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Issues involved: Interpretation of deduction u/s 80P(2)(a)(i) and u/s 80P(2)(c)(ii) for rent received from excess portion of building used for credit facility business.
Interpretation of u/s 80P(2)(a)(i): The Appellate Tribunal considered whether the rent received from the excess portion of a building used for providing credit facility to members is eligible for deduction u/s 80P(2)(a)(i). The Tribunal noted that as per sec.80P of the Act, only profits and gains attributable to specified activities are eligible for deduction. Since providing credit facilities is the core activity and the rental income is assessable under "income from house property," the Tribunal held that the assessee is not entitled to deduction u/s 80P(2)(a)(i). Interpretation of u/s 80P(2)(c)(ii): The Tribunal also analyzed the applicability of u/s 80P(2)(c)(ii) for the rental income. Referring to a judgment of the Hon'ble High Court of Kerala, the Tribunal highlighted that income attributable to an activity in which the cooperative society is engaged is exempted under this section. However, when a society lets out its property and receives rental income, it does not qualify as profits or gains attributable to the society's activity. The Tribunal emphasized that letting out surplus space does not fall under clause (c) of Section 80P(2) and therefore, the rent received is not eligible for exemption under section 80P(2)(c). Conclusion: After considering the arguments and legal provisions, the Tribunal concluded that the assessee is not entitled to deduction u/s 80P for the rental receipts. Consequently, the appeal was dismissed, and the assessee was not granted the requested deductions.
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