2023 (5) TMI 842 - AT - Income Tax

Disallowing deduction u/s.80P - interest income earned by the assessee from co-operative banks - HELD THAT - The extant issue is no more res integra in view of the catena of decisions delivered by the Pune Benches. The Pune Bench in Rena Sahakari Sakhar Karkhana Ltd. 2022 (1) TMI 419 - ITAT PUNE held 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 a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative 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. Direct to grant deduction u/s.80P(2)(d) of the Act on the amount of interest earned from various cooperative banks. Appeal of assessee allowed.

Summary

Issues:
The judgment involves the issue of deduction u/s 80P of the Income-tax Act on interest income earned from cooperative banks for the assessment years 2018-19 & 2020-21.

Comprehensive Details:

1. Background and Appeal: The appeals by the assessee were filed against the ex parte orders passed by the CIT(A) in relation to the assessment years 2018-19 & 2020-21, disallowing the deduction claimed u/s 80P amounting to Rs.22,40,771/- and Rs.26,85,471/- towards interest income earned from cooperative banks.

2. Decision Basis: The issue revolved around the eligibility of cooperative societies for deduction u/s 80P(2)(d) of the Act on interest income from cooperative banks. The Pune Bench's decision in Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr.CIT clarified that despite certain co-operative banks not being eligible for deduction under section 80P(4) since 1.4.2007, a registered cooperative society can claim deduction u/s 80P(2)(d) on interest income from investments/deposits in a cooperative bank meeting the criteria of a registered cooperative society under the Act.

3. Judgment: The Vice President, following the precedent set by the Division Bench, overturned the orders of the CIT(A) and directed to grant deduction u/s 80P(2)(d) of the Act on the interest income earned from various cooperative banks for the respective assessment years.

4. Outcome: Consequently, both appeals were allowed, and the order was pronounced in the Open Court on 18th May 2023.