2024 (8) TMI 1752

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....t assessee is registered as a Primary Agricultural Credit Society under Karnataka State Cooperative Societies Act, 1959. ITR was filed for AY 2016-17 under Section 148 on 04.11.2017 with a returned total income of Rs. 75,56,377 after claiming deduction of Rs.75,56,377/- under Section 80P(2)(a)(i) r.w.s 80P(2)(d), 80P(2)(a)(ii), 80P(2)(c) which they are legitimately entitled to. Assessee cooperative society under Section 2(19) of IT Act is engaged in carrying on the business of banking or providing credit facilities to its members. Members include Ordinary Members who have voting and profit-sharing rights and also Nominal Members who do not have such rights. Nominal Members are admitted under Section 17 and 18 of KSCS and are defined as Memb....

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....ector of Co-operative Societies Audit under KSCS Act for auditors. If this is not so ascertained it would be a violation of KSCS Act governing the assessee society. Learned AO has erred in adding this disallowing this ascertained expenditure to the total income by treating the same as ascertained provisions. Assessee cooperative society has received interest or dividend income on investments of surplus funds available with them at different points in time which were not required by them for lending to its members as there were no takers at that time. It is in fact the working capital of the assessee and not their liability. Therefore, the assessee has claimed deduction of such income amounting to Rs. 70, 66,995 as it is attributable to carr....

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.... member, the income earned on account of providing credit facilities to such member also qualify for deduction u/s 80P(2)(a)(i) of the Act. It was further held by the Hon'ble Apex Court that section 80P(4) of the I.T. Act is to be read as a proviso. It was stated by the Hon'ble Apex Court that section 80P(4) of the Act now specifically excludes only co- operative banks which are co-operative societies engaged in the business of banking i.e. engaged in lending money to members of the public, which have a license in this behalf from the RBI. The Hon'ble Apex Court had enunciated various principles in regard to deduction u/s 80P of the Act. On identical factual situation, the Bangalore Bench of the Tribunal in the case of M/s. Ravindra Multipu....