ITO v. Jhalawar Sahkari Bhoomi Vikas Bank Ltd.

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The Tax Publishers2013 TaxPub(DT) 1177 (Jp-Trib) : (2013) 051 (II) ITCL 0223 INCOME TAX ACT, 1961 --Deduction under section 80P--Co-operative society Fees received in respect of issuing no-due certificatesAssessing officer considered the fees received in respect of issuing no-due certificate as income from other sources, and accordingly disallowed assessee's claim. *Held:* Where the borrower, wishes to transfer his borrowing or otherwise switch to another bank or co-operative society, he has to be issued a 'no dues certificate' from the existing lender. Assessee charges a nominal fee for the same. Therefore, the same can not be assessed as income from other sources, being only integral to the assessee's principal business of lending. Income Tax Act, 1961 Section 80P(2)(a)(i) INCOME TAX ACT, 1961 --Deduction under section 80P--Co-operative society Interest from employees--Assessee is a co-operative society engaged in providing credit facilities to its members. Assessing officer disallowed assessee's claim for deduction under section 80P(2)(a)(i) on account of interest from employees and treated them as income from other sources. *Held:* Most of the employers facilitate and accommodate their employees by giving loans, either on interest bearing or even on interest-free basis. The income so earned can only assessable under section 56, and cannot be considered as undertaking of an activity incidental to its principal or operational activity. In fact, what is relevant from the standpoint of section 80P(2)(a)(i) is whether the relevant income flows from the members or non-members, disqualifying the income arising from the latter from the deduction under section 80P(2)(a)(i). The relevant consideration, was whether the income under reference flows from or was by way of providing credit facilities by assessee-society to its members, the answer to which is clearly in the negative. Income Tax Act, 1961 Section 80P(2)(a)(i) INCOME TAX ACT, 1961 --Deduction under section 80P--Co-operative society Recovery of Jeep charges--Assessee claimed deduction under section 80P(2)(a)(i). Assessing officer while computing deduction disallowed jeep recovery charges in respect of jeep expenses incurred on trips made by staff of the society to recover the dues from defaulting borrowers as also for inspection of securities. *Held:* Where the collection was from the debtors or from the members, the same was not in fact a source of revenue but only a recoupment of cost. If at all there was a net gain, which could well be, it was only the net income which could in that case stand to be excluded, and that too if the same was not a part of the lending activity to its members. There was as such no question of its exclusion while computing the deduction eligible under section 80P(2)(a)(i) in present case. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1177 (Jp-Trib) : (2013) 051 (II) ITCL 0223

INCOME TAX ACT, 1961

--Deduction under section 80P--Co-operative society Fees received in respect of issuing no-due certificatesAssessing officer considered the fees received in respect of issuing no-due certificate as income from other sources, and accordingly disallowed assessee's claim. Held: Where the borrower, wishes to transfer his borrowing or otherwise switch to another bank or co-operative society, he has to be issued a 'no dues certificate' from the existing lender. Assessee charges a nominal fee for the same. Therefore, the same can not be assessed as income from other sources, being only integral to the assessee's principal business of lending.

Income Tax Act, 1961 Section 80P(2)(a)(i)

INCOME TAX ACT, 1961

--Deduction under section 80P--Co-operative society Interest from employees--Assessee is a co-operative society engaged in providing credit facilities to its members. Assessing officer disallowed assessee's claim for deduction under section 80P(2)(a)(i) on account of interest from employees and treated them as income from other sources. Held: Most of the employers facilitate and accommodate their employees by giving loans, either on interest bearing or even on interest-free basis. The income so earned can only assessable under section 56, and cannot be considered as undertaking of an activity incidental to its principal or operational activity. In fact, what is relevant from the standpoint of section 80P(2)(a)(i) is whether the relevant income flows from the members or non-members, disqualifying the income arising from the latter from the deduction under section 80P(2)(a)(i). The relevant consideration, was whether the income under reference flows from or was by way of providing credit facilities by assessee-society to its members, the answer to which is clearly in the negative.

Income Tax Act, 1961 Section 80P(2)(a)(i)

INCOME TAX ACT, 1961

--Deduction under section 80P--Co-operative society Recovery of Jeep charges--Assessee claimed deduction under section 80P(2)(a)(i). Assessing officer while computing deduction disallowed jeep recovery charges in respect of jeep expenses incurred on trips made by staff of the society to recover the dues from defaulting borrowers as also for inspection of securities. Held: Where the collection was from the debtors or from the members, the same was not in fact a source of revenue but only a recoupment of cost. If at all there was a net gain, which could well be, it was only the net income which could in that case stand to be excluded, and that too if the same was not a part of the lending activity to its members. There was as such no question of its exclusion while computing the deduction eligible under section 80P(2)(a)(i) in present case.