2024 (4) TMI 746 - AT - Income Tax

Deduction u/s 80P - interest income(s) derived from such nationalized/other bank(s) - HELD THAT - The issue is no more res integra in light of this tribunal s recent coordinate bench s order in The Rena Sahakari Sakhar Karkhana Ltd 2022 (1) TMI 419 - ITAT PUNE allowed the assessee s claim for deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative bank. Even the latter limb of interest income derived from investments made in nationalized/other bank(s), the Revenue could hardly dispute that case law The Vaveru Cooperative Rural Bank Ltd. 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT that interest income(s) derived from such nationalized/other bank(s) also qualifies for Sec. 80P deduction and thereby declined it s very stand. Thus accept the assessee s Sec. 80P(2)(a)(i)/80P(2)(d) deduction claim(s) in very terms - Decided in favour of assessee.

Summary

Issues Involved:
1. Deduction u/s 80P(2)(a)(i) for interest income from cooperative institutions and other banks.
2. Pr. CIT's exercise of revisional jurisdiction u/s 263.

Summary:

Issue 1: Deduction u/s 80P(2)(a)(i) for interest income from cooperative institutions and other banks

The assessee claimed a deduction u/s 80P(2)(a)(i) amounting to Rs. 21,42,515/-, representing interest from cooperative institutions and other banks. The tribunal referenced its recent decision in ITA.No.1249/PUN./2018, which rejected the Revenue's arguments against such deductions. The tribunal reiterated that interest income derived from investments with cooperative societies qualifies for deduction u/s 80P(2)(d). The tribunal emphasized that the term "co-operative society" includes cooperative banks registered under the Co-operative Societies Act, thus making interest income from these banks eligible for deduction.

Issue 2: Pr. CIT's exercise of revisional jurisdiction u/s 263

The Pr. CIT had set aside the A.O's order, which allowed the deduction, on the grounds that cooperative banks are not cooperative societies and thus not eligible for deduction u/s 80P(2)(d). The tribunal disagreed, stating that cooperative banks, being registered cooperative societies, qualify for the deduction. The tribunal referenced several judicial pronouncements, including those from the High Courts of Karnataka and Gujarat, which supported the eligibility of interest income from cooperative banks for deduction u/s 80P(2)(d). The tribunal concluded that the A.O had taken a plausible view in allowing the deduction, and the Pr. CIT erred in exercising revisional jurisdiction u/s 263 to dislodge it.

Conclusion:

The tribunal allowed the assessee's appeal, restoring the A.O's order and granting the deduction u/s 80P(2)(a)(i)/80P(2)(d) for the interest income from cooperative institutions and other banks. The order was pronounced in open court on 16.04.2024.