2012 (7) TMI 760

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.... Commissioner of Income Tax(A) erred in disallowing the claim for deduction under Section 80 P (2)(a)(i) of the Income Tax Act, 1961 of Rs.63,56,983/- on interest income from providing of credit facilities to its members. 3. The brief facts of the case are that the Assessing Officer observed that assessee is engaged in the business of marketing the products of its members being sago which is a processed product with the aid of power. The assessee has claimed deduction of Rs.63,56,983/- under Section 80 P(2)(a)(i) of the Act on providing of credit facilities to its members. He observed that the deduction is available only to a co-operative society, which is engaged in carrying on business of banking or providing credit facilities to its m....

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....come of Rs.63,56,983/- by providing of credit facilities to its members. The assessee had claimed deduction of the said amount under Section 80 P(2)(a)(i) of the Act, which was disallowed by the Assessing Officer on the ground that the business of the society was marketing the products of its members and not that of banking society, which was confirmed in appeal by the Commissioner of Income Tax(A). We find that on similar issue, this Tribunal has restored the matter back to the file of the Assessing Officer in the case of M/s.Dharmapuri District Co-operative Sugar Mills Ltd. Both the parties before us has agreed that the issue should be restored to the file of the Assessing Officer with the very same direction as given in the case of M/s.D....

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....respect of income of co-operative societies is provided for. Under section 80P(1) where the gross total income of a co-operative society includes any income referred to in sub-section (2) then the sums specified in sub-section (2) shall be deducted from the gross total income to arrive at the total income of the assessee-society. In order to earn exemption under section 80P(2)a co-operative society must prove that it had engaged itself in carrying on any of the several businesses referred to in sub-section (2). In that connection, it is important to note that under sub-section (2), in the context of co-operative society, Parliament has stipulated that the society must be engaged in carrying on the business of banking or providing credit fac....