2023 (6) TMI 391

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....claim of deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 (hereinafter called 'the Act') (ii) whether interest income received amounting to Rs. 16,217/- from Cooperative Banks / Scheduled Banks, whether it is income from business or income from other sources. 3. Brief facts of the case are as follows: Assessee is a credit co-operative society registered under the Karnataka Cooperative Societies Act, 1959. Assessee is engaged in the business of providing credit facilities to its members. For the Assessment Year 2016-17, the return of income was filed declaring gross total income of Rs. 3,37,178/- which included interest income received on investments with banks amounting to Rs. 16,217/-. The assessee had claimed the entire ....

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.... Aggrieved by the order of the CIT(A), assessee has filed the present appeal before the Tribunal. The learned AR fairly submitted that assessee is primarily dealing with the non-members. Learned AR stated that out of 1462 members, 562 members are regular members and balance 900 members are associate members. The learned AR stated that with reference to the income received from non-members / associate members, the assessee may not be entitled to deduction under section 80P(2)(a)(i) of the Act. However, with reference to the regular members (total 562 members), the assesee would be entitled to proportionate deduction under section 80P(2)(a)(i) of the Act, with reference to the income earned from regular members. In this context, learned AR re....

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....sociate member; (b) Any banking company as a nominal member; (c) Any firm, company, co operative society or any body or corporation constituted by or under any law for the time being in force, as a nominal or associate member. * A nominal member shall not be entitled to any share in any form whatsoever in the assets or profits of the society and a nominal member who is an individual shall not also be entitled to become an office bearer of the society. * An associate member may hold shares but shall not be entitled to become an office bearer of the society." 8. Section 18 of the Karnataka Co-operative Societies Act, 1959 was amended whereby the following proviso was inserted with effect from 01.06.2014:- * "Provided that the numbe....

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....supra) reads as follows: "To sum up, therefore, the ratio decidendi of Citizen Cooperative Society Ltd. (supra), must be given effect to. Section 80P of the IT Act, being a benevolent provision enacted by Parliament to encourage and promote the credit of the co-operative sector in general must be read liberally and reasonably, and if there is ambiguity, in favour of the assessee. A deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication, as is sought to be done by the Revenue in the present case by adding the word "agriculture" into Section 80P(2)(a)(i) when it is not there. Further, section 80P(4) is to be read as a proviso, which proviso now specifically excludes co-o....