2022 (4) TMI 339 - AT - Income Tax

Deduction u/s 80P - As per DR assessee invested in Cooperative Bank and the interest earned from the Cooperative Bank is not eligible u/s 80P(4). Section 80P(4) only restricted investment in the Cooperative Society not in bank - HELD THAT - Section 80P(2)(d) of the Act allows whole deduction of income by way of interest or dividend derived by Cooperative Society from its investments with any other co-operative society. This provision does not make any distinction with regard to the source of investment because this section envisages deduction in respect of any income derived by co-operative society from in his investment with a co-operative society. So the Revenue is not required to look another of investment whether it was formed as required within time or otherwise. We have heard the considered of the case of Totagars Co-operative Sales Society Ltd. 2010 (2) TMI 3 - SUPREME COURT which was relied by the Ld. DR and find that the Hon ble Apex Court has dilapidated on the issue of deduction u/s 80P(2)(a)(i) but not on section 80P(2)(d). We also observed that in the case of Totagars Cooperative Sales Society Ltd 2017 (1) TMI 1100 - KARNATAKA HIGH COURT itself the Hon ble High Court of Karnataka has allowed the claim of deduction u/s 80P(2)(d) vide order dated 05.01.2017. We hereby hold that the investment of assessee in cooperative bank is eligible investment u/s 80P(2)(d) of the Act. The interest of the said investment related to Cooperative Society, assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act. Accordingly the appeals of the assessee are allowed.

Summary

Issues:
- Appeal against order of Ld. Commissioner of Income Tax under section 250(6)
- Delay in filing appeals - condonation of delay requested
- Interpretation of Section 80P(2)(d) of the Income Tax Act
- Disallowance of deduction for interest earned from Cooperative Bank
- Dispute over eligibility for deduction under Section 80P(2)(d)
- Definition of Cooperative Bank and Primary Co-operative Bank under Banking Regulation Act, 1949
- Arguments regarding deduction eligibility under Section 80P(2)(d)
- Comparative analysis of relevant case laws
- Judgment on eligibility of investment in Cooperative Bank under Section 80P(2)(d)
- Decision on appeals filed by the assessee

Analysis:
The judgment by the Appellate Tribunal ITAT PANAJI involved multiple issues arising from appeals against the Ld. Commissioner of Income Tax's order under section 250(6). The appeals were time-barred, with delays ranging from 26 to 32 days, but were condoned for hearing. The primary issue revolved around the interpretation of Section 80P(2)(d) of the Income Tax Act concerning the deduction of interest earned from a Cooperative Bank. The assessee claimed the interest as a deduction under Section 80P, which was disallowed by the Ld. AO, leading to an appeal before the ITAT.

The dispute centered on whether the interest earned from the Cooperative Bank was eligible for deduction under Section 80P(2)(d). The Revenue authorities relied on the Supreme Court's decision in the case of Totgar Cooperative Sales Society Ltd., adding the interest back to the total income of the assessee. The assessee argued that the interest earned from the bank should qualify for exemption under Section 80P, as Section 80P(4) did not restrict investments in banks. The Ld. DR contended that the interest was not eligible under Section 80P(4) as it only restricted investments in Cooperative Societies, not banks.

The judgment delved into the definition of Cooperative Bank and Primary Co-operative Bank under the Banking Regulation Act, 1949, to determine the eligibility of the assessee's investment in the Cooperative Bank. Various case laws were cited to support the argument that interest earned from such investments should be deductible under Section 80P(2)(d). The Tribunal analyzed the judgments and held that the investment in the Cooperative Bank was eligible under Section 80P(2)(d), allowing the appeals filed by the assessee.

In conclusion, the Appellate Tribunal ITAT PANAJI ruled in favor of the assessee, allowing the appeals related to the deduction of interest earned from the Cooperative Bank under Section 80P(2)(d) of the Income Tax Act. The judgment provided a detailed analysis of relevant legal provisions, case laws, and interpretations to support the decision.