2024 (8) TMI 1076 - AT - Income Tax

Deduction u/s. 80P(2)(a)(i)/80P(2)(d) - interest income earned by a Cooperative Society formed with the object of accepting deposits from Members and lending money to its Members - HELD THAT - On perusal of provisions of section 80P(2)(d), it is clear that the income derived by a cooperative society from its investment held with other cooperative societies shall be exempt from the total income of a cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. This issue was considered of CIT vs. Totagars Cooperative Sale Society, 2017 (1) TMI 1100 - KARNATAKA HIGH COURT wherein the Hon ble High Court after referring to the decision of Totgar s Co-operative Sale Society Ltd 2010 (2) TMI 3 - SUPREME COURT held that the ratio of decision of the Hon ble Supreme Court is not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. Interest income earned by cooperative society on deposits made out of surplus funds with cooperative banks qualifies for deduction under the provisions of section 80P(2)(d) of the Act. Therefore, the grounds of appeal raised by the appellant stand allowed.

Summary

The appeal was filed against the order of the National Faceless Appeal Centre for the assessment year 2020-21. The appellant, a Primary Credit Cooperative Society, earned interest income from Lokmangal Bank. The Tribunal allowed the appeal, stating that the interest income qualifies for deduction under section 80P(2)(d) of the Income-tax Act.