ITAT: Interest Income earned by Co-operative Society is entitled for deduction under section 80P(2)(d) of the Income Tax Act
ITAT: Interest Income earned by Co-operative Society is entitled for deduction under section 80P(2)(d) of the Income Tax Act
The Income Tax Appellate Tribunal, Mumbai bench (in short ITAT), ruled that interest income earned by a co-operative society on its investment held with cooperative bank would be eligible for claim of deduction under section 80P(2)(d) of the Income Tax Act, 1961 (hereinafter referred to as Act).
The division bench comprising of Kuldip Singh (Judicial Member) and S Rifaur Rahman (Accountant Member) found that the Commissioner of Income Tax (Appeal) (in short CIT(A)) erred in upholding the assesses/appellant- Amore Commercial Premises Co-Op Society Ltd. denial of deduction under Section 80P(2)(d).
Assessee being a Co-Operative Society claimed disallowance/deduction under Section 80P (2)(d) in respect of the interest of Rs. 6,96,725 for parking its funds with Saraswat Co-Operative Bank, Sham Vithal Rao Co-Operative Bank, and district central Cooperative Bank. However, centralized processing Centre (in short CPC)/ Assessing Officer disallowed the deduction claimed by the Assessee under Section 143(1).
Assessee carried the matter before the CIT(A) by way of filing Appeals who confirmed the addition by dismissing Appeals. Filling aggrieved Assessee filed an appeal before the ITAT.
The Appellate Tribunal undisputedly noted that the assessee Society invested in surplus funds with Co-Operative banks and earned the interest income to the tune of Rs. 6,96,725 and claimed it is deduction under section 80P (2)(d) of the Act, which has been disallowed by Assessing Officer and confirmed by the CIT(A).
The Appellate Tribunal placed reliance in case of Pr. CIT and another vs. Totgar's Co-operative Sale Society Ltd. (2017) passed by the High Court of Karnataka and Hon'ble Gujarat High Court in case of State Bank of India vs. CIT (2016) had held "that interest income earned by a co-operative society on its investment held with cooperative bank would be eligible for claim of deduction under section 80P(2)(d) of the Act. The interest income earned by a cooperative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and therein concluded that the assessee would be entitled for claim of deduction under Sec. 80P(2) (d) on the interest income earned on its investments/deposits with cooperative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 for dislodging the same."
In view of the decisions rendered by the various High Courts, the Appellate Tribunal was of the view that the assessee/appellant who earned an amount of Rs. Rs. 6,96,725 from its investment of surplus fund with cooperative banks was entitled for deduction under section 80P(2)(d) of the Act. Resultantly, the Ld. CIT(A) had erred in upholding the denial of deduction by the AO to the assessee under section 80P(2)(d) of the Act.
