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2022 (8) TMI 1270 - AT - Income TaxDeduction u/s 80P(2)(i) - interest income of investment as interest not being earned by way of providing credit facilities to its members - case of the assessee-society was selected for scrutiny and notice under section 143(2) - as per AO the newly inserted provisions of Section 2(24) (viia) by the Finance Act, 2006 with effect from 01.04.2007, includes the profit and gains of any business of banking (including providing credit facilities) carried on by a co-op society with its members and held that deduction under section 80P shall not be available to a Co-operative Bank other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank, though it is available to Co-operative Societies engaged in the activity of providing credit facility to members HELD THAT:- From the First Appellate Order we have observed that the Ld. CIT(A) has confirmed the disallowance made by the A.O. observing that the income earned from persons other than its regular members would not be eligible for deduction under section 80P(2)(a)(i) and such income earned from business with persons other than the regular members would be taxable as income from business. Similar issue was placed for adjudication before ITAT, Chennai Bench, Chennai in the case of Varathappam Palayam Primary Agricultural Co-op. Credit Society [2022 (7) TMI 113 - ITAT CHENNAI] wherein held that irrespective of the fact that whether the assessee is having “A” class Members or “B” class Members, the assessee is entitled for claiming exemption under section 80P(2)(a)(i). Thus we are compelled to held that the assessee is eligible for exemption under section 80P(2)(a)(i) of the I.T. Act, 1961 from the income earned from its regular members as well as from Associate/Other members. Therefore, the A.O. was not right in making disallowance and the Ld. CIT(A) has also erred in confirming the baseless and unsustainable disallowance. Therefore, grounds of assessee are allowed and A.O. is directed to allow the deduction under section 80P(2)(a)(i) - Appeal of assessee allowed.
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