ITAT Orders Re-adjudication on Section 80P(2)(e) Deduction for Agricultural Loans Provided to Members under Income Tax Act [Read Order]

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has issued an order for re-adjudication regarding the deduction for agricultural loans provided to members under Section 80P(2)(e) of the Income Tax Act, 1961.

The Assessee, M/s. Savanoor Primary Agricultural Co-operative Society Ltd, is a cooperative society registered under the Karnataka State Cooperative Societies Act, 1959. Engaged in providing credit facilities to its members, it filed its return of income for the Assessment Year 2018-19 on 14th October 2018, declaring nil income after claiming a deduction of Rs. 81,61,682/- under Section 80P of the Income Tax Act.

The assessee had claimed a deduction under section 80P(2)(e) of the Income Tax Act, which was denied by the Assessing Officer (AO) due to incomplete facts provided.

The bench, comprising Chandra Poojari (Accountant Member) and George George K (Vice President), noted that the issue required adjudication as complete details were not available before the AO. Thus, the matter was remanded to the AO's files for further examination, and the appeal filed by the assessee was allowed for statistical purposes.

Additionally, the assessee raised another issue concerning the deduction under Section 80P(2)(a)(i). It argued that the interest received from certain cooperative banks was a result of compliance with Rule 28 of the Karnataka Co-operative Societies Rules, 1960, thus constituting income from the business of providing credit facilities to its members eligible for deduction under section 80P(2)(a)(i) of the Income Tax Act.

The bench directed the AO to investigate whether the interest income was earned from investments in compliance with the relevant Karnataka Co-operative Societies Rules and Act. If the income was found to be a result of compulsory compliance, it would be entitled to deduction under section 80P(2)(a)(i) of the Income Tax Act. With these instructions, grounds 5 to 8 were remanded to the files of the AO.

In the result, appeal filed by the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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