Hiriadka Souhadra Sahakari Vs ITO (ITAT Bangalore)
Assessee Souhadra Sahakari challenged denial of deduction u/s 80P(2)(a)(i), denial of interest income deduction, & disallowance of interest provisions. There was delay of 341 days in filing appeal due to change of CA & email communications going to earlier consultant; ITAT condoned delay considering bona fide reasons.
On merits, AO denied 80P benefit stating assessee registered under Souhadra Act & dealing with non-members. ITAT relying on Karnataka HC held Souhadra Sahakari qualifies as co-operative society u/s 2(19) & eligible for deduction. Interest earned from co-operative bank held attributable to credit facility business & allowed u/s 80P(2)(a)(i).
Further, provisions for interest & NPA made as per statutory mandate & mercantile system cannot be disallowed unless prohibited by Act. ITAT directed AO to delete additions & allow deduction. Appeal allowed in full.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. ITA No. 1966/Bang/2025 is filed by M/s. Hiriadka Souhadra Sahakari (NI) for Assessment Year 2017-18 against the Appellate Order passed on 31.07.2024 wherein the Appeal filed by the Assessee against the Assessment Order passed u/s. 143(3) of the Income Tax Act by the Assessing Officer was dismissed. The Assessee is aggrieved with the same challenging the disallowance of deduction u/s. 80P(2)(a)(i) of Rs. 13,69,573/- received by the Assessee from activity of credit facilities to its member, the disallowance of deduction u/s. 80P(2)(d) of Rs. 1,08,890/-. Further, the disallowance of interest expenditure of Rs. 3,96,141/- and Rs. 63,795/- is also contested.
