“Section 2(1)(d)”
The decision most relied on for Section 2(1)(d) is Mavilayi Service Co-operative Bank Ltd. v. CIT (431 ITR 1), cited in 999 judgments on BharatTax.
Leading authorities on Section 2(1)(d)
Section 80P(4) serves as a proviso to Section 80P(1) and (2), excluding only cooperative banks that are cooperative societies and possess an RBI license for banking business. Its purpose is to exclude cooperative banks operating like commercial banks that lend money to the public.
Interest income earned by a cooperative society from its investments or surplus deposits with a cooperative bank is eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961.
The "Purpose Test" determines whether an incentive or subsidy is a capital or revenue receipt for income tax purposes. If the incentive's purpose is to enable an assessee to set up a new industry or make investments in capital assets, it is a capital receipt and not taxable.
When there is a conflict between the decisions of non-jurisdictional High Courts, the view that favors the assessee should be preferred.
An order imposing penalty for failure to carry out a statutory obligation results from quasi-criminal proceedings. Penalty is not ordinarily imposed unless the party acted deliberately in defiance of law, was guilty of contumacious or dishonest conduct, or acted in conscious disregard of their obligation.
Interest earned by a Co-operative Society from investing fixed deposits in banks is entitled to a deduction under Section 80P(2)(a)(i) of the Income-tax Act.
The Supreme Court affirmed the doctrine of mutuality, holding that contributions received from and returned to members for a common purpose do not constitute taxable profits. However, income from transactions with non-members or interest earned from investments in external entities (like cooperative banks) may break the mutuality chain and be taxable under Section 56, falling outside the scope of Section 80P deductions.
The Assessing Officer cannot deny a Section 80IA deduction by merely asserting that the assessee is not a "developer" without considering the relevant agreements and facts. Entitlement to Section 80IA deduction requires a thorough examination of the assessee's role as a developer.
