Ashapura Co-op. Credit Society Ltd. v. The Deputy Commissioner of Income Tax

Parties Involved

Facts Summary

The assessee, a co-operative credit society, filed its return of income electronically on 29.09.2017, declaring a total income of Rs. 140/- after claiming a deduction under section 80P of Rs. 21,69,578/-. The case was selected for limited scrutiny under CASS. The Assessing Officer noted that the assessee is engaged in the business of providing credit facilities to its members only from the deposits received from them. The assessee declared a net profit of Rs. 20,00,000/- for the year, and after adjustments, claimed a deduction under section 80P resulting in Nil income in the computation, though the return declared Rs. 140/- as taxable income. During the course of assessment, the Assessing Officer issued a show cause notice proposing to tax interest income earned from deposits with banks. The assessee clarified that its claim under section 80P comprised two limbs, namely, Rs. 4,80,651 under section 80P(2)(a)(i) being income from members for providing credit facility, and Rs. 16,88,927 under section 80P(2)(d) being interest from co-operative banks, aggregating to Rs. 21,69,578 as claimed in the return.…

Legal Issues

• 1. Whether the interest received by the appellant from the Co-operative Societies/Banks is eligible for deduction under section 80P(2)(d) of the Income Tax Act, 1961?
• 2. Whether the expenditure incurred for earning the income of Rs. 16,88,927/- is eligible for deduction under section 57 of the Income Tax Act, 1961?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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