2026 (3) TMI 276

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....ce, probabilities and the facts and circumstances in the Appellant's case. 2. The Appellant denies to be assessed to tax on total income as determined by the learned AO of Rs. 76,64,252/- as against the actual total income of Nil on the facts and circumstances of the case. 3. The learned Commissioner of Income-tax (Appeals) failed to appreciate that the learned AO has erred in disallowing the deduction u/s 80P despite that the Appellant is registered under Karnataka Souharda Sahakari Act, 1997 which are eligible for deduction as they are considered as "co-operative societies" within the meaning of section 2(19) of the Act in the facts and circumstances of the case. 4. The learned Commissioner of Income-tax (Ap....

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....tive society registered under the Karnataka Souharda Sahakari Act, 1997. The assessee filed their return of income declaring a Nil income. Subsequently, notices u/s. 143(2) as well as u/s. 142(1) were issued and the assessee also submitted the details as called for by the AO. The AO had denied the deduction claimed u/s. 80P(2) of the Act on the ground that the assessee is not a credit co-operative society since they were registered under the Karnataka Souharda Sahakari Act, 1997 and treated the assessee as an AOP. The AO had also made an addition u/s. 40(a)(ia) of the Act since the assessee had not furnished the details of the TDS deducted on the interest payments. Similarly, the AO had added the provision for NPA as income. As against the ....

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....A) had rightly denied the deductions. 6. We have heard the arguments of both sides and perused the materials available on record. 7. The first and foremost issue to be decided in this appeal is whether the assessee registered under the provisions of the Karnataka Souharda Sahakari Act, 1997 would also fit into the definition of co-operative society. This issue was already decided by Hon'ble Jurisdictional High Court in the judgments reported in (2020) 421 ITR 670 in the case of Swabhimani Souharda Credit Cooperative Ltd. vs. Govt. of India, (2020) 426 ITR 457 in the case of Shri Vitthalray Souharda Pattin Sahakari Niyamit vs. Union of India and (2025) 174 taxmann.com 789 in the case of Udaya Souhardha Credit Co-operative Society Ltd. ....

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....herein it was held that the assessee being a co-operative society is entitled for exemption from TDS on interest payments u/s. 194A(3)(v) of the Act. Respectfully following the above said judgment of the Hon'ble Jurisdictional High Court, we also hold that the deduction u/s. 40(a)(ia) of the Act could not be made on the assessee and therefore we direct the AO to delete this addition also. 9. The third issue involved in this appeal is the addition made in respect of the provision for NPA. In the synopsis, it was submitted by the assessee that even in the absence of the details about the provision for NPA, the disallowance would have tax neutral effect as the same would be added back to gross total income and then deduction under Chapter V....