9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (2) TMI 970 - AT - Income TaxDisallowance of deduction u/s 80P - interest income earned from cooperative banks - HELD THAT - We observe that the issue is now settled in favour of the assessee in the case of Shree Madhi Vighag Khand Udyog Sahakari Mandli Ltd. 2025 (1) TMI 767 - GUJARAT HIGH COURT held that where assessee a cooperative society earned interest on investment made with a cooperative bank and claimed deduction u/s 80P(2)(d) since cooperative bank was a cooperative society registered under Gujarat State Cooperative Societies Act assessee was to be allowed to claim deduction under Section 80P(2)(d) - Appeal of the assessee is allowed.
ISSUES PRESENTED and CONSIDERED
The primary issue considered in this judgment is whether the assessee is eligible for a deduction under Section 80P(2)(d) of the Income Tax Act concerning interest income of Rs. 2,80,904/- earned from cooperative banks. The appeal also addresses procedural aspects, specifically the dismissal of the appeal by the CIT(A) on the grounds of limitation without providing an opportunity to the assessee to explain the delay, which is argued as a violation of the principles of natural justice. ISSUE-WISE DETAILED ANALYSIS 1. Eligibility for Deduction under Section 80P(2)(d) Relevant Legal Framework and Precedents: Section 80P(2)(d) of the Income Tax Act allows cooperative societies to claim a deduction on income earned as interest from investments made with other cooperative societies. The legal framework is supported by precedents from the Gujarat High Court, notably in the cases of PCIT vs. Ashwinkumar Arban Cooperative Society Ltd. and Principal Commissioner of Income-tax vs. Shree Madhi Vighag Khand Udyog Sahakari Mandli Ltd., which affirm that interest income from cooperative banks qualifies for this deduction. Court's Interpretation and Reasoning: The Tribunal referred to the Gujarat High Court's rulings, which clarified that cooperative banks are considered cooperative societies under the Gujarat State Cooperative Societies Act. Therefore, interest income earned from these banks is eligible for deduction under Section 80P(2)(d). The Tribunal emphasized that the issue is settled in favor of the assessee by the jurisdictional High Court, making the deduction applicable. Key Evidence and Findings: The Tribunal relied on the judgments of the Gujarat High Court, which had previously addressed similar issues. The High Court had concluded that the cooperative banks, being registered under the Gujarat State Cooperative Societies Act, qualify as cooperative societies, thus allowing deductions on interest income under Section 80P(2)(d). Application of Law to Facts: The Tribunal applied the legal principles established by the Gujarat High Court to the facts of the case, determining that the interest income of Rs. 2,80,904/- earned by the assessee from cooperative banks is eligible for deduction under Section 80P(2)(d). Treatment of Competing Arguments: The Tribunal acknowledged the Revenue's reliance on decisions from other jurisdictions, such as the Karnataka High Court and the Supreme Court, concerning the exclusion of cooperative banks from the definition of cooperative societies. However, it found these arguments unpersuasive in light of the jurisdictional High Court's clear rulings supporting the assessee's position. Conclusions: The Tribunal concluded that the assessee is entitled to the deduction under Section 80P(2)(d) for interest income earned from cooperative banks, as supported by the Gujarat High Court's decisions. 2. Procedural Fairness and Natural Justice Relevant Legal Framework: The principles of natural justice require that parties be given a fair opportunity to present their case. In this context, the CIT(A)'s dismissal of the appeal on limitation grounds without notifying the assessee of the delay or providing an opportunity to explain was challenged as a violation of these principles. Court's Interpretation and Reasoning: The Tribunal did not delve deeply into this procedural issue, as the substantive issue regarding the deduction under Section 80P(2)(d) was resolved in favor of the assessee. However, the procedural aspect underscores the importance of adhering to natural justice principles in tax proceedings. SIGNIFICANT HOLDINGS The Tribunal's decision aligns with the jurisdictional High Court's interpretation that cooperative banks qualify as cooperative societies under the relevant state legislation, thereby allowing deductions on interest income under Section 80P(2)(d). The judgment reinforces the principle that the provisions of Section 80P(2)(d) apply to income earned from investments with cooperative banks, which are cooperative societies themselves. The Tribunal's final determination was to allow the appeal of the assessee, granting the deduction for the interest income in question.
|
