Irula Snake Catchers Industrial Co-operative Society Ltd. Vs ITO (ITAT Chennai)
Interest on savings bank eligible for U/s 80P(2)(a)(vi) – Totgars distinguished; deduction allowed to labour-based co-op society – ITAT Chennai
In Irula Snake Catchers Industrial Co-operative Society Ltd. vs ITO (A.Y. 2020-21), the AO treated ₹1.21 lakh interest from savings bank account as “income from other sources” and denied deduction u/s 80P, relying on Totgars Co-operative Sale Society Ltd. The CIT(A) confirmed the disallowance.
The ITAT noted that the assessee was a labour-oriented co-operative society whose income arose from collective disposal of members’ labour. The deposits were made out of operational receipts forming part of working capital, and not from funds payable to members. Hence, the factual matrix differed from Totgars, where interest arose from surplus funds retained on behalf of members.
Relying on High Court and coordinate bench decisions, the Tribunal held that the expression “attributable to” in section 80P(2)(a)(vi) has wide scope and includes incidental interest income having nexus with eligible activities. Accordingly, disallowance of ₹1,21,269 was deleted and deduction u/s 80P was allowed. The assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
The captioned appeal by the assessee is arising out of the order of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi dated 31.01.2025 for AY 2017-18.
