Eluru Cooperative House Mortgage Society Limited Vs ITO (ITAT Visakhapatnam)
ITAT Visakhapatnam held that the interest on nonrecoverable loans has not been recorded by the assessee and accordingly no deduction under section 80P of the Income Tax Act was claimed. Thus, addition made thereon is liable to be deleted.
Facts- The assessee is a cooperative society registered under the Andhra Pradesh Cooperative Societies Act, with the object of providing credit facilities to its members. AO held that the assessee has collected deposits from the non-members and granted loans to the non-members as well as staff members over the years, without the same being members of the society. Thus, AO held that the same is in violation of principles of mutuality. Accordingly, AO disallowed the deduction claimed under section 80P of the Act.
CIT(A) upheld the deduction. Being aggrieved, the present appeal is filed by the assessee.
Conclusion- Held that the Ld. AO only considered the partial information and the last three columns of the aforesaid details, which provide the information regarding Temporary Membership Number, Temporary Membership Date and share capital collected, were not taken into consideration by any of the lower authorities. Similarly, regarding the deposits received from non-members, we find that the details furnished by the assessee were not entirely taken into consideration, and only partial information was considered by the Ld. AO for coming to the conclusion that the assessee has transacted with non-members. Therefore, in the light of the facts and circumstances as noted above, since the entire details as submitted by the assessee were not taken into consideration by the lower authorities, and there is also no examination of the fact that the assessee caters to two types of members i.e., “A” Class Members and “B” Class Members, therefore we are of the considered view that the same needs a fresh consideration by the lower authorities in order to arrive at the correct conclusion. Accordingly, we restore this issue to the file of the Ld.AO for de novo adjudication after consideration of all the details regarding the grant of loan and receipt of deposits from the members as submitted by the assessee. Further, the Ld. AO is also directed to take into consideration the bylaws of the assessee and the Andhra Pradesh Cooperative Societies Act, in order to decide this issue.
