1. Chapter VIA of the Income Tax Act, 1961 Provisions & Issues Vikram Naik 21 st March 2009

2. 2 Contents Introduction Deduction in Respect of Certain Payments Deduction in Respect of Certain Incomes 80C 80IA, 80IB, 80IC Overview Issues 80P 80G

3. 3 Overview of Chapter VIA

4. 4 In computing the total income of the assessee, there shall be allowed from gross total income, in accordance with the provisions of this Chapter, the deductions specified in sections 80C to 80U Introduction 80A Chapter VIA Deductions to be made in computing total income Sections 80A to 80U

5. 5 Introduction  80A: Aggregate total deduction under sections 80C to 80U cannot exceed gross total income Essential rules governing deductions Income from Salaryxxxx Income from House Propertyxxxx Income from Business or Professionxxxx Income from Capital Gains (with exceptions)xxxx Income from Other Sourcesxxxx Total xxxx Less:Set off and carry forward of losses (sections 70 to 74A)xxxx Gross Total Income (section 80B) xxxx

6. 6 Deductions in respect of certain Payments Deduction in respect ofPayment Towards 80C*Life insurance premia, and others 100% of the amount paid or deposited, not exceeding INR 1,00,000  Life insurance premia, Deferred annuity, Provident fund, Saving certificate, Superannuation fund, any scheme of the Central Government, Pension fund, Deposit scheme, Tuition fees, Mutual Fund, Others 80CCC* Contribution to certain pension funds 100% of the amount paid or deposited, not exceeding INR 1,00,000  Any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the fund 80CCD* Contribution to pension scheme of Central Government 100% of the amount paid or deposited, not exceeding 10% of salary  Contribution by the employee and contribution by the Central Government or any other employer towards pension scheme  The 10% limit applies to both the above eligible contributions individually 80D Health insurance premia 100% of the amount paid or deposited with any insurer, not exceeding INR 15,000 (INR 20,000 in case of senior citizens)  In case of an individual - Insurance for assessee and family, and Insurance for parents  In case of a HUF, insurance for each member 80DD Maintenance of a dependant who is a disabled person INR 50,000 for a disabled person and INR 75,000 for a severely disabled person  Medical treatment, training, or rehabilitation of a disabled dependant or amount paid or deposited with an insurer for a scheme of maintenance of a disabled person  Return of income along with a medical certificate is required 80DDBMedical treatment 100% of the amount paid not exceeding INR 40,000 (INR 60,000 in case of a senior citizen)  Medical treatment of individual, family, or member of HUF  Cost of treatment to be reduced by the amount paid by an insurer or employer *80CCE prescribes an aggregate limit of INR 1,00,000 for 80C, 80CCC, 80CCD

7. 7 Deductions in respect of certain Payments Deduction in respect ofPayment Towards 80E Interest on loan taken for higher education 100% of the amount paid  Interest on a loan from a financial institution or a charitable institution for the purpose of higher education, for the assessee or a relative  Deduction allowed for initial assessment year (AY) and seven AYs after that or until the interest is paid back in full, whichever is earlier 80G Donations to certain funds, charitable institutions, etc. 50% or 100% of the eligible amount paid  Donations to specified funds or institutions 80GGRents paid Excess of rent over 10% of adjusted gross income or INR 2000 per month or 25% of total income, whichever is less  Any expenditure incurred in excess of 10% of total income towards payment of rent  For the purposes of own residence 80GGA Certain donation for scientific research and rural development Any sum paid  Scientific, social science, or statistical research to a scientific research association, a university, college or other institution  An institution, public sector undertaking, or local authority undertaking a rural development program, or a rural development fund  Assessee should not have income chargeable under the head “Profits and Gains of business or profession” 80GGB Contributions by companies to political parties 100% of sums donated  Contributions to political parties 80GGC Contributions by any person to political parties 100% of sums donated  Contributions to political parties

8. 8 Deductions in respect of certain Incomes Deduction in respect ofEligible Business 80IA Profits and gains from industrial undertakings or enterprises engaged in infrastructure development, etc. 100% deduction on the profits and gains from eligible businesses for a period of 10 years  Infrastructure facility  Telecommunication services  Industrial Park or Special Economic Zone (SEZ)  Generation and distribution of power  Transmission and distribution network  Substantial renovation and modernization of a network  Reconstruction of a power plant  Laying and operating a cross-country natural gas distribution network Key Conditions  Should not be formed by reconstruction or splitting up  Should not be formed by transfer of plant and machinery  Should have begun to operate between 1st April 1993 and 31st March 2010, depending on the eligible business 80IAB Profits and gains by an undertaking or enterprise engaged in development of Special Economic Zone 100% deduction on income for developers of Special Economic Zones (SEZ)  Developers of SEZs after 1st April 2005  100% for 10 consecutive years out of 15 years from the year in which notified by the central government  In case transfer of operating and maintenance of SEZ, then deduction shall be allowed to transferee developer for unexpired period

9. 9 Deductions in respect of certain Incomes Deduction in respect ofEligible Business 80IB Profits and gains from certain industrial undertakings other than infrastructure development undertakings Deductions on income from certain industrial undertakings  Deduction on profits from an industrial undertaking in the − States of Jammu & Kashmir − Preservation and packaging of fruits and vegetables − Handling, storage and transportation of food grains 100% for the first five years, and 25% (30% in case of companies) for the next five years (7 years in case of co-operative societies)  Deduction on profits from the operation of a hospital in India of 100% for 5 years Key Conditions  Should not be formed by reconstruction or splitting up  Should not be formed by transfer of plant and machinery 80IC Undertakings or enterprises in certain special category States Deductions on income from certain industrial undertakings in certain states  Deduction on profits from an industrial undertaking in the specified areas in states of Himachal Pradesh and Uttaranchal of 100% for the first five years, and 25% for the next five years (30% in case of companies)-until April 1, 2012  Same conditions as above 80ID Profits and gains from business of hotels and convention centers in specified area 100% deduction on income from hotels and convention centers  Deduction on profits from the business of hotels and convention centers and hotels in World Heritage sites of 100% for 5 consecutive years  Same conditions as above

10. 10 Deductions in respect of certain Incomes Deduction in respect ofEligible Business 80IE Certain undertakings in North-Eastern states 100% on income from certain industrial undertakings in North Eastern States  Deduction on profits from an undertaking eligible manufacturing or other eligible business in the states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura-upto April 1, 2017  100% of income for 10 consecutive assessment years.  Eligible business- hotel, old age home, adventure and leisure sports etc. 80JJA Profits and gains from business of collecting and processing of bio-degradable waste 100% on income  Deduction of 100% for 5 years on any profits from the business of collecting and processing or treating of bio-degradable waste for generating power, producing bio-fertilizers, bio-pesticides or other biological agents, producing bio-gas, making pellets or briquettes for fuel or organic manure 80JJAA Employment of new workmen 30% of additional wages of new workmen  Industrial undertaking (by an Indian company) engaged in manufacturing of any article or thing  Deduction of 30% of additional wages to new regular workmen for a period of 3 years  Undertaking should not be formed by reconstruction or splitting up 80LA Certain incomes of Offshore Banking Units (OBU) and International Financial Services Center (IFSC)  A bank with income from an OBU in an SEZ or income of a unit of an IFSC  Deduction of 100% for the first 5 years, and 50% for the next 5 years

11. 11 Deductions in respect of certain Incomes Deduction in respect ofEligible Business 80P Income of co-operative societies  Deduction on profits of a co-operative society of 100%, INR 1,00,000, INR 50,000 depending on the business the society is engaged in 80QQBRoyalty income, etc., of authors of certain books other than text-books 100% of the eligible income or INR 3,00,000, whichever is less  An author (individual) − Resident in India − Income from the assignment or grant of his/her interests in the copyright of any book being a work of literary, artistic or scientific nature, or of royalty or copyright fees in respect of such book  Where there is no lump sum consideration, income in excess of 15% of the value of the books sold will be ignored  Income earned outside India 80RRB Royalty on payments 100% of the royalty received or INR 3,00,000 whichever is less  Deduction of income from royalty to an individual who is resident in India  When the source is outside India, deduction is allowed on the amount brought into India within 6 months from the end of the year  Prescribed certificate must be furnished Other Deductions 80U A person with a disability Deductions on income of a person with a disability  Deduction of INR 50,000 from the total income of a person with a disability  Deduction of INR 75,000 from the total income of a person with a severe disability  Return of income to be furnished along with a medical certificate

12. 12 Important Issues

13. 13 Deductions in respect of life insurance premia and others Issue: Whether investment out of borrowings are eligible Case: CIT vs. Ramesh Chandra Khandelwal (2005) 273 ITR 363 (All). Such investments are eligible for deduction u/s 80C Points:Source need not be currently taxable income earned. Assessee may well spend taxable income and invest borrowings All incomes are amalgamated and spent, so it is not possible to distinguish savings from borrowings 80C is for the encouragement of thrift and its interpretation shouldn’t nullify that object In favor of:Assessee Issues 80C

14. 14 Donations to certain funds, charitable institutions, etc. Issue: Whether sums donated out of sources other than chargeable income are allowed Case: Infosys Technologies vs. JCIT (2007) 10 TTJ (Bang) 631 Points:No stipulation that donation has to be only out of income chargeable to tax Deduction available even when donations are out of ■ Capital or gifts received ■ Exempted Income ■ Income out of earlier years In favor of:Assessee Issues 80G

15. 15 Deduction in respect of profits and gains from industrial undertakings 80IA(3), 80IB(2), 80IC(4): “This section applies to an undertaking…not formed by splitting up, or reconstruction, of a business already in existence” Case: Textile Machinery Corporation ltd vs. CIT (1977) 107 ITR 195 (SC) CIT vs. Hindustan General Industries Ltd (1982) 137 ITR 851 (Delhi) Points:Reconstruction involves ■ Substantially the same persons carrying on substantially the same business ■ Complete absorption and loss of identity into the old business The following is NOT reconstruction ■ Expansion of the existing undertaking (this would not deprive the assessee of the benefit) ■ New emergence of a separate unit which may exist on its own as a viable industrial unit Splitting up indicates ■ That the integrity of a business earlier in existence is broken up ■ Different sections of the activities previously carried out are carried on independently In favor of:Assessee - Textile Machinery Corporation ltd vs. CIT Assessee - CIT vs. Hindustan General Industries Ltd Issues 80IA, 80IB, 80IC Issue: What constitutes reconstruction / splitting up?

16. 16 Deduction in respect of profits and gains from industrial undertakings 80IA(3), 80IB(2), 80IC(4): “This section applies to an undertaking…not formed by splitting up, or reconstruction, of a business already in existence” Issues 80IA, 80IB, 80IC Issue: What constitutes reconstruction / splitting up? Where there is  substantial investment in new plant & machinery, and  new employees are recruited substantially along with new services provided to new clients, then the new unit is not formed by splitting up of existing unit and is eligible for tax incentives on export profits To hold that a business is formed by reconstruction, there must be some material to hold that  Some assets of the existing business were diverted into another business  This other business was formed from such splitting up  The two business were the same and the business formed was an integral part of the earlier one ITO vs. DSM Soft P. Ltd. (unreported) (Chennai ITAT) Other Principles

17. 17 Deduction in respect of profits and gains from industrial undertakings Issue: What constitutes reconstruction / splitting up? Case: CIT vs. M/s Mahaan foods Ltd. (2008) 177 Taxman 274 (Del) Points:80-IA does not require the new industrial undertaking to be on a separate plot of land leaving the earlier undertaking totally untouched Deduction allowed where the entire business is a new industrial undertaking with ■ Newly acquired technology for increased production capacity ■ A fresh dose of investment In favor of:Assessee Issues 80IA, 80IB, 80IC

18. 18 Deduction in respect of profits and gains from industrial undertakings 80IA(3), 80IB(2), 80IC(4): “This section applies to an undertaking…not formed by the transfer to a new business of machinery or plant previously used for any purpose” Explanations: Where the total value of transferred plant and machinery does not exceed 20% of the total plant and machinery of the business, the provision is deemed to be complied with Issue: Where the limit was exceeded in earlier years, can a subsequent reduction of old machinery below 20% secure deduction in a later year? Issues 80IA, 80IB, 80IC Case: CIT vs. Satellite Engineering Co ltd (1978) 113 ITR 208 (Guj) Points:No additional limitation (to satisfy the condition on commencement) to be eligible for deduction in the subsequent years If an undertaking satisfies the condition in the subsequent years, deduction is allowed In favor of:Assessee - CIT vs. Satellite Engineering Co ltd Case 1 : Deduction allowed post-formation, if 20% condition is rectified

19. 19 Deduction in respect of profits and gains from industrial undertakings 80IA(3), 80IB(2), 80IC(4): “This section applies to an undertaking…not formed by the transfer to a new business of machinery or plant previously used for any purpose” Explanations: Where the total value of transferred plant and machinery does not exceed 20% of the total plant and machinery of the business, the provision is deemed to be complied with Issue: Where the limit was exceeded in earlier years, can a subsequent reduction of old machinery below 20% secure deduction in a later year? Issues 80IA, 80IB, 80IC Case: CIT vs. Nippon Electronics (India) Pvt Ltd (1990) 181 ITR 518 (Kar) Points:Deduction allowed for an undertaking not “formed” by transfer of plant and machinery Eligibility for deduction has to be tested at the initial AY In favor of:Revenue- CIT vs. Nippon Electronics (India) Case 2 : Deduction allowed only if 20% condition satisfied on formation

20. 20 Deduction in respect of profits and gains from industrial undertakings 80IA(3), 80IB(2), 80IC(4): “This section applies to an undertaking…not formed by the transfer to a new business of machinery or plant previously used for any purpose” Explanations: Where the total value of transferred plant and machinery does not exceed 20% of the total plant and machinery of the business, the provision is deemed to be complied with Issue: Where the limit was exceeded in earlier years, can a subsequent reduction of old machinery below 20% secure deduction in a later year? Issues 80IA, 80IB, 80IC Case: ITO v. Laxmi Packers [2007] 14 SOT 303 (Mum) Points:Legislature does not intend to keep the taxpayer (after formation of the undertaking) from purchasing second hand machinery to meet future demands Additional machinery beyond the 20% limit can be purchased post-formation In favor of:Assessee Case 3 : Deduction allowed post-formation, even if 20% condition is not subsequently met

21. 21 Deduction in respect of profits and gains from industrial undertakings 80IA(3), 80IB(2), 80IC(4): “This section applies to an undertaking…not formed by the transfer to a new business of machinery or plant previously used for any purpose” Explanations: Where the total value of transferred plant and machinery does not exceed 20% of the total plant and machinery of the business, the provision is deemed to be complied with Issue: Where the limit was exceeded in earlier years, can a subsequent reduction of old machinery below 20% secure deduction in a later year? Issues 80IA, 80IB, 80IC ? When considering the value of plant and machinery transferred, do we consider 20% of the book value, tax value, or market value? ?

22. 22 Deduction in respect of profits and gains from industrial undertakings Issue: Does leasing of property amount to formation by transfer? Case: Bajaj Tempo vs. CIT (1992) 196 ITR 188 (SC) Points:Undertaking established on premises taken on lease does not amount to formation by transfer of building To amount to “formation by transfer”, it must be implied that but for the transfer, the undertaking would not have come into being In favor of:Assessee Issues 80IA, 80IB, 80IC

23. 23 Deduction in respect of profits and gains from industrial undertakings 80IA(5): “…the profits and gains of an eligible business … shall be computed as if such eligible business were the only source of income of the assessee during the previous year …” Issues 80IA, 80IB, 80IC Illustration

24. 24 Deduction in respect of profits and gains from industrial undertakings 80IA(5): “… the profits and gains of an eligible business … shall be computed as if such eligible business were the only source of income of the assessee during the previous year relevant to the initial assessment year …” Issue: What is the “initial assessment year”? Case: Mohan Breweries & Distilleries ltd vs. ACIT (2008) 114 TTJ 532 Points:It is at the option of the assessee to choose the initial AY from which deduction can be claimed Initial AY is the AY in which assessee has chosen to claim deduction under the section. It cannot be the year when operations began Provisions of s. 80-IA(5) treating undertaking as a separate sole source of income cannot be applied to a year prior to the year in which assessee opted to claim relief for the first time. In favor of:Assessee Issues 80IA, 80IB, 80IC

25. 25 Deduction in respect of profits and gains from industrial undertakings 80IA(5): “…the profits and gains of an eligible business … shall be computed as if such eligible business were the only source of income of the assessee during the previous year …” Issue: Whether the profit from the eligible business has to be computed after deduction of the notional brought forward losses and depreciation of eligible business even though they have been allowed set off against other income in earlier years Case: ACIT vs. Goldmine Shares and Finance (P) Ltd. (2008) 116 TTJ 705 Points:80IA(5) is an over-riding provision. A fiction is created for determining the quantum of deduction of the eligible unit as if such unit is the only source of income of the assessee Deduction would be computed after setting off carried forward losses of the eligible unit against profit of the eligible unit alone Losses of earlier years, though already absorbed against other sources are once again to be notionally brought forward and set off against profits of the eligible unit to compute eligible deduction In favor of:Revenue Issues 80IA, 80IB, 80IC

26. 26 Deduction in respect of profits and gains from industrial undertakings 80IA Explanation: “… nothing contained in this section shall apply to a person who executes a work contract entered into with an undertaking or enterprise…” 80IA(4)(i): “Any enterprise carrying on the business of developing….an infrastructure facility which fulfills the following conditions, namely…it is owned by a company registered in India…” Issue: Availability of benefit to a sub-contractor Case: Patel Engineering Ltd vs. DCIT (2005) 94 ITD 411 (Bom) Points:“Contractor”, as mentioned in a infrastructure development facility, is not necessarily contradictory to the term “developer”, who is eligible for deduction Incentive intended for entrepreneurs who undertake entrepreneurial and business risk, and not contractors who only undertake business risk In favor of:Assessee Issues 80IA, 80IB, 80IC Note*: Considering the huge infrastructure funding requirement of about USD 300 billion in the next 5 years, the withdrawal of tax incentives to works contractors will need to be reconsidered *FICCI pre-budget memorandum

27. 27 Deduction in respect of profits and gains from industrial undertakings 80IA/IB/IC(1): “Where the gross total income….includes any profits and gains derived…from any business referred to…” Examples of income not derived from a business: Import / export entitlements from an Export Incentive Scheme Lease money from leasing property to an eligible undertaking Sale of scrap Interest earned on deposit with a State Electricity Board Issues 80IA, 80IB, 80IC “Derived from” cannot have a wide import, unlike the phrase “attributable to” There has to be a direct nexus between the profit and gains and the undertaking Issue: When is income “derived from” an eligible business?

28. 28 Deduction in respect of profits and gains from industrial undertakings 80IA(12): Deduction shall be available to any enterprise transferred in a scheme of amalgamation or demerger 80IA(12A): Nothing in sub-section 12 shall apply to any enterprise transferred in a scheme of amalgamation or demerger Issue: Is 80IA(12A) applicable to 80IB and 80IC? Points:80IA(12A) inserted as 80-IA benefit was intended to provide incentive to take initial investment and entrepreneur risk 80IA(5) and 80IA(7) to (12) apply to 80IB and 80IC. No mention of 80IA(12A) in 80IB and 80IC CBDT Circular 3 of 2008 confirms the above. Issues 80IA, 80IB, 80IC

29. 29 Deduction in respect of profits and gains from industrial undertakings 80IA(12): Deduction shall be available to any enterprise transferred in a scheme of amalgamation or demerger 80IA(12A): Nothing in sub-section 12 shall apply to any enterprise transferred in a scheme of amalgamation or demerger Issue: Is deduction available if there is transfer via slump sale or share sale? Points:Amalgamation, as defined u/s 2(1B), doesn’t include slump sale or share sale 80IA(12) and 80IA(12A) do not mention transfer via slump sale or share sale Deduction u/s 80IA is for an “undertaking”. One possible view is that deduction will be available in the case of a slump sale as only ownership changes Issues 80IA, 80IB, 80IC

30. 30 Issues 80IA, 80IB, 80IC Deduction u/s 80IA allowed to well integrated new units with a separate and distinct identity. It is not very relevant that  The new units have the same management / premises  The new units produce similar goods, or procure raw materials from a common source – JCIT vs. Associated Capsules P. Ltd. (2008) 304 ITR (AT) 85 (Mum) Deduction u/s 80IB(10) is allowed to the developer, even if the developer is not the owner, as  The developer opted for the business risks associated, therefore could not be called a contractor  Deduction is not exclusively to a taxpayer, but to a developing undertaking, be it an owner or contractor – Radhe Developers & Ors vs. ITO (2008) 113 TTJ 300 (Ahm) Deduction u/s 80-IB(10) is allowed to units of a larger housing project, as  80IB(10) uses the words ‘residential unit’, therefore deduction should be computed unit-wise  The provision should be construed liberally so as to advance its objective – DCIT vs. Brigade Enterprises (P.) Ltd. (2008) 119 TTJ 269 (Bangalore) Other Principles

31. 31 Issues 80IA, 80IB, 80IC Deduction u/s 80IB is available even if, once the requirements are met, the services provided by the eligible unit are used by the taxpayer itself or a third party – Sanchita Marine Products (P.) Ltd. vs. DCIT 15 SOT 280 (Mum) Other Principles Mere facilitation from the head office of an eligible unit would not disentitle the eligible unit from claiming deduction – DCIT vs. Tribhovandas Bhimji Zaveri (2007) 110 TTJ 942 (Mum)  Providing installation, testing, commissioning facilities etc. of the cranes to a port in a BOLT scheme is an infrastructure facility u/s 80IA – DCIT vs. ABG Heavy Industries Ltd. (2008) 20 SOT 525 (Mum)

32. 32 Deduction in respect of profits and gains from industrial undertakings 80IA(12): Deduction shall be available to any enterprise transferred in a scheme of amalgamation or demerger 80IA(12A): Nothing in sub-section 12 shall apply to any enterprise transferred in a scheme of amalgamation or demerger Issue: Should 80IA(12A) be reconsidered? Thoughts*: Companies’ need to reposition themselves quickly, especially in the current economic environment Mergers / demergers crucial to companies’ global competitiveness Earlier position of 80IA(12) to be continued and benefit to be available to the amalgamated or resulting company Issues 80IA, 80IB, 80IC *FICCI pre-budget memorandum

33. 33 Deduction in respect of profits and gains from industrial undertakings 80IB(9): Deduction to an undertaking which begins commercial production of mineral oil Issues: Undertakings unable to avail benefit for the full 7 years due to the huge depreciation claims in the initial 3-4 years Commercial viability of upcoming refineries affected by the Sunset Clause (tax holiday not available for undertaking beginning refining on or after 1 st April 2009) The term ‘mineral oil’ does not include petroleum and natural gas, unlike other sections of the Act Thoughts*: 100 % tax holiday for a period of any 10 consecutive years out of 15 years under section 80-IA instead of 80-IB Flexibility to be provided of choosing any 7 consecutive years out of 15 years Drop the sunset clause or extend to 31 st March 2012 for private sector undertakings, to be on par with public sector undertakings Issues 80IA, 80IB, 80IC *FICCI pre-budget memorandum

34. 34 Deduction in respect of profits and gains from industrial undertakings 80IB(9): Deduction to an undertaking with profits from operating and maintaining a hospital Issues: Current 5 year tax holiday is very short. Entrepreneurs would hardly reach the break even point in the first 5 years Thoughts*: 5 year holiday to be extended to 10 years Infrastructure status to be granted to the healthcare industry Companies creating the following training and educational facilities to be eligible for exemption ■ Medical ■ Dental ■ Nursing ■ Midwifery ■ Paramedical ■ Lab Technicians ■ Biomedical Engineering Issues 80IA, 80IB, 80IC *FICCI pre-budget memorandum

35. 35 Deduction in respect of income of co-operative societies Issue: When a co-operative society (other than a credit co- operative) provided credit facilities to its members, is the interest earned eligible for deduction? Case: CIT vs. Krishak Sahkari Ganna Samiti (2002) 258 ITR 594 CIT vs. Madras Autorickshaw Drivers Co-operative Society (1983) 143 ITR 981 Points:Income “attributable to” an activity includes income from sources other than the main activity of the society Interest from statutory investment in government securities deductible However Interest earned from goods sold on credit not deductible as the element of sale predominates the element of financing In favor of:Assessee - CIT vs. Krishak Sahkari Ganna Samiti Revenue - CIT vs. Madras Autorickshaw Driver’s Co-op Issues 80P

36. 36 Deduction in respect of income of co-operative societies Issue: Whether income from activities of a co-operative housing society is eligible for deduction u/s 80P(2)(c ) Case: CIT vs. Film Nagar Co-operative Housing Society Ltd (2004) 91 ITD 27 Maker Tower A & B Co-op. Hsg. Society vs. ITO (2008) 20 SOT 253 Points:Income of a co-operative housing society is eligible as a case of “other co-operative societies” (80P(2)(c ) Profit and gains are not from “business” but from “activities” carried out In favor of:Assessee - CIT vs. Film Nagar Co-operative Assessee - Maker Tower A & B Co-op. Issues 80P

37. 37 Deduction in respect of income of co-operative societies Issue: Whether a co-operative bank needs to carry on business only with members to be eligible for exemption Case: Milli Co-op Urban Bank vs. ITO (2007) 106 ITD 151 (Hyd) Points:Co-operative bank can do business with non-members and be eligible for deduction u/s 80P(2)(i) The section should be read as income to a co- operative society carrying on the business of “banking” or “providing credit facilities to its members” In favor of:Assessee Issues 80P

38. 38 Questions?

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