2024 (2) TMI 190 - AT - Income Tax

Deduction u/s 80P - interest has been received from Cooperative Bank - HELD THAT - As going through the provisions of Section 80P(2)(d) of the Act, we find that the assessee is eligible for deduction u/s 80P(1) in respect of the income derived by way of interest or dividend from its investment with any cooperative bank society. In the instant case, though the interest has been received from Cooperative Bank, but basically it is a Cooperative Society, which has taken a banking license. Recently in the case of Amore Commercial Premises Co- Op. Society Limited vs. Central Processing Centre 2023 (1) TMI 826 - ITAT MUMBAI has dealt with the similar issue and after placing reliance on the judgement of Pr. CIT and Others vs. Totgars Co-operative Society Limited, 2017 (1) TMI 1100 - KARNATAKA HIGH COURT and State Bank of India vs. CIT, 2016 (7) TMI 516 - GUJARAT HIGH COURT has held that interest income earned by Cooperative Society on its investment held with Cooperative Bank would be eligible for claim of deduction u/s 80P(2)(d). Thus we are inclined to hold that the assessee is eligible for deduction u/s 80P(2)(d) in respect of FDR interest received from Cooperative Bank. Decided in favour of assessee.

Summary

Issues Involved:
1. Condonation of Delay
2. Classification of Interest Income
3. Eligibility for Deduction under Section 80P(2)(d) of the Income-tax Act, 1961

Summary:

1. Condonation of Delay:
The appeal was delayed by 181 days. The assessee filed an affidavit explaining the delay, primarily attributing it to the discontinuation of their previous tax consultant, who failed to inform them about the appellate order. The Tribunal found the reasons satisfactory and condoned the delay, admitting the appeal for adjudication on merit.

2. Classification of Interest Income:
The assessee, a Credit Cooperative Society, had shown interest income from Fixed Deposit Receipts (FDRs) as "income from other sources" and claimed deductions under Section 57 of the Act. The Assessing Officer (AO) and the Commissioner of Income-Tax (Appeals) [CIT(A)] disallowed these deductions, treating the interest income as not eligible for deduction under Section 80P(2)(f) of the Act. The Tribunal noted that the interest income was received from deposits made with Indore Premier Cooperative Bank Limited, which is a cooperative society.

3. Eligibility for Deduction under Section 80P(2)(d):
The Tribunal examined Section 80P(2)(d) of the Act, which allows deductions for income derived from investments with any other cooperative society. Relying on precedents, including decisions from the Hon'ble Karnataka High Court and Gujarat High Court, the Tribunal concluded that interest income earned from investments with a cooperative bank qualifies for deduction under Section 80P(2)(d). The Tribunal held that the assessee is eligible for this deduction and set aside the findings of the CIT(A), thereby deleting the addition/disallowance.

Conclusion:
The Tribunal allowed the appeal, granting the assessee the deduction under Section 80P(2)(d) for the interest income from FDRs with a cooperative bank, and did not need to adjudicate the alternative ground due to the favorable decision on the primary grounds. The order was pronounced in the open court on 10.01.2024.