ALNAVAR CREDIT SOUHARDHA CO-OPERATIVE LIMITED,ALNAVAR vs. INCOME TAX OFFICER, WARD-1(1), HUBLI

ITA 738/BANG/2024Status: DisposedITAT Bangalore28 June 2024AY 2020-21Bench: SMT. BEENA PILLAI (Judicial Member), SHRI LAXMI PRASAD SAHU (Accountant Member)1 pages
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What did the Tribunal hold?

The Tribunal noted that the assessee is a cooperative society registered under the Karnataka Co-operative Societies Act. The primary issue was whether the interest income earned on investments made from surplus funds is eligible for deduction under Section 80P(2)(a)(i) or 80P(2)(d). The Tribunal considered various judicial precedents and concluded that interest income not attributable to the main business operations of the assessee is not eligible for deduction. However, the Tribunal directed the AO to allow the cost of funds for earning the interest income.

What were the facts?

The assessee, Alnavar Credit Souhardha Co-operative Ltd., filed its return of income declaring NIL income after claiming deductions. The Assessing Officer (AO) noticed that the assessee had claimed deduction u/s 80P(2)(a)(i) on interest income from investments in cooperative and commercial banks. The AO allowed part of the deduction but disallowed Rs.12,07,983, which was interest earned on fixed deposits with cooperative/commercial banks, relying on the judgment in Totgars Cooperative Sale Society Ltd.

What were the issues?

Whether interest income from investments made out of surplus funds by a cooperative society is eligible for deduction under Section 80P(2)(a)(i) or 80P(2)(d) of the Income Tax Act, and whether expenditure incurred for earning such income is allowable.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 80P(2)(d),Section 56,Section 57(iii)

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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE

Before: SMT. BEENA PILLAI & SHRI LAXMI PRASAD SAHU

For Appellant: Ms. Shreeraksha, CA
For Respondent: Shri Ganesh R. Ghale, Standing Counsel
Hearing: 30.05.2024Pronounced: 28.06.2024

Per Laxmi Prasad Sahu, Accountant Member This appeal is filed by the assessee against order dated 23.02.2024 of the Addl./Jt.CIT(Appeals)-8, Mumbai for the AY 2020-21 on the following grounds:-

“1. That the order of the Commissioner of Income Tax (Appeals) in so far it is prejudicial to the interests of the appellant is bad and erroneous in law and against the facts and circumstances of the case.

2.

That the learned Commissioner of Income Tax (Appeals) erred in law and on facts in not allowing the deduction u/s. 80P(2)(a)(i) of the Act with respect to interest income from investments even though such investments are made out of the surplus funds available with

The order continues below.

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