ALANKAR PRIMARY AGRICULTURAL CREDIT CO OPERATIVE SOCIETY ,ALANKAR vs. INCOME TAX OFFICER, WARD-1, PUTTUR

ITA 814/BANG/2024Status: DisposedITAT Bangalore26 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 held that for deduction under Section 80P(2)(a)(i), the income must be attributable to the main business of providing credit facilities. Investments in banks, even if compulsory, do not fall under this category. Regarding Section 80P(2)(d), the eligibility for deduction on interest from cooperative banks is dependent on whether the payer bank is governed by the Banking Regulation Act, 1949, and holds an RBI license; this aspect was remitted to the AO. The issue of computing the cost of funds for investment income was also remitted to the AO for fresh computation.

What were the facts?

The assessee, a cooperative society, filed its return of income declaring 'Nil' income after claiming deductions under Section 80P(2)(a)(i). The Assessing Officer (AO) disallowed the deduction on interest income earned from investments in banks and cooperative banks, treating it as income from 'Other Sources'. The CIT(Appeals) upheld the AO's order.

What were the issues?

Whether interest income earned by a cooperative society from investments in banks and other cooperative banks is eligible for deduction under Section 80P(2)(a)(i) or 80P(2)(d) of the Income Tax Act, and the correct computation of cost of funds for such income.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 80P(2)(d),Section 250,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: Shri Srikrishna Kantilia, CA
For Respondent: Shri Ganesh R. Ghale, Standing Counsel
Hearing: 30.05.2024Pronounced: 26.06.2024

Per Laxmi Prasad Sahu, Accountant Member

2.

This appeal is filed by the assessee against the order dated 23.4.2024 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2020-21 on the following grounds:-

“1. The order of the learned Commissioner passes under section 250 of the Act is opposed to law, equity, weight of evidence, probabilities and the facts and Circumstances in the Appellant's case.

2.

The appellant denies to be assessed to tax on total income as determined by the learned Assessing Officer Rs. 31,67,724/- as against the total income reported by the Appellant's of Rs. NIL on the facts and circumstances of the case.

3.

The

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