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| The Tax Publishers2020 TaxPub(DT) 3542 (Bang-Trib) INCOME TAX ACT, 1961
Section 80P
Where AO denied deduction under section 80P(2) on the ground that assessee being in banking business, accepted deposits from general public being 'C' Class nominal members and also lent the funds, whereas, nominal members were contributors for earning surplus and did not participate in surplus of society, hence, concept of mutuality ceased to exist, issue was restored to AO to examine and verify eligibility of nominal members because generally nominal members are also eligible for benefits of credit society.
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Deduction under section 80P - Allowability - Assessee-society accepted deposits from nominal members and also lent funds - AO alleging violation of principle of mutuality
Assessee, a Primary Agriculture Co-operative Society formed for benefit of Members engaged in agricultural activities and also engaged in accepting deposits and lending of finances to Members claimed deduction under section 80P. AO denied deduction under section 80P(2) on the ground that assessee being in banking business, accepted deposits from general public being 'C' Class nominal members and also lent the funds, whereas, nominal members were contributors for earning surplus and did not participate in surplus of society, hence concept of mutuality ceased to exist. Held: Generally nominal members are also eligible for benefits of credit society. Accordingly, issue was restored to AO to examine and verify eligibility of nominal members and assessee was to be provided adequate opportunity of hearing.
REFERRED :
FAVOUR : Matter remanded.
A.Y. :
IN THE ITAT, BANGALORE BENCH
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