INCOME TAX ACT, 1961

Section 80P

Deduction unders ection 80P - Allowability - Income by way of interest or dividends derived by the co-operative soceity from its investments with any other co-operative society -

Assessee was a co-operative society engaged in providing credit facilities to its members. AO made disallowance of deduction under section 80P(2)(d) being income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society.Held: Revenue's case was covered by South Eastern Railways Employees Co-operative Credit Society Limited 2016 TaxPub(DT) 4145 (Cal-HC) The State Co-operative Societies Act, 2006 and Rules thereunder mandate 10% of net profit in every cooperative year to be transferred to a reserve fund. Interest income on rest of the net profit of assessee appeared to be similar income or to be similarly treated as interest income on investment of sale of agricultural produce of the assessee. In such circumstances, matter was remanded to AO to work out interest earned on the reserve fund, if invested and allow deduction therefore, in addition to the deduction already allowed in applying section 80P(2)(d).

Followed:Totgars' Cooperative Sale Society Ltd. v. ITO (2010) 322 ITR 283 (SC) : 2010 TaxPub(DT) 1466 (SC), CIT v. South Eastern Railway Employees Co-Op. Credit Society Ltd. (2017) 390 ITR 524 (Cal) : 2016 TaxPub(DT) 4145 (Cal-HC) and ITO v. The Electro Urban Co-op. Credit Society Ltd. [ITA No. 144/Kol/2016, dt. 17-11-2017].

REFERRED :

FAVOUR : In assessee's favour by way of remand.

A.Y. :

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