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2022 (12) TMI 76 - AT - Income TaxDeduction u/s 80P - exemption of interest income received from other cooperative society u/s 80P(2)(d) - AO was of the opinion that the interest income so received is not eligible for exemption u/s 80P(2)(d), as the said income was received from non-members of the society - HELD THAT - Reasoning of the Assessing Officer as well as the ld. CIT(A) was overruled by the Co-ordinate Bench of this Tribunal in the case of The Ugar Sugar Works Kamgar Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society 2021 (11) TMI 1117 - ITAT PANAJI in favour of the appellant society. Thus the interest income is eligible for deduction u/s 80P(2)(d) - we direct the Assessing Officer to allow the same. Hence, the ground of appeal no.1 stands allowed. Additions made u/s 40(a)(ia) and section 36(1) of the Act - HELD THAT - As the inflated profits on account of such disallowances, would also qualify for deduction u/s 80P(2)(a)(i) of the Act. Hence, direct the Assessing Officer to allow the above disallowances which form part of the business income of the appellant society for exemption u/s 80P of the Act. Accordingly, ground of appeal nos.2 and 3 stands allowed.
Issues:
1. Denial of exemption under section 80P(2)(a)(i) and section 80P(2)(d) of the Income Tax Act, 1961. 2. Disallowance under section 40(a)(ia) for non-deduction of tax at source. 3. Disallowance of contribution made to Provident Fund (PF) under section 36(1)(iv) and 36(1)(va). Issue 1: Denial of exemption under section 80P(2)(a)(i) and section 80P(2)(d): The appellant, a cooperative society, filed an appeal against the assessment order denying exemption under section 80P(2)(a)(i) and section 80P(2)(d) of the Act. The ld. CIT(A) held that the appellant is a cooperative society, not a cooperative bank, and directed the Assessing Officer to allow the deduction under section 80P(2)(a)(i) if interest income is not earned from nominal members. The Tribunal referred to previous decisions and ruled that interest income derived from investments with other cooperative societies is exempt under section 80P(2)(d). The Tribunal overruled the Assessing Officer's reasoning that the interest income was received from non-members and allowed the deduction under section 80P(2)(d) based on relevant case laws and judgments. Issue 2: Disallowance under section 40(a)(ia) for non-deduction of tax at source: The ld. CIT(A) directed the Assessing Officer to allow the claim under section 40(a)(ia) after proper verification. The Tribunal, without delving into the merits of the disallowances, held that the disallowed amounts would qualify for deduction under section 80P(2)(a)(i) of the Act as part of the business income of the appellant society. Consequently, the Tribunal directed the Assessing Officer to allow the disallowances as part of the business income eligible for exemption under section 80P of the Act. Issue 3: Disallowance of contribution made to Provident Fund (PF) under section 36(1)(iv) and 36(1)(va): The Assessing Officer disallowed contributions made to Provident Fund (PF) under section 36(1)(iv) and 36(1)(va) on the grounds that the contributions were not made to an approved fund. However, the Tribunal did not specifically address this issue in its judgment, as the focus was on allowing the disallowances under section 40(a)(ia) for exemption under section 80P(2)(a)(i) of the Act. In conclusion, the Tribunal allowed the appeal filed by the assessee, directing the Assessing Officer to grant the deductions under section 80P(2)(d) and section 80P(2)(a)(i) for interest income and disallowances, respectively. The Tribunal emphasized the eligibility of certain disallowances for exemption under section 80P of the Income Tax Act, 1961.
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