ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1(1), HUBBALLI vs. TOTGARS CO-OPERATIVE SALE SOCIETY LTD , SIRSI

This appeal is filed by the Revenue against the order dated 11.04.2016 of CIT(A), Hubballi relating to Assessment Year 2013-14.

The assessee is a Co-operative Society engaged in the business of processing and marketing of agricultural produce grown by the members. The assessee also provides the credit facility to its members besides running a kirana Store and earning interest on deposits. The assessee claimed deduction u/s 80P(2)(d) of the Act. The assessee claimed deduction on a sum of Rs.4,20,93,663/- which was interest and dividend received from Co-operative Societies. The AO denied the benefit of Page 2 of 7 deduction on the ground that the interest received by the assessee from Co-operative Societies which are engaged in business of banking and, therefore, regarded as Co- operative Banks. Since as per section 80P(4) of the Act to provision of section 80P(2)(d) are not applicable to Co-operative Banks, hence the AO denied the benefit of deduction u/s 80P(2)(d) of the Act.

On appeal by the assessee, the CIT(A) deleted the addition made by the AO by observing as under at paras 8 to 17 of the impugned order: