• Deduction u/s.80P

Latest developments on provisions u/s.80P of the Act. One mutually aided co-operative society has been depositing fixed deposits in Nationalised bank. Assessing officer disallowed saying that the Nationalised bank is not a member of co-operative society and interested earned therefrom is not allowed as deduction u/s.80P. Some deposits are collected from relatives of members, i.e., wife of a member, parents of member. For this reason deduction u/s.80P is disallowed. Email: [deleted]
Asked 6 months ago in Income Tax from Visakhapatnam, Andhra Pradesh

Hi,

 

Yes,the action taken by AO is correct.

 

It is disallowable.

Karishma Chhajer
CA, Jodhpur
1196 Answers
7 Consultations

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Deduction of 100% of the interest on investments is allowed only when the investment is made in other cooperative society and no other reason. Nationalized banks are not co-operative societies. 

Vivek Kumar Arora
CA, Delhi
2789 Answers
128 Consultations

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Yes u/s 80P income earned in the form of interest or dividend is only allowed as deduction if it's earned from other co operative society. Since you have earned it from ordinary nationalised bank they are correct in disallowing your deduction and asking for tax on same.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

Naman Maloo
CA, Jaipur
1808 Answers
16 Consultations

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Dear Sir,

 

Hope you are doing well !!

 

Under this section, a certain specified income of a co-operative society, engaged in specific activities are allowed as a deduction if such an income is included in the gross total income of the society.

 

A co-operative society is not defined specifically for the purpose of Section 80P. However, Section 2(19) of the Income-tax Act, 1961, defines Co-operative society as registered under the co-operative societies Act, 1912 or under any other law governing the registration of co-operative societies in any State.

 

Nationalised banks are not covered under said definition. 

 

Thanks & Regards,

Payal Chhajed

Payal Chhajed
CA, Mumbai
2601 Answers
34 Consultations

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Section 80P

As per section 80P, income earned by credit distributing co-operative societies is 100% exempt.

Now we need to discuss few of the terminology in this-

1. Credit to whom ?? - credit to its members. Thus income from credit to its member is considered as tax free. & not the income earned otherwise.

2. Members : members of co-operative society.

 

 

Chirag Maru
CA, Raipur
158 Answers

5.0 on 5.0

Hi

 

Yes ,AO act is correct here.

 

 

Hope it helps

Swati Agrawal
CA, Mumbai
1146 Answers
5 Consultations

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