M/s. Gurumachideva Vividhoddesha Sahakara Sangha Ltd. vs. The Income Tax Officer, Ward – 1 & TPS, Udupi

Parties Involved

Facts Summary

The assessee, a co-operative society, filed its return of income on 24/10/2017 and claimed a deduction under section 80P(2)(a)(i) of the Act. The Assessing Officer (AO) did not accept the deduction, reasoning that the assessee had mostly dealt with non-members. The AO also added excess provisions for interest, registration, pension fund, and bad debts to the total income. The assessee appealed to the Commissioner of Income Tax (Appeals) (CIT(A)), arguing that nominal members are also members of the society and that the excess provision of interest was eligible for deduction as per the Karnataka Co-operative Societies Act. The CIT(A) allowed the disallowance of interest income but confirmed the addition for excess provision of interest and other provisions. The assessee then filed this appeal before the Tribunal.…

Legal Issues

• 1. Whether the appellate authority was justified in sustaining the addition in respect of differential provision for interest payable on deposits and other debits found in the audited Profit & Loss A/c.
• 2. Whether the addition sustained in appeal is opposed to Section 40A(7) and Section 43(2) of the Act and contrary to CBDT Circular No. 37/2016 and relevant case laws.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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