2021 (5) TMI 635 - AT - Income Tax

Disallowance u/s 80P(2)(d) - claim of interest income from the deposits in Co operative bank - AO disallowed the claim for both the years under consideration holding that the deduction is available for investment in other co operative societies and not other co operative banks as he was of the view that Co-operative Society and Co operative Banks have been given different treatment even under section 194A of the Act which relates to TDS - HELD THAT - We find that the issue in respect of deduction claimed in respect of interest income earned from Co operative Banks under section 80P(2)(d) of the Act is squarely covered by the decisions relied upon by the learned Counsel for the assessee as aforesaid wherein identical issue, except variation in figures, has been decided by the Tribunal in (i) Amit Tata Employees Co operative Housing Society Ltd. v/s ACIT, 2019 (7) TMI 1811 - ITAT MUMBAI (ii) Poonam Chambers Premises Co Op. Society Ltd. v/s ACIT. 2018 (8) TMI 2033 - ITAT MUMBAI (iii) Merwanjee Cama Park Co operative Housing Society Ltd. v/s ITO 2017 (10) TMI 58 - ITAT MUMBAI (iv) ITO v/s Eternity Co operative Housing Society Ltd. 2018 (5) TMI 2029 - ITAT MUMBAI Consistent with the view taken in the aforesaid Co ordinate Bench decisions in which the decision of the Hon ble Karnataka High Court in Totagars Co operative Society 2017 (7) TMI 1049 - KARNATAKA HIGH COURT was distinguished by the Co ordinate Bench. We hold that the assessee is a Co operative Society is entitled for claiming deduction under section 80P(2)(d) of the Act in respect of the interest income earned from either from Co operative Bank or from Co operative Society whatsoever that may be. Consequently, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the Revenue.

Summary

Issues:
Challenge to orders dated 15th March 2019 for A.Y. 2013-14 and 20th March 2019 for A.Y. 2014-15 by Revenue regarding disallowance under section 80P(2)(d) for interest income from Co-operative bank.

Analysis:
1. The appeals were filed by Revenue challenging orders for A.Y. 2013-14 and 2014-15 by the Commissioner (Appeals)-32, Mumbai. Both appeals involved a common issue related to disallowance under section 80P(2)(d) for interest income from Co-operative bank.

2. The Assessing Officer disallowed the claim for both years, stating that the deduction is available for investment in co-operative societies, not banks. The AO sought an explanation from the assessee, who submitted a detailed reply. The AO rejected the submissions, citing that interest income from Co-operative banks is not eligible for deduction under section 80P(2)(d) as banks are not considered co-operative societies. The AO added the disallowed amount to the total income.

3. The Commissioner (Appeals) directed the AO to allow the deduction under section 80P(2)(d) based on previous decisions. The Revenue challenged this decision, citing the Karnataka High Court judgment in Totagar's Co-operative Society. The Counsel for the assessee relied on Co-ordinate Bench decisions supporting the deduction claim.

4. The Tribunal held that the issue of deduction for interest income from Co-operative banks under section 80P(2)(d) is settled by previous Tribunal decisions. The Tribunal upheld the Commissioner (Appeals) order, stating that the assessee, being a Co-operative Society, is entitled to claim the deduction regardless of the source of interest income.

5. The Tribunal dismissed the Revenue's appeal for A.Y. 2013-14 and 2014-15, as the issue was already decided in favor of the assessee by the Co-ordinate Bench decisions. The consistent view taken by the Tribunal and the distinction made from the Karnataka High Court judgment supported the allowance of the deduction under section 80P(2)(d) for interest income from Co-operative banks.

6. Consequently, both appeals by the Revenue for A.Y. 2013-14 and 2014-15 were dismissed, affirming the orders of the Commissioner (Appeals) and upholding the deduction claim for interest income from Co-operative banks under section 80P(2)(d).