NASHIK DISTRICT SECONDARY TEACHERS CO-OP CREDIT SOCIETY LTD,NASHIK vs. COMMISSIONER OF INCOME-TAX, (APPEAL) -1, NASHIK

The only issue raised in this appeal is against the confirmation of disallowance of deduction u/s.80P on interest earned from staff loan to the tune of Rs.2,65,702/-.

Briefly stated, the facts of the case are that the assessee is a Co-operative Society engaged in the business of providing credit facilities to its members. The Assessing Officer (AO) observed that the assessee had shown receipt of Rs.6,33,839/- from loans given to its employees. He reduced proportionate expenses and worked out the net amount at Rs.2,65,702/-. By allowing deduction u/s.80P(2)(c) at Rs.50,000/-, the AO made disallowance at Rs.2,15,702/-, which came to be sustained in the first appeal.

I have heard both the sides and perused the relevant material on record. It is seen as an admitted position that the assessee is engaged in the business of providing credit facilities to its members. Section 80P(2)(a) provides that in the case of Co-operative society engaged in carrying on the business of banking or providing credit facilities to its members, the whole of the amount of profits and gains of business attributable to any one or more of such activities shall be eligible for deduction. The ld. AR submitted that the staff members to whom the advances were made, are also the members and further no disallowance was ever made in the Nashik District Secondary Teachers Co-op. Credit Society Ltd., past on such interest received from the staff members. The rule of consistency comes into play which necessitates the allowing of claim u/s.80P on such interest income. I, therefore, direct to delete the disallowance made by the ld. CIT(A).

In the result, the appeal is allowed.