Gurudatta Gramin Bigarsheti Sahakari Patsanstha Maryadit Vs ITO (ITAT Delhi)
The assessee filed an appeal before the Income Tax Appellate Tribunal (ITAT) against the order of the Commissioner of Income Tax (Appeals) [NFAC] for Assessment Year (AY) 2015-16 arising from an assessment made under Sections 147 read with 144B of the Income Tax Act. The assessee challenged, among other issues, the disallowance of deduction under Section 80P in respect of interest income of ₹12,04,748 earned from The Nasik Merchants Co-operative Bank Ltd. It also contended that such interest was part of its business income and alternatively claimed deduction under Section 80P(2)(d).
The Assessing Officer observed that the assessee, a co-operative credit society registered under the Maharashtra Co-operative Societies Act and engaged in accepting deposits and providing loans to its members, had claimed deduction under Section 80P(2) amounting to ₹23,65,046. While allowing deduction of ₹11,60,298, the Assessing Officer disallowed ₹12,04,748 representing interest earned from The Nasik Merchants Co-operative Bank Ltd. Holding that such interest was not eligible for deduction under Section 80P, the Assessing Officer relied on the decision of the Supreme Court in Totagars Co-operative Sale Society Ltd. v. ITO. The Commissioner (Appeals) affirmed the assessment order.
Before the Tribunal, it was an admitted fact that the assessee was a co-operative credit society carrying on the business of accepting deposits and advancing loans to its members. The Tribunal identified the central issue as whether the interest income of ₹12,04,748 qualified for deduction under Section 80P.
