2023 (6) TMI 1316 - AT - Income Tax

Denial of deduction u/s.80P - interest income earned from the deposits with other cooperative banks - HELD THAT - As seen that the assessee is a co-operative society and earned interest income from the deposits with other Co-operative Banks. The extant issue is no more res integra in view of the catena of decisions delivered including the Rena Sahakari Sakhar Karkhana Ltd. 2022 (1) TMI 419 - ITAT PUNE holding that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a cooperative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a cooperative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The payer of interest is also a Co-operative society registered under the Cooperative Societies Act. We overturn the impugned order and direct to grant deduction u/s.80P(2)(d) of the Act on the amount of interest earned from various cooperative banks. Assessee appeal is allowed.

Summary

Issues:
The denial of deduction u/s.80P in respect of interest income earned from deposits with other cooperative banks.

Summary:
The Appellate Tribunal ITAT Pune addressed the appeal against the order passed by the CIT(A) regarding the denial of deduction u/s.80P for interest income from deposits with cooperative banks. The assessee, a Cooperative credit society, claimed deduction u/s. 80P(2) for interest income earned. The AO disallowed the deduction based on a Supreme Court judgment and this decision was upheld in the first appeal. The assessee appealed contending that the deduction should be allowed u/s 80P(2)(d) of the Act.

After reviewing the submissions and relevant material, it was noted that the assessee earned interest income from deposits with cooperative banks. Referring to previous decisions, including Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr. CIT, it was established that despite certain limitations on deductions for cooperative banks, a cooperative society is eligible for deduction u/s 80P(2)(d) on interest income from investments/deposits with a cooperative bank. The Tribunal overturned the previous order and directed to grant deduction u/s.80P(2)(d) on the interest earned from various cooperative banks.

Therefore, the appeal was allowed, and the order was pronounced in the Open Court on 07th June, 2023.