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TMI Blog2019 (2) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... the question was that such interest was received during the course of carrying on its activity of providing credit facilities to its members and hence, deductible under section 80P(2)(a)(i) of the Act. We find merit in the plea of assessee in this regard. The interest became due to the assessee from Ghatge Patil Group of companies, since it had failed to remit the amount of installments deducted by it along with interest to the Co-operative Society of the employees of the said concern. Section 49(3) of the Maharashtra Co-operative Societies Act postulates that the employers of members were mandatorily part of the main activity of the assessee society i.e. providing credit facilities to its members. Once the amount is received from the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax (Appeals) failed to appreciate that members of the appellant society have authorized their employers being group companies to recover the loan instalments from their salary and remit directly to the appellant only for the sake of convenience. In fact such authorization and surety from the employer is the basis on which the loans are advanced to the members. No loan is given without surety and authorization. 4. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) is not justified in making observation that there is no agreement between the appellant and the group companies when the employer has given undertaking to deduct the installment from the salary of the employee and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leave to add, alter, delete or modify all or any of the above grounds of appeal. 3. The issue raised in the present appeal is against the claim of deduction under section 80P(2)(a) of the Act in respect of interest received from Ghatge Patil Group of companies amounting to ₹ 23,74,646/-. 4. Briefly, in the facts of the case, the assessee was Employee Co-operative Credit Society of the employees of group of companies of M/s. Ghatge and Patil Group. The assessee society was engaged in the business of accepting deposits from its members and providing credit facilities to its members. The assessee society was also engaged in other than banking activities. The Assessing Officer during the course of assessment proceedings noted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus, explained that there were lot of dues from the companies, against which the assessee filed cases and during the year under consideration, the District Deputy Registrar, Co-operative Societies, Kolhapur had directed the companies to pay the dues along with interest and interest totaling ₹ 23,74,646/- was received during the year. It was claimed to be part and parcel of activity of assessee s society of providing credit facilities to its members and once these claimed to be its income and was eligible for deduction under section 80P(2)(i) of the Act. The Assessing Officer however, denied the said claim and made addition of ₹ 23,74,646/-. 5. The CIT(A) was of the view that in the absence of any business connection with gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered from the salaries of employees (members of Co-operative society) by the companies and after deduction, the amount had to be remitted to the assessee s society. The said procedure is laid down under section 49 of the Maharashtra Co-operative Societies Act itself. For the recovery of loan advanced, the employee gives authorization to his employer to deduct loan installment and interest from his salary and remit the same to the Co-operative Society. Under section 49(3) of the Maharashtra Co-operative Societies Act, it is provided that where the employer fails to deduct such installment or after deduction fails to remit the amount to the assessee s society, he was liable to pay installment along with 1 times interest to the society. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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