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2022 (10) TMI 1045 - ITAT PUNEDeduction u/s 80P(2)(a)(i) - addition in respect of collection from members @ 2.5% of the loan account which is attributable to the activity of the credit co-operative society of providing credit facilities to its members - HELD THAT:- The provisions of section 80P(2)(a)(i) of the Act allows deduction to the amount earned from the profits and gains of business attributable to the business activity of the assessee, which in this case is providing credit facilities to its members. The interest rate charged @ 2.5% of the loan amount as development fund, this has been passed in the Resolution of the Board of Directors of the assessee, but as rightly submitted by the DR, the nature and characterization of the term ‘development fund’ is not clear on record whether this fund is something which can be said to be attributable to the business activity of giving credit facilities to its members of the assessee or is it something outside the purview that has to be examined. In the interest of justice, therefore, set aside the order of NFAC and remand the matter to the file of the AO for adjudication as per law to conduct the detailed verification regarding interest of 2.5% of the loan amount taken as development fund by the assessee and whether it is attributable to the business activity of the assessee. That after examination of the facts and circumstances, if the AO finds that such calculation of the amount can be said as attributable to the business of the assessee, in such case, he shall allow deduction u/s 80P(2)(a)(i) of the Act. Needless to say, the AO shall provide reasonable opportunity of hearing to the assessee. Appeal of assessee is allowed for statistical purposes.
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