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2022 (11) TMI 1258 - AT - Income TaxDeduction u/s 80P(2)(a)(i) - Claim denied as it is only a Urban Co-operative Bank then a cooperative society and the said interest income represents deposits made in a cooperative bank and thus not entitled for the relief in issue as per section 80P(4) - HELD THAT - Section 80P(2)(d) of the Act allows whole deduction of income by way of interest or dividend derived by Cooperative Society from its investments with any other co-operative society. This provision does not make any distinction with regard to the source of investment because this section envisages deduction in respect of any income derived by cooperative society from in his investment with a cooperative society. So the Revenue is not required to look another of investment whether it was formed as required within time or otherwise. As heard the considered of the case of Totagars Co-operative Sales Society Ltd 2010 (2) TMI 3 - SUPREME COURT which was relied by the Ld. DR and find that the Hon ble Apex Court has dilapidated on the issue of deduction u/s 80P(2)(a)(i) but not on section 80P(2)(d). We also observed that in the case of Totagars Cooperative Sales Society Ltd, 2017 (1) TMI 1100 - KARNATAKA HIGH COURT itself the Hon ble High Court of Karnataka has allowed the claim of deduction u/s 80P(2)(d). Considering all the judgments we hereby hold that the investment of assessee in cooperative bank is eligible investment u/s 80P(2)(d) of the Act. The interest of the said investment related to Cooperative Society, assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act. Accordingly the appeals of the assessee are allowed. Appeal of assessee allowed.
Issues:
1. Eligibility of deduction under section 80P(2)(a)(i) for interest income earned from a cooperative bank. Analysis: The appeal before the Appellate Tribunal ITAT PANAJI involved the eligibility of the assessee for a deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 for the assessment year 2017-18. The dispute arose from the National Faceless Appeal Centre Delhi's order, where the lower authorities had denied the deduction of Rs.19,56,156/- to the assessee on the grounds that it was a cooperative bank and not a cooperative society, and the interest income did not qualify for relief under section 80P(4). The Tribunal observed that recent legal precedents established that even registered cooperative societies were entitled to the deduction, and the interest income derived from cooperative banks was eligible for the relief. The Tribunal relied on various judgments to support its decision, emphasizing that interest earned from cooperative banks was attributable to the banking business and therefore qualified for the deduction under section 80P(2)(a)(i). 2. Interpretation of section 80P(4) and eligibility of interest income from cooperative banks. The Tribunal considered the definition of Cooperative Bank and Primary Cooperative Bank under the Banking Regulation Act, 1949 to determine whether a particular cooperative society could be treated as a cooperative bank. It was highlighted that the definition of Cooperative Bank included Primary Cooperative Bank, and the interest income earned by the assessee on deposits with the cooperative bank was deemed eligible for deduction under section 80P(2)(d). The Tribunal referred to various judgments from different High Courts and Tribunals to support its conclusion that investments in cooperative banks were eligible for deduction under section 80P(2)(d) of the Act. The Tribunal directed the Assessing Officer to compute the necessary deductions after considering the assessee eligible for the section 80P deduction. In conclusion, the Appellate Tribunal ITAT PANAJI allowed the assessee's appeal, holding that the interest income earned from a cooperative bank was eligible for deduction under section 80P(2)(a)(i) and 80P(2)(d) of the Income Tax Act, 1961. The Tribunal's decision was based on legal interpretations and precedents that established the eligibility of such income for the deduction, emphasizing the nature of the income derived from cooperative banks as part of the banking business.
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