Deduction u/s 80P (2)(a)(1) for Credit co op society

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  1. Whether interest received from deposit made in nationalies bank by credit coop society is taxable or one can get deduction u/s 80 P(2)(a)(1) of Income Tax Act
  2. Chandrashekar M

    Chandrashekar M Active Member

    I am providing two case laws, you can read the full judgement and take a considered decision whether the facts of your case will justify for claiming deductionU/s. 80P(2)(a)(i)

    Deduction u/s 80P will be allowed only when there is direct or proximate connection with or nexus to the income and the business carried on by the society. Interest income on deposits made with banks is not attributable to income of co-operative society and outside realm of section 80P- [Sri Basaveshwara Credit Co-operative Society Ltd. v. CIT [2014] 47 189 (Bangalore – Trib.)]

    The Hon’ble Supreme Court of India in the case of Totgars’ Co-operative Sale Society Ltd. Vs Income-tax Officer [2010] 188 Taxman 282 (SC), held that fund not required immediately for business of providing credit facilities and interest earned on such fund would come under the category of ‘Income from Other Sources’ taxable u/s 56 of the Income-tax Act, 1961 and the same would not qualify for deduction as business income u/s 80P(2)(a)(i) of the Income-tax Act, 1961.

    -- Regards
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