Our society does not fit any of the activity clauses of 80P. Is there any deduction left for us?
Yes, a small flat one. Section 80P(2)(c) gives a co-operative society engaged in activities other than those specified in clause (a) or clause (b) a deduction of so much of the profits and gains attributable to those activities as does not exceed Rs 1,00,000 where it is a consumers' co-operative society, and Rs 50,000 in any other case. It is available either independently of, or in addition to, the activity clauses — so a society already claiming under clause (a) can still claim clause (c) on its other profits.
Section 80P works clause by clause. Sub-section (1) says that where the gross total income of a co-operative society includes any income referred to in sub-section (2), the sums specified in sub-section (2) shall be deducted in computing total income. Clause (a) of sub-section (2) covers seven named activities — banking or providing credit facilities to members, cottage industry, marketing of members' agricultural produce, purchase of agricultural implements and supplies for members, processing of members' agricultural produce without power, collective disposal of members' labour, and fishing and allied activities. Clause (b) covers a primary society supplying milk, oilseeds, fruits or vegetables to a federal co-operative society, the government, a local authority or a government company. Clauses (d) to (f) cover interest and dividends from investments with other co-operative societies, letting of godowns and warehouses, and, for small societies, certain interest and dividends and house property income.
Clause (c) sits between the activity clauses and the rest, and it is the residual one. Its words are: 'in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b) (either independently of, or in addition to, all or any of the activities so specified), so much of its profits and gains attributable to such activities as does not exceed, (i) where such co-operative society is a consumers' co-operative society, one hundred thousand rupees; and (ii) in any other case, fifty thousand rupees.'
Read the words in the bracket carefully, because they are the point most often missed. 'Either independently of, or in addition to, all or any of the activities so specified' means clause (c) is not confined to societies that do nothing in clause (a) or (b). A credit society that also runs some other activity may claim clause (a) on its credit business and clause (c) on the profits attributable to the other activity. 'Engaged in activities other than those specified in clause (a) or clause (b)' therefore describes the activity the profits come from, not the character of the society as a whole.
The measure is 'profits and gains attributable to such activities'. It is a deduction of profits, capped, not a flat allowance regardless of profit: if the other activity threw up Rs 30,000 of profit, the deduction is Rs 30,000 and not Rs 50,000. And it is attributable to those activities, so the same attribution exercise that runs through the rest of s.80P applies here.
The two figures are Rs 1,00,000 and Rs 50,000. The higher one applies where the society is a consumers' co-operative society, and the Explanation to the clause defines that: 'In this clause, "consumers' co-operative society" means a society for the benefit of the consumers.' There is no turnover or membership qualification in the definition. Note that an older version of s.80P still carried on the department's own site shows the pre-amendment figures of Rs 40,000 and Rs 20,000; the current figures are the ones above.
Two limits apply to a clause (c) claim as much as to any other. Section 80P(4) shuts the whole section out for a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, so clause (c) is no way around that. And s.80P(3) computes the deduction with reference to the income included in gross total income as reduced by other Chapter VI-A deductions. Separately, s.80AC bars any 80P deduction for AY 2018-19 onwards unless the return was filed by the s.139(1) due date, and that applies to a clause (c) claim too.
As a practical matter, this is a fallback and it is a small one. Its use is where a society has lost the main claim — typically where interest has been held to be other-sources income rather than income attributable to the credit business — and wants something on the record. Because it is capped at Rs 50,000 for most societies, it is worth taking as an alternative plea in the reply rather than as a separate litigation.
When an 80P(2)(a)(i) or 80P(2)(d) claim fails, most replies have nothing behind it. Clause (c) is the thing behind it, and the bracketed words mean it is not lost merely because the society also carries on a clause (a) activity. It is small money, but it is claimed in the same reply and costs nothing to plead in the alternative.
The AO cites Citizen Co-operative Society to deny my 80P claim. How far does it go?
We are a state-level co-operative agricultural and rural development bank. Does 80P(4) block our deduction?
My society lends to non-members too. Does that wipe out its 80P(2)(a)(i) deduction?
My society invested surplus funds in short-term bank deposits. Is that interest covered by 80P?
The Tribunal remanded the nominal member issue to the Assessing Officer but recorded findings on the merits while doing so, leaving the officer nothing to decide. Is there anything I can do about that in the High Court?
Our co-operative credit society filed its return late and lost the section 80P deduction under section 80AC. The Chief Commissioner has rejected our section 119(2)(b) condonation application for want of sufficient cause. Is that rejection sustainable?
The Department has taxed my housing project income as business profit. Can I claim the section 80-IB(10) deduction now, in appeal, when I never claimed it in my return?
The Assessing Officer taxed our interest on deposits under s.56 by simply citing Totgars, without answering our case that the deposits are a statutory reserve we are obliged to maintain and that the interest we paid on borrowings should be netted against it. Is that order sustainable?
Every page in this library links to what it was written from, so you can check it rather than take our word for it.
