2023 (6) TMI 125 - AT - Income Tax

Revision u/s 263 - allowability of the claim of deduction either u/s.80P(2)(a)(i) or u/s.80P(2)(d) - PCIT has held the assessment order to be erroneous and prejudicial to the interest of the Revenue only on the ground that the claim of deduction u/s.80P on the interest income was not in order - HELD THAT - As observed 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. Similar view has been taken by the Pune Benches of the Tribunal in several cases including The Sesa Goa Employees Coop. Credit Society Ltd. 2022 (12) TMI 959 - ITAT PUNE - We hold that the impugned order cannot be sustained. Decided in favour of assessee.

Summary

Issues involved:
The issue involves the condonation of delay in filing an appeal, the disputed claim of deduction under sections 80P(2)(a)(i) and 80P(2)(d) of the Income-tax Act, 1961, and the eligibility of a cooperative society for deduction on interest income from deposits with cooperative banks.

Condonation of Delay:
The appeal was time-barred by 340 days, but the delay was condoned after the assessee filed an affidavit explaining the reasons for the delay, which was found satisfactory. Consequently, the appeal was admitted for disposal on merits.

Disputed Claim of Deduction:
The Principal Commissioner of Income Tax (PCIT) invoked jurisdiction under section 263 of the Act to dispute the allowability of the claim of deduction under sections 80P(2)(a)(i) or 80P(2)(d) concerning interest income earned from deposits with cooperative banks. The Tribunal observed that the claim of deduction under section 80P(2)(d) was valid for a cooperative society on interest income from investments/deposits with a cooperative bank meeting the criteria of a registered cooperative society under the Act.

Eligibility of Cooperative Society for Deduction:
The Tribunal found that the provision of section 80P(4) did not affect the eligibility of a cooperative society for deduction under section 80P(2)(d) on interest income from deposits with a cooperative bank, provided the bank was a registered cooperative society as defined in the Act. Citing precedents, the Tribunal overturned the PCIT's decision, holding that the impugned order was unsustainable and allowed the appeal in favor of the assessee.

Separate Judgement:
No separate judgment was delivered by the judges in this case.