2023 (9) TMI 1515 - AT - Income Tax

Deduction u/s.80P(2)(d) - interest income received from co-operative banks - HELD THAT - This Tribunal in the case of Shree Madhi Vibhag Khand Udyog Sahakari Mandi 2023 (7) TMI 1042 - ITAT SURAT whereby the issue relating to deduction u/s 80P(2)(d) of the Act, in respect of interest income received from co-operative banks, was decided in favour of assessee. That is, deduction u/s 80P(2)(d) of the Act be allowed to the co-operative society in respect of interest income received from co-operative banks. Decided in favour of assessee.

Summary

Issues Involved:
1. Addition of Rs. 10,99,260/- and non-granting of deduction of interest income claimed under section 80P(2)(d) of the Income Tax Act, 1961.
2. Deduction under section 80P(2)(d) for interest income received from co-operative banks.
3. Initiation of penalty proceedings under section 274 read with section 270A(1) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Addition of Rs. 10,99,260/- and Non-Granting of Deduction of Interest Income Claimed under Section 80P(2)(d):
The assessee appealed against the addition of Rs. 10,99,260/- and the non-granting of the deduction of interest income claimed under section 80P(2)(d). The Tribunal referred to a previous decision in the case of Shree Madhi Vibhag Khand Udyog Sahakari Mandli Ltd., where it was held that the deduction under section 80P(2)(d) should be allowed to a co-operative society in respect of interest income received from co-operative banks. The Tribunal found that the issue was squarely covered in favor of the assessee by this precedent, thus supporting the assessee's claim for the deduction.

2. Deduction under Section 80P(2)(d) for Interest Income Received from Co-operative Banks:
The Tribunal examined the provisions of section 80P of the Income Tax Act, which provides deductions to co-operative societies. Specifically, section 80P(2)(d) allows for the deduction of interest income received by a co-operative society from its investments with another co-operative society. The Tribunal noted that there is no specific definition of a co-operative society in this clause. The Revenue argued that the term "co-operative society" should not include co-operative banks, relying on the interpretation rules and past judgments. However, the Tribunal referred to the jurisdictional High Court's decision in Surat Vankar Sahakari Sangh Ltd., which held that a co-operative society is eligible for deduction under section 80P(2)(d) for interest received from co-operative banks. The Tribunal concluded that the order of the Assessing Officer was not erroneous and upheld the assessee's eligibility for the deduction.

3. Initiation of Penalty Proceedings under Section 274 read with Section 270A(1):
The assessee also contested the initiation of penalty proceedings under section 274 read with section 270A(1). The Tribunal did not provide a detailed analysis of this issue in the judgment, focusing instead on the primary issue of the deduction under section 80P(2)(d). However, given that the Tribunal ruled in favor of the assessee on the primary issue, it can be inferred that the penalty proceedings would not be justified.

Conclusion:
The Tribunal allowed the appeal of the assessee, deleting the addition made by the Assessing Officer and confirming the eligibility for the deduction under section 80P(2)(d) for interest income received from co-operative banks. The decision was based on the precedent set by the Coordinate Bench and the jurisdictional High Court, which supported the assessee's claim. The Tribunal found no reason to interfere with the previous decisions and ruled in favor of the assessee.