2022 (5) TMI 1481 - AT - Income Tax

Deduction u/s.80P(2) - Assessee is a Co-operative Society with main activity to promote the interest of IRULA Community who come under the Scheduled Tribe ST - main activity of the Society is snake catching, extraction of venom, storage of venom, price fixing, selling of venom - DR prayed that bank interest earned by the Assessee is liable to be taxed under the head income from other sources - HELD THAT - Assessee received the interest from the co-operative bank TAICO . The co-operative banks are first cooperative society and thereafter they are converted into banks. The Hon ble jurisdictional High Court is also in favour of the Assessee. Hon ble Supreme Court in the case of Mavilayi Service Co-operative Bank Limited 2021 (1) TMI 488 - SUPREME COURT observed that whether the Assessee is registered as a primary agricultural credit society, it is entitled for the benefit of deduction u/s.80P(2) of the Act, notwithstanding that it was also giving loans to its members which is not related to agriculture. Respectfully considering the judicial observations, it is clear that, in the case of the interest earned from the co-operative bank, it does not come under the consideration of the income from other sources. The said interest is eligible for deduction u/s.80P(2) of the Act. Charges received from the video and still photography - As it is a settled issue as stated by the learned Counsel. Assessee, mentioned that in the assessment years 2012 2013 and 2014 2015, CIT(A) had allowed the charges received from different parties related to this assessee. Gate collection fee or viewing or the camera charges is the income by way of admission charges are either direct income by way of collective disposal of the labour or attributable to the activities of the society. Though, it is not a disposal of labour but the said income is entering into the income of the co-operative society and ploughs back the amount in the activities of the society. So, the income generated from the camera charges is liable for deduction u/s.80P(2) - Appeal of the Revenue dismissed.

Summary

Issues:
1. Condonation of delay in filing appeal due to Covid-19 pandemic.
2. Disallowance of deduction u/s.80P(2) of the Income Tax Act.
3. Taxability of interest income from cooperative banks.
4. Taxability of charges received from video and still photography.

Condonation of Delay:
The Revenue filed an appeal against the CIT(A)'s order, which was delayed by 175 days. The Income Tax Officer attributed the delay to the Covid-19 pandemic and filed an application under Section 5 of the Limitation Act. The Tribunal, considering the circumstances and the Supreme Court's directions, condoned the delay and admitted the appeal for adjudication on merits.

Disallowance of Deduction u/s.80P(2):
The Assessee, a Co-operative Society promoting the interest of the "IRULA" Community, claimed deduction u/s.80P(2) during assessment proceedings. The Assessing Officer disallowed the deduction, adding back interest income and video/still photography charges. The CIT(A) allowed the deduction related to u/s.80P(2) and video/still photography charges. The Revenue appealed, arguing that the bank interest and photography charges should be taxed differently.

Taxability of Interest Income from Cooperative Banks:
The Assessee received interest from a cooperative bank, "TAICO." The Tribunal considered precedents and observed that cooperative banks are first cooperative societies, entitled to deduction u/s.80P(2) of the Act. Citing judicial observations and the Supreme Court's ruling, the interest earned from the cooperative bank did not fall under income from other sources and was eligible for deduction.

Taxability of Charges from Video and Still Photography:
The Tribunal settled the issue of charges received from video and still photography. The Assessee argued that these charges were income by way of admission charges, ploughed back into the activities of the society. Referring to past assessments and the nature of the income, the Tribunal concluded that the income generated from camera charges was liable for deduction u/s.80P(2) of the Act. Consequently, the appeal of the Revenue was dismissed, affirming the deductions allowed by the CIT(A).

In conclusion, the Tribunal upheld the deductions claimed by the Assessee under u/s.80P(2) and dismissed the Revenue's appeal. The judgment clarified the tax treatment of interest income from cooperative banks and charges received from video and still photography, providing a comprehensive analysis based on legal precedents and interpretations of the Income Tax Act.