Aditya Urban Co–operative Credit Society Limited Vs ITO (ITAT Nagpur)
The Income Tax Appellate Tribunal (ITAT), Nagpur Bench, has granted significant tax relief to Aditya Urban Co-operative Credit Society Limited, allowing a deduction of Rs. 10,14,028 on interest earned from Fixed Deposits (FDRs) with a cooperative bank for the Assessment Year 2015-16. The Tribunal’s decision overturns the orders of the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)], which had denied the deduction by treating the interest as “income from other sources” and not attributable to the society’s core business activities.
Case Background
Aditya Urban Co-operative Credit Society Limited, registered under the Maharashtra Co-Operative Society Act, is primarily engaged in providing credit facilities to its members. Its operations include accepting deposits from members and advancing loans to them, or investing accepted deposits as required. The society claimed its income was eligible for exemption under Section 80P(2)(a)(i) of the Income Tax Act, 1961.
The case was reopened, and the Assessing Officer, upon scrutiny, observed that a portion of the society’s income was derived from interest earned on bank FDRs, amounting to Rs. 10,14,028. The AO concluded that this income was not directly attributable to the specified business activity of the assessee and, consequently, denied the deduction under Section 80P.
