Case Law Details
Indian Oil Employees Welfare Cooperative Society Ltd. Vs ACIT (ITAT Mumbai)
The case of Indian Oil Employees Welfare Cooperative Society Ltd. vs ACIT (ITAT Mumbai) revolves around the eligibility of the cooperative society’s interest income under section 80P of the Income Tax Act. The society contested the disallowance of deductions claimed under section 80P for the interest earned from cooperative banks.
The crux of the matter lies in determining whether the interest income earned by the cooperative society qualifies for deduction under section 80P(2)(a) or 80P(2)(d) of the Income Tax Act. The Assessing Officer (AO) disallowed the deductions, contending that the interest income does not constitute business income of the society.
However, the ITAT analyzed the provisions of section 80P meticulously. It observed that while section 80P(2)(a) pertains to profits and gains of business attributable to the cooperative society’s activities, section 80P(2)(d) deals with interest or dividends received from investments with other cooperative societies. The crucial distinction lies in whether the income arises from the society’s business activities or from investments with other cooperative societies.
The ITAT highlighted that the society, being primarily engaged in facilitating payments to beneficiaries and refunding dues to members, earns interest on surplus funds deposited with cooperative banks. It emphasized that section 80P(2)(d) explicitly allows deductions for income derived from investments in other cooperative societies.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
