Manjunatheshwara Credit CoOperative Society Ltd v ITO

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The Tax Publishers2021 TaxPub(DT) 5608 (Bang-Trib)

INCOME TAX ACT, 1961

Section 80P(2)(a)(i)

The banking business, even though run by a co-operative bank, is sought to be excluded from beneficial provisions of exemption or deduction under section 80P. The purpose of bringing on the statute book sub-section (4) in section 80P was to exclude applicability of section 80P altogether to any co-operative bank and to exclude the normal banking business income from such exemption/deduction category. The words used in section 80P(4) are significant. Therefore, assessee was neither entitled to deduction under section 80P(2)(d) nor under section 80P(2)(a)(i) in respect of interest income earned from investments with Cooperative Banks and such interest income was to be assessed as income from other sources, necessarily, the cost incurred for earning such interest income should be allowed as deduction under section 57. AO was directed to verify the same.

Deduction under section 80P(2)(a)(i) - Co-operative society - Interest earned from funds invested in co-operative bank -

Assessee, a co-operative society claimed deduction under section 80P(2)(a)(i) as regards interest income dividend received on investments with co-operative banks. AO disallowed assessee's claim. Held: The banking business, even though run by a Co-operative bank is sought to be excluded from beneficial provisions of exemption or deduction under section 80P. The purpose of bringing on the statute book sub-section (4) in section 80P was to exclude applicability of section 80P altogether to any co-operative bank and to exclude the normal banking business income from such exemption/deduction category. The words used in section 80P(4) are significant. Therefore, assessee was neither entitled to deduction under section 80P(2)(d) nor under section 80P(2)(a)(i) in respect of interest income earned from investments with Cooperative Banks such interest income was to be assessed as income from other sources, necessarily, the cost incurred for earning such interest income should be allowed as deduction under section 57. AO was directed to verify the same.

Followed:Vasavamba Co-operative Society Ltd. v. Pr. CIT [ITA No.453/Bang/2020 Order, dated 13-8-2021]Impliedly Followed:Principal Commissioner & Anr. v. Totagars Co-operative Sale Society (2017) 395 ITR 611 (Kar.) : 2017 TaxPub(DT) 1748 (Karn-HC)

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2015-2016

IN THE ITAT, BANGALORE BENCH