Deduction u/s.80P

Hi,

Yes,the action taken by AO is correct.

It is disallowable.

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. 

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.

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Thank you

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

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.

Hi

Yes ,AO act is correct here.

Hope it helps