Shri. Laxmi Venkatesh Credit Co-op Society Limited vs. Income Tax Officer

Parties Involved

Facts Summary

The assessee, Shri. Laxmi Venkatesh Credit Co-op Society Limited, a cooperative credit society registered under the Karnataka Co-Operative Societies Act, 1959, filed an appeal against the order passed by the Commissioner of Income Tax (Appeals) for the assessment year 2020-21. The assessee claimed a deduction under section 80P(2)(a)(i) of the Income Tax Act for interest earned from deposits in Scheduled Banks and Co-operative Banks. The Assessing Officer disallowed the deduction, leading to the assessee filing an appeal. The Tribunal considered the submissions and material on record and found that the interest earned from reserve fund investment and fixed deposits was attributable to the profits and gains of the business of providing credit facilities to its members, and thus eligible for deduction under section 80P(2)(a)(i) of the Act.…

Legal Issues

• 1. Whether the Assessing Officer and the CIT(Appeals) were right in denying the benefit of deduction of interest income of Rs. 14,99,840/- (Rs. 8,01,867/- earned from Reserve Fund Investment + Rs. 6,70,286/- earned from Fixed Deposits + Rs. 27,691/- earned from SB Accounts) in Co-operative Banks/Schedule Banks and thereby levying Tax to the tune of Rs. 4,64,830/-. In the alternative Whether the Assessing Officer and the CIT(Appeals) were right in denying the benefit of deduction of cost expenses incurred by the Assessee in earning interest income of Rs. 14,99,840/-.
• 2. The sole issue that arises for our consideration, in the present case, pertains to the disallowance of deduction claimed under section 80P(2)(a)(i) of the Act.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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