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11. National Cooperative Development Corporation vs. Assistant Commissioner of Income Tax - SC
(2025)181 Taxmann.com 333-SC
Deductions - Section 36(1)(viii) provides a deduction of "profits derived from the business of providing long-term finance" in respect of any financial corporation engaged in providing long-term finance for industrial or agricultural development - The phrase "derived from" must be interpreted much more narrowly than the phrase "attributable to" - It requires a direct or immediate nexus with the specific business activity, for if the income is even a "step removed" from the business in question, that nexus is snapped - The deduction is limited to income from "first degree" sources and explicitly keeps out "ancillary profits" of the undertaking
The current litigation concerns several assessment years in which the Assessee, a statutory corporation mandated to advance initiatives for the production, processing, and marketing of agricultural produce and notified commodities in accordance with cooperative principles, sought deductions under Section 36(1)(viii) of the Income-tax Act, 1961 ('the Act').In the Assessment Order, the AO proceeded to consider each of the receipts independently. As regards the dividend income, the AO held that this was a return on investment
