Section 80P(1)

Section 80P(1) — the law in short

What the courts have decided on section 80P(1), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• M/s Swabhimani Souharda Credit Co-operative Ltd v Government of India High CourtHelps taxpayer
  We are registered under the Karnataka Souharda Sahakari Act 1997, not the Karnataka Co-operative Societies Act 1959. The Assessing Officer says we are not a 'co-operative society' under s.2(19) and so cannot claim s.80P at all. Is that right?
  No. The Karnataka High Court declared that entities registered under the Karnataka Souharda Sahakari Act, 1997 fit the definition of 'co-operative society' in s.2(19) of the Income-tax Act, 1961 and are therefore entitled to stake their claim to the benefit of s.80P. The definition covers a society registered under the Co-operative Societies Act 1912 or under any other law for the time being in force in a State for the registration of co-operative societies, and the 1997 Act is such a law.
• Lalitamba Pattina Souharda Sahakari Niyamita v ITO High CourtHelps taxpayer
  The Tribunal refused my society's s.80P(2)(a)(i) claim on bank fixed deposit interest saying it had already been given s.80P(2)(d). Can the two clauses be treated as interchangeable, and if the interest really is income from other sources, what happens to my cost of funds?
  No, they cannot. The Karnataka High Court held that s.80P(2)(a)(i) and s.80P(2)(d) are entirely different and distinct provisions, that a deduction given under (d) does not disentitle a society from claiming under (a)(i), and that the authorities cannot reject an (a)(i) claim by mixing up the two. It further held that even if the interest is assessable under s.56, the Tribunal, as the last fact finding authority, was obliged to examine the proportionate cost of funds and administrative expenses deductible under s.57, and it remanded the matter to the Assessing Officer.
• PCIT v Totagars Co-operative Sale Society (5 January 2017) High CourtHelps taxpayerHigh Courts differ
  My society earns interest on deposits placed with a co-operative bank. The Assessing Officer says s.80P(2)(d) covers only investments with a co-operative society and a co-operative bank is not one. Is there authority the other way?
  Yes. The Karnataka High Court, Dharwad Bench, held that 'co-operative society' is a genus and 'co-operative bank' a species of it, so a co-operative bank is necessarily covered by the words 'co-operative society' and interest earned from it qualifies under s.80P(2)(d). It also held that the Supreme Court's decision in Totgars, being on s.80P(2)(a)(i), is inapplicable to a claim under s.80P(2)(d). But the same High Court, at the same Bench, took the opposite view five months later on the same assessee.
• Tumkur Merchants Souharda Credit Co-op Ltd v ITO High CourtHelps taxpayer
  The AO cites Totgars against my credit society's deposit interest. Can I still claim 80P?
  Yes, if the deposits arose in the course of the credit business. 'Attributable to' is wider than 'derived from', so interest on short-term deposits of funds not immediately needed for lending remains within s.80P(2)(a)(i).
• Statutory position — s.80P(4): which bodies are shut out, and what the Banking Regulation Act 1949 actually defines CBDT Circulars & InstructionsCuts both ways
  The Assessing Officer says my society is a co-operative bank and so s.80P(4) denies the whole deduction. What does he have to establish before he can say that?
  Section 80P(4) provides that the provisions of s.80P shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, and its Explanation borrows the meanings of 'co-operative bank' and 'primary agricultural credit society' from Part V of the Banking Regulation Act, 1949. Under Part V a co-operative bank is only one of three things — a State co-operative bank, a central co-operative bank or a primary co-operative bank — so unless the society answers one of those three descriptions it is not hit by sub-section (4), whatever its name or its bye-laws call it.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.