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Case Law Details

Case Name : Bhairabnala Samabay Krishi Unnayan Samity Ltd. Vs ITO (ITAT Chennai)
Appeal Number : ITA No. 111/Kol/2022
Date of Judgement/Order : 15/12/2022
Related Assessment Year : 2017-18
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Bhairabnala Samabay Krishi Unnayan Samity Ltd. Vs ITO (ITAT Chennai)

As far as section 80P(4) of the Act, it only provides that provisions of section 80P shall not be applied in relation to any co­operative bank other than agricultural credit society or any agricultural rural bank. In simple words such cooperative Bank cannot claim deduction u/s.80P(2) & 80P(3) of the Act. Since the assessee is not a cooperative bank, but a Primary Agricultural Credit Society therefore, provisions of section 80P(4) of the Act is not applicable and thus, it is entitled to deduction u/s. 80P of the Act to the extent allowable as per relevant provisions.

Now the alleged interest income of Rs. 16,04,004/- is earned from idle funds invested in the bank and as far as deduction u/s. 80P(2)(i) is concerned, which refers to income earned from carrying on banking business or providing credit facilities to its members, I find that the alleged interest income is not earned by the assessee from its members and therefore, not eligible for deduction u/s. 80P(2)(i) of the Act.

However, on going through the provisions of section 80P(2)(d) of the Act the co-operative society is eligible for deduction of income in respect of any income by way of interest or dividends derived from its investments with any other co-operative society, Now the assessee has earned interest income from Burdwan Central Co­operative Bank Ltd. Though the Burdwan Central Co-operative Bank Ltd is having license under the Banking Regulation Act, 1949 to carry on Banking Business, but basically it is a cooperative society, which has been allowed to do banking business under the said Banking Regulation Act, 1949. Section 80P(2)(d) only refers to word ‘co-operative society’ and it has not been specifically mentioned under the said provisions of the Act that investments made in cooperative banks are to be excluded. In my humble understanding since the cooperative banks are basically co-operative societies only therefore, the words ‘cooperative society’ mentioned in Sec. 80P(2)(d) of the Act includes these cooperative societies also which are carrying on banking business as cooperative banks. Therefore, I am of the considered view since the assessee has earned interest of Rs. 16,04,004/- from other cooperative society, which in this case is a cooperative bank, is eligible for deduction u/s. 80P(2)(d) of the Act.


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