co-operative society and in the absence of registration under Karnataka Co-op. Societies Act, 1959, the AO disallowed the claim of deduction amounting to Rs.63,48,443. Further the AO noted that the assessee has received interest income of Rs.9,93,255 on account of interest on investment with KCC Bank in FD/RFD and disallowed the same u/s. 80P(2)(a)(i) of the Act.
CIT(A) confirmed the action of AO. Being aggrieved, the present appeal is filed.
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