Section 40A, 143 of Income Tax Act, 1961—In the instant case, revenue is in appeal on the issue of disallowance of 5,92,19,981/- u/s.40A(2)(b) of the Act.

Held that— The Co-ordinate Bench of ITAT has held that the provisions of section 40A(2)(b) of the Act, does not apply to co-operative society. Hence, no disallowance under that section can be made in the assessment of co-operative society. The Hon’ble Bombay High Court also in the case of CIT vs Manjara Shetkari Sahakari Sakhar Karkhana Ltd.(supra) has held that ‘’the section 40A(2) does not apply to the co-operative society, hence no disallowance under that section can be made in the assessment of the Cooperative society’’.

we are of the view that the provisions of section 40(A)2(b) of the Act, are not applicable to co-operative society. Therefore, we are inclined with the decision of ld.CIT(A), that the provision of section 40(A)2(b) of the Act, were not applicable to the case of the assessee, therefore we do not find any merits in the appeal of the revenue and the same is dismissed.[D.C.I.T, BHARUCH CIRCLE, BHARUCH VERSUS GANESH KHAND UDYOG SAHAKARI MANDALI LTD.] [2018] 7 ITCD Online (103) [ITAT SURAT]