The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) has allowed Union Bank of India to claim deduction under Section 80P (2) (a) (i) for dividends received from cooperative bank shares.
The Union Bank of India Staff Co-op Thrift and Credit Society Limited, was a Multi-State Cooperative Society, registered under the Multi State Cooperative Societies Act, 2012 at Chennai. The members of the assessee’s society are all employees of Union Bank of India. Assessee extends credit facilities like surety loans, festival loans, calamity loans etc to its members. Assessee society does not provide any banking facility to its members or general public. For this assessment year 2017-2018, assessee filed its return of income claiming deduction under Section 80P(2) (a) (i) of the Income Tax Act for an amount of Rs.3,77,800/- received as dividend from shares held in Chennai Central Co-operative Bank.
The Assessing Officer while framing the assessment noted that the assessee received dividend from shares held in Chennai Central Co-operative Bank under Companies Act on dividend distribution tax under Section 115 O of the Income Tax Act. According to the Assessing Officer, Chennai Central Co-operative Bank was a bank and hence the assessee’s claim of deduction under Section 80P (2) (a)(i) of the Income Tax Act was not allowable and accordingly he made addition. Aggrieved, assessee preferred an appeal before the CIT(A).
Read More … Income Earned by Co-operative Society is eligible for Deduction u/s 80P (2)(a)(i) of Income Tax Act: ITAT
A single member bench of the tribunal comprising Mahavir Singh observed that the assessee is a multi-state cooperative society, registered under the multi-state cooperative Societies Act, 2012 at Chennai. The members of the assessee’s society are all employees of Union Bank of India. Assessee extended credit facilities like surety loans, festival loans, calamity loans etc. to its members. Assessee received Rs.3, 77,800/- as dividend from shares held in Chennai Central Co-operative Bank
The Chennai Central Co-operative Bank was registered under Tamil Nadu State Co-operative Act and once it is registered under Tamil Nadu State Co-operative Act assessee was as such eligible for deduction. Since the assessee is a Co-operative Society and it has received dividend from Chennai Central Co-operative Bank, the same was eligible for claim of deduction in view of the decision of the Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd., & Ors. Vs. CIT.
Similar view has been taken by the Tribunal in the case of Tamil Nadu Co-operative State Agriculture and Rural Development Bank Limited following the decision of Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd., supra and the Madras High Court in the case Ammapet Primary Agricultural Cooperative Bank Ltd. Respectfully following the same, ITAT allowed the claim of deduction under Section 80P(2)(a)(i) of the Income Tax Act. Accordingly, the appeal of the assessee was allowed. Also Read …. Interest Income of Farmers Services Co-operative Society from Fixed Deposits in Union Bank of India deductible u/s 80P (2)(a)(i): ITAT
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