INCOME TAX ACT, 1961

Section 80P

Deduction under section 80P - Allowability - Providing credit facility to assessee's members and associate members -

Assessee was a co-operative society carrying on business of providing credit facilities and claimed deduction under section 80P. AO denied benefit of deduction under section 80P on allegation that assessee-society was carrying on banking business for public at large and its operation was not confined to its members but outsiders as well. Held: In terms of definitions of expressions 'members' and 'associate member' under Tamil Nadu Cooperative Societies Act, 1983, an 'associate member' is also a 'member' in terms of Section 2(16) of Tamil Nadu Cooperative Societies Act, 1983. AO himself found that associate members were also admitted as members of society. In such circumstances, AO fell into an error in not granting any relief to assessee. In addition to that, AO did not point out that loans were disbursed to all and in terms of Clause (b) to sub-section (4) of section 80P, society had an area of operation, and it operated within taluk and will provide long term credit for agricultural and rural development activities as well.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2011-12

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