MUDUR VYAVASAYA SEVA SAHAKARI SANGHA LTD., ,UDUPI vs. INCOME TAX OFFICER, WARD-1 & TPS, UDUPI

ITA 299/BANG/2024Status: DisposedITAT Bangalore14 May 2024AY 2020-211 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the assessee is eligible for deduction under Section 80P(2)(a)(i) on interest income derived from providing credit facilities to its regular members (A & B class). However, interest income from C & D class members, who are not considered members as per bye-laws, is to be disallowed. The issue regarding deduction under Section 80P(2)(d) on interest income from investments in District Cooperative Banks was remitted to the AO for fresh consideration.

What were the facts?

The assessee, a cooperative society, claimed deduction under Section 80P for business profits and interest on investments. The Assessing Officer (AO) disallowed the deduction, citing a violation of the 'mutuality' principle due to transactions with non-members and non-compliance with the Karnataka Co-operative Societies Act. The CIT(Appeals) upheld the disallowance of deduction on business profits but partly allowed deduction on interest income from other cooperative societies.

What were the issues?

Whether the cooperative society is entitled to deduction under Section 80P on interest income from members and non-members, and whether interest income from investments in cooperative banks is eligible for deduction.

Which sections of the Income-tax Act were involved?

Section 80P,Section 56

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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI LAXMI PRASAD SAHU

For Appellant: Shri Mahesh R. Uppin, Advocate
For Respondent: Shri Ganesh R. Ghale, Standing Counsel
Hearing: 21.03.2024Pronounced: 21.03.2024

Per Laxmi Prasad Sahu, Accountant Member This appeal is filed by the assessee against the DIN & Order No.ITBA/NFAC/S/250/2023-24/1058924345(1) dated 20.12.2023 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2020-21. 2. The concise grounds of appeal are as under:-

“ 1. Whether both the below authorities were justified in denying the benefit of deduction u/s. 80P(2)(a)(i) of the Act to the appellant in respect of its Business Profits of Rs. 12,70,793/- holding that the 'concept of mutuality' was dislodged in Appellant society even when the appellant society had 1,807 Regular Members, 168 Associate Member

The order continues below.

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