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2023 (5) TMI 878 - AT - Income TaxDeduction u/s.80P - interest income earned from Cooperative banks and also Nationalised banks - HELD THAT - 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 cooperative 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. Respectfully following the decision of the Division Bench overturn the impugned order and direct to grant deduction u/s.80P(2)(d) of the Act on the amount of interest earned from various cooperative banks. Allowability of deduction u/s.8P(2)(a)(i) on the interest income earned from the deposits kept with Nationalized banks - As find the Pune Benches in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit 2019 (4) TMI 682 - ITAT PUNE has decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit 2015 (8) TMI 1085 - ITAT PUNE has allowed similar deduction . In the said case the Tribunal discussed the contrary views expressed by Tumkur Merchants Souharda Credit Cooperative Ltd. 2015 (2) TMI 995 - KARNATAKA HIGH COURT allowing deduction u/s. 80P on interest income and that of the Hon ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. 2014 (9) TMI 833 - DELHI HIGH COURT not allowing deduction u/s.80P on interest income earned from banks. Both the Hon ble High Courts took into consideration the ratio laid down in the case of Totgar s Cooperative Sale Society Ltd. (supra) . No direct judgment from the Hon ble jurisdictional High Court on the point having been pointed out the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). The position continues to remain the same before this Tribunal also. Respectfully following the precedent the impugned order is overturned and the interest income earned from the deposits kept with nationalised bank is also allowed as deduction u/s.80P(2)(a)(i) of the Act. Appeal is allowed.
Issues involved:
The denial of deduction u/s.80P of the Income-tax Act in relation to interest income earned from Cooperative banks and Nationalised banks. Deduction u/s.80P on interest income from Cooperative banks: The appellant claimed deduction u/s.80P on net interest income after reducing expenses from the gross amount earned from banks. The Assessing Officer initially denied the deduction, but the first appeal upheld it. The Tribunal referred to previous decisions by the Pune Benches and cited Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr.CIT, stating that co-operative societies are eligible for deduction on interest income from investments/deposits with registered co-operative banks. Following this, the impugned order was overturned, and deduction u/s.80P(2)(d) was directed to be granted on interest earned from various cooperative banks. Deduction u/s.80P on interest income from Nationalised banks: Regarding the allowability of deduction u/s.80P(2)(a)(i) on interest income from deposits with Nationalised banks, the Tribunal referenced the case of Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT. The Tribunal noted conflicting views from different High Courts but ultimately followed the precedent set by the Hon'ble Karnataka High Court. As no direct judgment from the jurisdictional High Court was presented, the Tribunal upheld the deduction on interest income earned from nationalised banks under u/s.80P(2)(a)(i) of the Act. Consequently, the impugned order was overturned, and the appeal was allowed. Separate Judgment: The order was pronounced by Shri R.S. Syal, Vice President, in the Open Court on 19th May 2023.
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