2023 (1) TMI 1409 - AT - Income Tax

Disallowance of deduction u/s 80P(2)(d) - assessee has earned as interest on fixed deposit in a Co-operative Bank - HELD THAT - We note that this issue is no longer res-integra, since this issue has cropped up several times before this Tribunal wherein we have consistently allowed the same. Recently this Tribunal in the case of UTI Employees Sai Samrudhi Co-op Housing Society Ltd 2022 (12) TMI 1531 - ITAT MUMBAI held that the assessee Co-operative Society s claim for deduction (FD Interest) from Mumbai District Central Co-operative Bank. is allowable deduction u/s 80P(2)(d) - Assessee appeal allowed.

Summary

Issues:
- Appeal against disallowance of deduction u/s 80P(2)(d) of the Income Tax Act, 1961 for interest income earned by a Co-operative Housing Society from fixed deposits in Co-operative Banks.

Detailed Analysis:
1. The appeal was filed by a Co-operative Housing Society against the decision of the Ld. CIT(A) disallowing a deduction u/s 80P(2)(d) of the Income Tax Act for interest income earned on fixed deposits in Co-operative Banks. The Tribunal noted that this issue has been dealt with in previous cases and consistently allowed the deduction. Reference was made to a similar case involving a Co-operative Housing Society formed by employees and nominees of a government entity, where the deduction was allowed for interest income from a Co-operative Bank.

2. The relevant provision, Section 80P(2)(d) of the Act, allows deduction for interest income derived by a Co-operative Society from investments with another Co-operative Society. The definition of "Co-operative society" was also provided under Section 2(19) of the Act. It was clarified that even though Co-operative Banks are not entitled to the deduction under Section 80P due to a specific sub-section, they are still considered Co-operative Societies under the law, making interest income from investments with them eligible for deduction.

3. The Tribunal referred to various judicial pronouncements supporting the allowance of deduction under Section 80P(2)(d) for interest income earned by Co-operative Societies from investments in Co-operative Banks. Conflicting decisions were noted, but the Tribunal followed the view favoring the assessee, as per the principle that in case of conflicting decisions, the view in favor of the assessee should be preferred.

4. Based on the above analysis and legal principles, the Tribunal allowed the appeal of the Co-operative Housing Society, directing the Assessing Officer to allow the claimed deduction for interest income earned from the Co-operative Banks. The decision was in line with previous rulings and legal interpretations supporting the eligibility of Co-operative Societies for deductions under Section 80P(2)(d) of the Act.

5. In conclusion, the Tribunal allowed the appeal of the assessee Co-operative Housing Society, directing the Assessing Officer to grant the claimed deduction for interest income earned from the Co-operative Banks, in accordance with Section 80P(2)(d) of the Income Tax Act, 1961.