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2015 (9) TMI 1403 - ITAT AHMEDABAD

2015 (9) TMI 1403 - ITAT AHMEDABAD - TMI - Entitlement to benefit of Section 80P - interest income received on fixed deposit kept with Nationalized bank, commission income and other income - Held that:- The assessee society’s main object is to give credit facilities to its members from the funds received from the members by way of collection of deposits from its members in the common fund and such common fund is deployed in the form of granting loan to the members of the society. As the co-op. c .....

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- KARNATAKA HIGH COURT ), the assessee is eligible for deduction under section 80P(2)(a)(i) of the Act; however, rent income at ₹ 18,600, commission income at ₹ 13,701, other income ₹ 400 and incometax refund of ₹ 13,271 totalling to ₹ 45,542/- is not eligible for deduction under section 80P(2)(a)(i) of the Act - Decided partly in favour of assessee - ITA No.2073/Ahd/2015 - Dated:- 24-9-2015 - S/Shri Rajpal Yadav, JM, & Manish Borad, AM. Appellant by None Respon .....

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Nationalized bank, commission income and other income amt. comes to ₹ 12,22,308/- was confirmed by ld. CIT(A) Gandhinagar and also not granted benefit of Section 80P of the Income-tax Act. 2. The assessment is bad in law, invalid and illegal. It be so held now and the same be quashed. 3. Direction to charge interest under ss 234B and 234C without application of mind is unjustified. It be so held now. 4. There being no concealment or furnishing of inaccurate particulars, initiation of pena .....

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declaring total income at Rs.NIL. Proceedings u/s 143(3) were initiated and addition of ₹ 12,72,308/- was made on account of inadmissibility u/s 80P for following income : Rent income 18,600 Commission 13,701 Other Income 400 Interest on I.T. fund 13,271 Interest on investment with 12,26,336 Institution other than cooperatives 12,72,308 The AO went ahead to tax this amount of ₹ 12,72,308/-. Aggrieved, the assessee went in appeal before CIT(A) who gave partial relief but confirmed th .....

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ether the surplus funds of members which was invested in specified securities and deposits in the non-co-operative institutions and banks was required to be taxed u/s 28 of the Act. The Hon ble High Court of Gujarat is silent in its order dated 15/01/2014 in the case of Jafari Momin (supra) on the decision of Hon ble ITAT, as regards the taxability of interest income u/s 56 of the Act. Taking into consideration, the ratio of the Hon ble Supreme Court in the case of Totgars (supra) the decision o .....

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am of the firm view that the total interest income earned of ₹ 12,22,308/- from institution other than cooperative banks is required to be taxed u/s 56 of the Act. Thus, the addition made by the AO of ₹ 12,22,308/- is hereby held justified and addition is confirmed for the purpose of section 56 of the Act. The relevant ground of appeal is rejected. Aggrieved, assessee is now in appeal before the Tribunal. 4. The ld. DR relied on the orders of lower authorities. The following statemen .....

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ing Regulation Act nor doing any Banking activity. It is a Primary Society engaged in Providing Credit facility to its members only. Any rules and regulation of Reserve Bank of India is not applicable to our society, because it is registered under the Co-op. Societies Act. It is a purely Co-op. Society. Loans and advances granted by the Co-op. Society to its members at rate prescribed by the Committee, taking into consideration the object for which the society had been created. Hence the society .....

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re it is eligible deduction u/s 80P of I.T. Act. In the meanwhile, one of the Delhi based credit society, Delhi Co-op. Urban Thrift and Credit Society, also sought clarification from CBDT regarding admissibility of deduction under Section 80P of Income-Tax Act, 1961. The Central Board of Direct Taxes clarified that Delhi Co-op. Urban Thrift and Credit Society does not fall within the meaning of Co-operative Bank as defined in Part V of the Banking Regulation Act, 1949. Looking to the above facts .....

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the rival contentions and gone through the facts and circumstances of the case as well as records available and judicial pronouncements referred therein. The only issue is in regard to the addition of various types of income such as rent, interest income from nationalized bank, commission income, other income totaling to ₹ 12,72,308 and the AO after allowing deduction under section 80P(2)(c) of the Act assessed the income of the assessee society at ₹ 12,22,308/-. As submitted in the .....

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type of issues has been dealt by Hon ble High Court of Karnataka in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. reported in (2015) 55 Taxman.com 447 (Kar). The relevant portion from the above referred judgment is reproduced below :- 10. In the instant case, the amount which was invested in banks to earn interest was not an amount due to any members. It was not the liability. It was not shown as liability in their account. In fact this amount which is in the nature of profits and gai .....

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