2024 (5) TMI 583 - AT - Income Tax

Deduction us/ 80P(2)(a) or u/s 80P(2)(d) - income received on investment made with co-operative banks - HELD THAT - On similar set of facts, coordinate Bench of this Tribunal in the case of The Andaluru Large Size Co-operative Society 2024 (5) TMI 516 - ITAT VISAKHAPATNAM held in favour of the assessee, relying of the decision of Kakateeya Mutually Aided Thrift and Credit Co-op Society 2023 (9) TMI 211 - ITAT VISAKHAPATNAM wherein as held assessee has invested surplus funds out of the activities carried out as per the provisions of section 80P(2)(a) of the Act. We therefore by respectfully following the jurisdictional High Court are of the view that interest income should be allowed as deduction u/s. 80P(2)(a)(i) of the Act and thereby the Ld. CIT(A)-NFAC has rightly held by deleting the addition made by the Ld. AO and hence we find no infirmity in the order of the Ld. CIT(A)-NFAC. Appeal of assessee allowed.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Disallowance of deduction claimed u/s 80P of the Act.

Condonation of Delay:

The assessee filed an appeal with a delay of 15 days due to the Secretary's medical condition, supported by a medical certificate. The Tribunal found a reasonable cause for the delay and admitted the appeal for hearing in the interest of justice.

Disallowance of Deduction u/s 80P:

The assessee, a large cooperative credit society, claimed a deduction u/s 80P(2)(a) of the Act. The AO denied the deduction by applying the decision of the Apex Court in the case of M/s Totgars Co-op Sales Society, treating the income from investments with cooperative banks as income from other sources. The CIT(A) sustained this addition.

The assessee argued that the facts in their case were distinguishable from the Totgars case and that the interest on deposits with the District Cooperative Central Bank (DCCB) should be eligible for deduction u/s 80P(2). The Tribunal agreed, noting that the original source of the investment was income derived from activities listed in section 80P(2)(a), and thus, the character of such income should not be lost.

The Tribunal cited the decision of the Andhra Pradesh High Court in Vavveru Cooperative Rural Bank Ltd., which distinguished the Totgars case and allowed similar deductions. The Tribunal also referenced the coordinate bench's decision in The Andaluru Large Size Co-operative Society, which supported the assessee's claim for deduction u/s 80P(2)(a)(i) of the Act.

Conclusion: The Tribunal quashed the order passed by the CIT(A) and allowed the appeals of the assessee for the A.Y. 2018-19 and 2020-21, permitting the deduction u/s 80P of the Act.

Order pronounced in the open court on 8th May, 2024.