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The ITAT allowed the appeal, holding that the entire deduction under section 80P(2)(a)(i) cannot be denied due to minor income from e-stamping commissions earned from non-members, as the principle of mutuality applies to the predominant business activity with members. Incidental transactions with non-members do not destroy mutuality or the eligibility for deduction. Furthermore, interest income earned on fixed deposits with a Cooperative Bank, mandated by statutory reserve requirements under sections 57(2) and 58 of the Cooperative Societies Act, qualifies as operational income. Such income is distinguishable from interest on surplus funds and is eligible for deduction under section 80P(2)(a)(i). The matter was remanded to the AO to verify the statutory deposit calculations and allow the appropriate deduction accordingly.
The ITAT allowed the appeal, holding that the entire deduction under section 80P(2)(a)(i) cannot be denied due to minor income from e-stamping commissions earned from non-members, as the principle of mutuality applies to the predominant business activity with members. Incidental transactions with non-members do not destroy mutuality or the eligibility for deduction. Furthermore, interest income earned on fixed deposits with a Cooperative Bank, mandated by statutory reserve requirements under sections 57(2) and 58 of the Cooperative Societies Act, qualifies as operational income. Such income is distinguishable from interest on surplus funds and is eligible for deduction under section 80P(2)(a)(i). The matter was remanded to the AO to verify the statutory deposit calculations and allow the appropriate deduction accordingly.
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