Co-operative society

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 September 2014 Whether co-operative housing society limited is eligible for deduction under section 80 P?

Thanks in Advance

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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24 September 2014 Co operative society engaged in housing is not eligible for 80P deduction

Querist : Anonymous

Querist : Anonymous (Querist)

25 September 2014 Sir, But as per section 80 P (2)(c), in any other case, Rs. 50000/- deduction is allowed?
Please explain, why Housing Co-operative society is not eligible for the said deduction.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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19 July 2024 Section 80P of the Income Tax Act, 1961 provides deductions in respect of income of cooperative societies. Here’s an explanation of the provisions relevant to housing cooperative societies:

### Section 80P Overview:

1. **General Deduction for Cooperative Societies (Section 80P(1))**:
- Section 80P(1) provides a deduction in respect of profits and gains of business carried on by a cooperative society.
- This deduction applies to all cooperative societies, including housing cooperative societies, engaged in business activities.

2. **Specific Provisions for Certain Categories (Section 80P(2))**:
- Section 80P(2) specifies certain conditions and limitations for deductions:
- **80P(2)(a)**: Primary agricultural credit societies.
- **80P(2)(b)**: Cooperative societies providing financial assistance to its members for agricultural purposes.
- **80P(2)(c)**: Other cooperative societies.

3. **Limitation under Section 80P(2)(c)**:
- Section 80P(2)(c) limits the deduction to Rs. 50,000 for cooperative societies other than those specified in (a) and (b) above.
- This means that cooperative societies falling under this category can claim a maximum deduction of Rs. 50,000 from their total income.

### Eligibility of Housing Cooperative Societies:

- **Business Income**: Housing cooperative societies primarily earn income from maintenance charges, service charges, rent from amenities provided to members, etc. These are considered business income.

- **Section 80P(1)**: Housing cooperative societies are eligible for deduction under Section 80P(1) for the profits and gains derived from their business activities. There is no restriction on the amount of deduction under this provision.

- **Section 80P(2)(c)**: While Section 80P(2)(c) limits the deduction to Rs. 50,000 for other cooperative societies, housing cooperative societies typically fall under Section 80P(1) as they are engaged in business activities related to providing housing and related services to their members.

### Why Housing Cooperative Societies are Not Eligible under Section 80P(2)(c):

- **Nature of Activities**: Housing cooperative societies primarily engage in business activities related to providing housing facilities and services to their members. They do not fall under the categories specified in Section 80P(2)(a) or (b) (which are specific to agricultural credit and finance).

- **Section 80P(1) Applicability**: Since housing cooperative societies derive their income from business activities, they are eligible for deduction under Section 80P(1) for their business profits. This provision does not impose a cap like Section 80P(2)(c).

### Conclusion:

Housing cooperative societies are eligible for deduction under Section 80P(1) for the profits and gains derived from their business activities. This provision allows them to claim deductions without any specific limit, unlike Section 80P(2)(c) which imposes a Rs. 50,000 cap on deductions for certain other categories of cooperative societies. Therefore, housing cooperative societies can avail of tax benefits under Section 80P(1) based on their business income derived from providing housing and related services to their members.