Grants from West Bengal State Government to Co-operative Society not Income from other source: ITAT directs to allow Deduction u/s 80P [Read Order]

The Income Tax Appellate Tribunal (ITAT) of Kolkata bench has held that grants from West Bengal State Government to cooperative societies are not income from other sources and directed to allow deduction under section 80P of the Income Tax Act, 1961.

Udyan Large Size Multipurpose Cooperative Society Limited, the assessee is a Cooperative Society, formed by its Tribal members and registered under the West Bengal Cooperative Societies Act, 1973, is engaged in providing Mini Bank service to its members, Sales of Fertilizer to its Tribal members as per bye-laws, guidelines of Government of West Bengal.

In the return of income filed, the assessee claimed the deduction under section 80P of the Income Tax Act, 1961 has been claimed at Rs.65,844/-. During complete scrutiny under CASS, Assessing Officer noticed that in the Profit & Loss Account, the assessee has claimed miscellaneous income of Rs. 9,92,664.28.

The Assessing Officer confronted the assessee to explain the nature of the miscellaneous income, but could not get a satisfactory reply and he treated it as income from other sources. The CIT(Appeals) upheld the order.

The assessee placed the break-up of miscellaneous income stating that all this income is part of the regular activities of the Cooperative Society for which it is established for. The miscellaneous income of Rs. 9,92,664/- shown in the Profit&Loss Account has been treated by both the lower authorities as income from other sources.

It was evident that the assessee is working only for the Tribal members and the main purpose of the Society is to provide Mini Bank service to its members, Sales of Fertilizer to its Tribal members etc. It is also discernable that various grants are received from the West Bengal State Government.

The West Bengal Tribal Development Cooperative Corporation Limited, which is a Government of West Bengal Undertaking, is an Apex Body over the various types of Societies like that of the assessee. It was found that the miscellaneous income of Rs. 9,92,664/- mainly constitutes grants received from the West Bengal Government for various activities as per its registered bye-laws, the bench noted.

A two-member bench comprising Shri Rajpal Yadav, (Vice-President) & Dr Manish Borad (Accountant Member) observed that since the alleged sum of Rs.9,92,664/- is the income earned by the Society for its objects, the same is eligible for deduction under section 80P of the Income Tax  Act. The tribunal allowed the appeal in result.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates