AUTO NIRVAHAKARA CREDIT OPERATIVE SOCIETY LIMITED,UDUPI vs. INCOME TAX OFFICER, WARD-3, UDUPI

ITA 2214/BANG/2025Status: DisposedITAT Bangalore17 March 2026AY 2017-18Bench: SHRI WASEEM AHMED (Accountant Member), SHRI KESHAV DUBEY (Judicial Member)1 pages
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What did the Tribunal hold?

Regarding the provision for interest, the Tribunal held that even if disallowed, the addition would be absorbed by the deduction u/s 80P(2)(a)(i), leading to a revenue-neutral exercise. For the interest income from scheduled banks, the Tribunal found that the AO did not properly examine the nature and source of funds, which are crucial for determining eligibility for deduction u/s 80P(2)(a)(i).

What were the facts?

The assessee, a co-operative society, filed its ROI declaring nil income after claiming deduction u/s 80P(2)(a)(i). The AO disallowed a provision of Rs. 14,20,000 for interest payable to members, treating it as hybrid accounting. Similarly, interest income of Rs. 32,043 from scheduled banks was taxed as income from other sources.

What were the issues?

Whether a provision for interest payable to members and interest income from scheduled banks are eligible for deduction u/s 80P(2)(a)(i)?

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 250,Section 28

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Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE

Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY

For Appellant: Shri Prasanna Shenoy, CA
For Respondent: Shri Ganesh R Ghale, Advocate – Standing
Hearing: 24.02.2026Pronounced: 17.03.2026

PER WASEEM AHMED, ACCOUNTANT MEMBER:

The present appeal has been instituted by the assessee against the order of the Ld. CIT(A) passed u/s 250 of the Act dated 31.07.2025. 2. The assessee in its memorandum of appeal has raised many grounds. However, for the sake of brevity and convenience, we are not inclined to reproduce the same here.

3.

Ground Nos. 1 and 2 are interconnected and relates to provision for interest payable to members.

4.

The relevant facts are that the assessee is a society, filed its ROI for captioned AY declaring income as nil after claiming deduction u/s 80P(2)(a)(i) of the Act. The case of the assessee was selected fo

The order continues below.

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