ITAT denies deductions for interest, rental, and misc. income under sec 80P(2)(d) for lack of nexus.

The ITAT dismissed the appeal regarding the eligibility of deductions under section 80P(2)(d) for interest income from nationalized banks and for rental income and miscellaneous income. The decision was based on the lack of nexus between the income earned and the core activities of the cooperative society, as established by legal precedents and interpretations of the Income Tax Act.

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Issues:
1. Eligibility of deduction under section 80P(2)(d) for interest income from nationalized banks.
2. Eligibility of deduction under section 80P for rental income and miscellaneous income.

Issue 1:
The appeal involved a dispute regarding the eligibility of the assessee for a deduction under section 80P(2)(d) of the Income Tax Act for interest income earned from nationalized banks. The Assessing Officer disallowed the deduction, adding the interest income to the total income of the assessee. The CIT(A) upheld the disallowance, stating that the interest income earned from nationalized banks did not qualify for deduction under section 80P(2)(d) as there was no nexus between the interest earned and the core activities of providing credit facilities to members. The ITAT, citing relevant case law including the Supreme Court and Gujarat High Court decisions, affirmed the CIT(A)'s decision, stating that interest income from investments in banks, not being cooperative societies, was not deductible under section 80P(2)(d). Consequently, the appeal on this issue was dismissed.

Issue 2:
The second ground of appeal concerned the disallowance of deduction under section 80P for rental income and miscellaneous income. The Assessing Officer disallowed an amount representing rental income and miscellaneous income, stating that these incomes were not incidental to the primary activities of the cooperative society. The CIT(A) upheld the disallowance, emphasizing that the assessee failed to establish how this income was incidental to its activities. The ITAT, relying on various precedents from different High Courts and Tribunals, confirmed the CIT(A)'s decision. It was held that rental income or any income not incidental to the primary activity of the cooperative society was not eligible for deduction under section 80P. The appeal on this issue was also dismissed by the ITAT.

In conclusion, the ITAT dismissed the appeal of the assessee on both issues related to the eligibility of deductions under section 80P(2)(d) for interest income from nationalized banks and for rental income and miscellaneous income. The decision was based on the lack of nexus between the income earned and the core activities of the cooperative society, as established by relevant legal precedents and interpretations of the Income Tax Act.

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