Held that the assessee was not a bank according to the definition of section\u00a05(c)\u00a0of the\u00a0Banking Regulation Act, 1949.\u00a0 The assessee did not fall under the exception under section\u00a080P(4). That with regard to interest earned from credit facilities, staff loans and investments made, the\u00a0Karnataka Co-operative Societies Act, 1959\u00a0defined \u201cmembers\u201d to include nominal and associate members under section\u00a02(f). Therefore, the assessee qualified for deduction under section\u00a080P(2)(a)(i)\u00a0in respect of the interest earned from credit facilities extended to nominal and associate members. That according to section\u00a080P, an income which was attributable to any of the specified activities in section\u00a080P(2)\u00a0of the Act could only be eligible for deduction. Providing loans to the employees could not be considered as, \u201cattributable\u201d to the business of the assessee. The term \u201cattributable to the business\u201d is a much narrow term, which is directly connected to the objects of the assessee for which it has been established. Therefore, the interest earned by the assessee from loans given to its employees could not be considered for deduction under section\u00a080P(2)(a)(i)\u00a0of the Act and had to be treated as income from other sources. That there was nothing on record to come to the conclusion that the amount which was invested in banks to earn interest was an amount due to its members, and was a liability. This amount which was in the nature of profits and gains, was not immediately required by the assessee for the objects of the society, but was required to be invested as required by the\u00a0Karnataka Co-operative Societies Act, 1959. Therefore it had deposited the money out of which interest was earned. The interest was thus attributable to carrying on the business of the assessee. The Assessing Officer was to verify whether interest was received by the assessee out of investments made with co-operative societies. If the assessee had earned interest income out of investments with co-operative society, it was entitled to deduction under section\u00a080P(2)(d)\u00a0of the Act. If the interest was earned from the banks, it had to be considered under the head \u201cIncome from other sources\u201d and necessary relief to be granted to the assessee under section\u00a057\u00a0of the Act in respect of cost of funds and proportionate administrative and other expenses in accordance with law. Accordingly, the issue was restored to the file of the Assessing Officer for de novo consideration. That the guarantee commission could not be considered to be in the nature of any levy, cess of such type. The provisions of section\u00a043B\u00a0would not be admissible to the payment of guarantee commission by the assessee to the State Government under an agreement as it did not qualify for any of the types mentioned therein. Therefore, the issue was remanded to the Assessing Officer to carry out necessary verification, based on the agreement entered into by the assessee with the Government and to analyse if the payment of guarantee commission was an admissible deduction under section\u00a037(1)\u00a0of the Act. That the income earned by the assessee from e-stamping services could not be considered for the purpose of deduction under section\u00a080P(2)\u00a0of the Act. However, the Assessing Officer was to consider the alternative claim of the assessee in accordance with law and proper opportunity of being heard to be granted to the assessee.\u00a0 That the issue regarding incorrect quantification of total income, the Assessing Officer was to quantify total income, in accordance with law in the light of evidence filed and proper opportunity of being heard to be granted to the assessee.\u00a0 That it was submitted that nothing had been decided by the Commissioner (Appeals) on the merits on the ex parte orders passed by the Commissioner (Appeals). As the issue regarding the eligibility to claim deduction under section\u00a080P(2)(a)(i)\u00a0\/\u00a0(d)\u00a0of the Act was principally considered, these appeals were also to be analysed by the Assessing Officer on similar basis. (AY. 2012-13 to 2018-19, 2020-21)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 80P : Co-operative societies-A State-level non-banking Co-Operative credit Society-Did not fall under exception under Section 80P(4)-Nominal and associate members-Members to include nominal and associate members-Entitled to deduction-employees could not be considered attributable to business of assessee-Not entitled to deduction-to be treated as income from other sources-Interest from loans extended to employees of assessee-Interest from investments-Necessary relief to be granted under Section 57 in respect of cost of funds and proportionate administrative and other expenses in accordance with law-Issue restored to Assessing Officer for de novo consideration-Guarantee Commissions-Cannot be considered as Levy or ccess-Issue remanded to Assessing Officer to carry out necessary verification based on agreement entered into by assessee with Government and to analyse if payment of guarantee commission is an admissible deduction-Business Loss-Matter remanded–E-Stamping Income-Income earned from E-stamping cannot be considered for purpose of deduction-Assessing Officer is directed to consider alternate claim of assessee in accordance with Law. [S. 37(1), 43B, 56, 57, 80P(2)(a)(i), 80P(2)(d)(4), Banking Regulation Act, 1949, 5(c), Karnataka Co-Operative Societies Act, 1959, S.2(F)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-51005","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-dgF","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/51005","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=51005"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/51005\/revisions"}],"predecessor-version":[{"id":51006,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/51005\/revisions\/51006"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=51005"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=51005"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=51005"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}