INCOME TAX ACT, 1961

Section 80P(2)

Deduction under section 80P - Co-operative society - Interest on FDs in different co-operative banks - Assessee being a souharda co-operative

Assessee-society was in business of providing credit facilities to its members. It earned interest on FDs in different co-operative banks and claimed deduction under section 80P(2). Revenue disallowed the said claim of deduction on the ground that the assessee was not a purely co-operative society. Assessee contended that it was basically a co-operative society registered under Karnataka Co- operative Society Act, 1959 and as such, the interest income earned on FDs would be eligible for deduction under section 80P(2). Held: Souharda co-operatives are also one form of co-operative societies registered under a law in force in the State of Karnataka for registration of co-operative societies. Thus, the conclusion of the Revenue that the assessee could not be regarded as a co-operative society was unsustainable. Accordingly, the assessee's claim regarding deduction under section 80P(2) could not be rejected on the basis that the assessee could not be regarded as a co-operative society. However, the matter was remanded to AO for fresh decision regarding allowability of deduction under section 80P(2) after examining other conditions for allowing such deduction because those conditions were not examined by the AO.

REFERRED : Sindhu Credit Souharda Sahakari Niyamita v. ITO ITA No. 2144/Bang/2019 vide order dt. 20-2-2020 and Mahaveer Credit Co-operative Society Ltd. v. ITO in ITA Nos. 282 & 283/Bang/2020 dt. 21-8-2020.

FAVOUR : Matter remanded.

A.Y. : 2016-17

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