2022 (12) TMI 1322 - AT - Income Tax

Deduction u/s 80P - assessee s status as to whether it is a cooperative bank or a credit cooperative society as per the Revenue s and assessee s arguments, respectively - HELD THAT - There could be hardly any dispute that hon ble apex court s recent landmark decision in Mavilayi Service Co-operative Bank Ltd 2021 (1) TMI 488 - SUPREME COURT has settled the issue that assessee s registration under the respective cooperative law itself forms the decisive factor. This assessee is further found registered as credit cooperative society only. I thus reject the Revenue s instant arguments to this effect. Assessee had deposited its surplus in cooperative banks and derived interest therefrom which has been claimed as eligible for section 80P deduction - As decided in BELGAUM COAL COKE CONSUMER COOPERATIVE ASSOCIATION LTD. 2021 (11) TMI 1121 - ITAT PANAJI we hold that the interest income earned by the appellant society on investment made with the cooperative bank which are also cooperative societies is exempt from the Income Tax Act u/s 80P(2)(d) of the Act. Therefore, we hold that the lower authorities was not justified in denying the claim of deduction u/s 80P(2)(d) of the Act. Accordingly, we direct the Assessing Officer to allow the same as deduction u/s 80P(2)(d) - Assessee appeal is allowed.

Summary

Issues involved:
1. Disallowance of deductions under section 80P(2)(a)(i) and 80P(2)(d) by lower authorities.
2. Assessee's status as a cooperative bank or credit cooperative society.
3. Eligibility of exemption of income received from cooperative banks under section 80P(2)(d) of the Income Tax Act.

Analysis:
1. The appeal was against the Commissioner of Income Tax (Appeals) order disallowing deductions under section 80P(2)(a)(i) and 80P(2)(d). The first issue was the assessee's status as a cooperative bank or credit cooperative society. The tribunal referred to a recent landmark decision by the apex court which stated that the registration under the respective cooperative law determines the status. As the assessee was registered as a credit cooperative society, the Revenue's argument was rejected.

2. The second issue revolved around the eligibility of exemption of income received from cooperative banks under section 80P(2)(d). The tribunal cited a previous order which highlighted that cooperative banks are also cooperative societies despite having a banking license. Referring to decisions by various high courts and the Supreme Court, the tribunal held that interest income earned by the appellant society on investments made with cooperative banks, which are also cooperative societies, is exempt under section 80P(2)(d). The Revenue's arguments were rejected, and the Assessing Officer was directed to allow the deduction under section 80P(2)(d).

3. The tribunal rejected all arguments presented by the Revenue and allowed the assessee's appeal, directing the Assessing Officer to compute necessary deductions in accordance with the law. No other grounds or arguments were raised during the hearing, and the appeal was allowed accordingly. The order was pronounced in open court on 28th December 2022.