Udupi Taluk Protestant Christian Credit Co-operative Society Ltd. vs. ITO

Parties Involved

Facts Summary

The assessee, Udupi Taluk Protestant Christian Credit Co-operative Society Ltd., is a credit co-operative society registered under the Karnataka Co-operative Society Act, 1959. It provides credit facilities to its members. For the assessment year 2018-19, the assessee filed its return of income declaring a gross total income of Rs.1,47,79,120/-, after claiming a deduction of Rs.1,47,77,664/- under section 80P of the Income Tax Act, 1961. The Assessing Officer (AO) observed that the interest income earned by the assessee from commercial banks should be segregated from the business income and taxed under section 56 of the Act. The AO did not allow corresponding expenses while taxing the income under the head 'Other sources' and also held that the assessee is not entitled to the deduction under section 80P(2)(d) of the Act in respect of the interest income earned from co-operative banks. Aggrieved by this order, the assessee appealed to the Commissioner of Income Tax (Appeals) (CIT(A)), contending entitlement for the deduction under section 80P(2)(d) or, alternatively, for corresponding expenses. The CIT(A) dismissed the appeal.…

Legal Issues

• 1. Whether the interest income earned by the assessee from commercial banks should be segregated and taxed under section 56 of the Act.
• 2. Whether the assessee is entitled to deduction under section 80P(2)(d) of the Act in respect of the interest income earned from co-operative banks.
• 3. Whether the assessee is entitled to corresponding expenses relatable to interest earned from co-operative banks.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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