INCOME TAX ACT, 1961

Section 80P

Deduction under section 80P - Assessee dealing with nominal members - Deduction of propotionate cost, administrative and other expenses -

Assessee claimed deduction under section 80P. AO rejected the claim for deduction under section 80P holding that assessee was dealing with Nominal members and hence, fails in the Principle of Mutuality. Accordingly, AO held that assessee was not eligible for deduction under section 80P. Held: In the case of Karkala Co-op S. Bank Ltd. v. ITO [ITA Nos. 1288 & 1289/Bang/2019 dated 18-2-2021], Tribunal had considered issue of eligibility of the assessee to claim deduction under section 80P(2)(d) and it was held that assessee was eligible for deduction of expenses incurred for earning the interest income. Following the above said decision of the Tribunal, matter was restored back to AO with the direction to allow deduction of proportionate cost, administrative and other expenses, if AO proposes to assess the interest income earned from bank deposits as income under the head 'Income from other sources'.

Followed:Citizen Co-operative Society Limited v. ACIT (2017) 250 Taxman 78 (SC) : 2017 TaxPub(DT) 2053 (SC), Totgars´ Cooperative Sale Society Limited v. ITO (2010) 188 Taxmann.com 282 : 2010 TaxPub(DT) 1466 (SC), Pr. CIT v. Totagars Co-operative Sale Society (2017) 83 Taxmann.com 140 : 2017 TaxPub(DT) 1748 (Karn-HC), M/s The Totgars' Co-operative Sale Society Ltd. v. ITO (2015) 58 taxmann.com 35 (Karn), Karkala Co-op. S. Bank Ltd. v. ITO (ITA No.1288 & 1289/Bang/2019 dated 18-2-2021).

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 80P

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