2022 (10) TMI 257 - AT - Income Tax

Deduction u/s 80P - interest earned from Co-operative Banks on FDRs other than co-operative societies - HELD THAT - We note that issue under consideration is squarely covered by the judgment of Hon'ble jurisdictional High Court of Gujarat in the case of Surat Vankar Sahakari Sangh Ltd. 2016 (7) TMI 1217 - GUJARAT HIGH COURT as relied on by CIT(A), wherein it was held that assessee-co-operative society was eligible for deduction u/s 80P(2)(d) in respect of gross interest received from cooperative bank. We note that assessee is a co-operative society and therefore is entitled to claim deduction in respect of interest received from another co-operative bank under section 80(P)(2)(d) - we confirm the order passed by the CIT(A) and dismiss the appeal of Revenue.

Summary

Issues:
1. Deduction under Section 80P(2)(d) of the Income Tax Act for interest earned from Co-operative Banks.

Analysis:
The appellate tribunal ITAT Surat heard an appeal by the Revenue against an order from the Commissioner of Income Tax (Appeals) related to the assessment year 2015-16. The primary issue was the deletion of an addition made by the Assessing Officer on interest earned from Co-operative Banks on Fixed Deposit Receipts (FDRs) other than co-operative societies, claimed as a deduction under Section 80P(2)(d) of the Income Tax Act, 1961. The Assessing Officer disallowed the interest income earned by the assessee-society from entities other than co-operative societies and added it back to the total income under "income from other sources." The Assessing Officer relied on a decision of the Hon'ble High Court of Karnataka. The Commissioner of Income Tax (Appeals) deleted the addition, emphasizing the distinction between deductions under Section 80P(2)(a) and 80P(2)(d) of the Act, allowing the deduction of interest received by a cooperative society from any other cooperative society, including cooperative banks, without restrictions. The Commissioner referred to various legal decisions supporting the deduction of interest income from District Co-Operative Banks under Section 80P(2)(d). The tribunal, following the precedent of the Hon'ble jurisdictional High Court of Gujarat, upheld the allowance of the deduction and dismissed the Revenue's appeal.

The tribunal concluded that the appellant, being a co-operative society, was entitled to claim a deduction for interest received from another co-operative bank under Section 80(P)(2)(d) of the Act based on the binding precedent of the Hon'ble jurisdictional High Court of Gujarat. The tribunal confirmed the order passed by the Commissioner of Income Tax (Appeals) and dismissed the Revenue's appeal.