9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (10) TMI 968 - AT - Income TaxDeduction u/s. 80P(2)(d) - interest earned from deposits in cooperative bank - as per AO amendment made by Finance Act, 2015 in section 194A(3)(v) of the Act which excludes the Cooperative Banks from the definition of Co-operative Society and requiring them to deduct income tax at source under Section 194A - HELD THAT - As relying on Kaliandas Udyog Bhavan Premises Co-op Hsg Society 2018 (4) TMI 1678 - ITAT MUMBAI and KSHATRIY GADKARI MARATHA COOPERATIVE CREDIT SOCIETY LTD. 2019 (4) TMI 1932 - ITAT MUMBAI we hold that the assessee a cooperative society is eligible for deduction u/s. 80P(2)(d) of the Act in respect of the interest income earned by the assessee from either any other cooperative society or from a cooperative bank. Thus, we do not find any infirmity in the order of the Ld. CIT(A) and accordingly, grounds raised by the revenue are dismissed.
Issues Involved:
1. Deduction under Section 80P(2)(d) of the Income Tax Act for interest earned from deposits in cooperative banks. 2. Interpretation of Section 80P(4) and its impact on the applicability of Section 80P(2)(d). 3. Characterization of income earned from deposits and its eligibility for deduction. 4. Reliance on previous judicial decisions and their applicability to the current case. Issue-wise Detailed Analysis: 1. Deduction under Section 80P(2)(d) of the Income Tax Act for interest earned from deposits in cooperative banks: The primary issue revolves around whether the assessee, a cooperative society, is entitled to a deduction under Section 80P(2)(d) of the Income Tax Act for interest income earned from deposits in cooperative banks. The Revenue argued that the amendment made by the Finance Act, 2015, in Section 194A(3)(v) of the Act, which excludes cooperative banks from the definition of "co-operative society," implies that cooperative banks are not eligible for deductions under Section 80P. However, the tribunal observed that various Coordinate Benches have consistently held in favor of the assessee on this matter. Specifically, in the case of Kshatriy Gadkari Maratha Cooperative Credit Society Ltd. v. ITO, it was determined that the assessee is entitled to the deduction under Section 80P(2)(d) for interest income earned from cooperative banks. 2. Interpretation of Section 80P(4) and its impact on the applicability of Section 80P(2)(d): The Revenue contended that Section 80P(4) excludes the applicability of Section 80P to any cooperative bank, thereby affecting the eligibility for deductions under Section 80P(2)(d). However, the tribunal noted that the Supreme Court's decision in The Totgar Cooperative Sales Society Limited v. ITO dealt with whether interest on surplus funds is eligible for deduction under Section 80P(2)(a)(i), not Section 80P(2)(d). The tribunal emphasized that Section 80P(2)(d) explicitly allows deductions for interest or dividends derived from investments with any other cooperative society, and this provision remains unaffected by Section 80P(4). 3. Characterization of income earned from deposits and its eligibility for deduction: The Revenue argued that the character of the income earned from deposits, whether with scheduled banks, nationalized banks, or cooperative banks, does not change and should be fully taxable as it does not partake in the operational income of the cooperative housing society. The tribunal, however, clarified that the interest income derived from investments made with any other cooperative society is eligible for deduction under Section 80P(2)(d). The tribunal referred to the decision of the Karnataka High Court in Pr.CIT v. Totgar Cooperative Sales Society Limited, which held that cooperative societies, including cooperative banks, are eligible for deductions under Section 80P(2)(d). 4. Reliance on previous judicial decisions and their applicability to the current case: The tribunal considered the Revenue's reliance on the decisions in PCIT v. Totagar's Cooperative Sales Society and the case of Kaliandas Udyog Bhavan Premises Co-op Society Ltd. The tribunal noted that the decision of the Hon'ble Supreme Court in Totgar Cooperative Sales Society Limited v. ITO was not applicable to the current case as it dealt with Section 80P(2)(a)(i) and not Section 80P(2)(d). The tribunal also referred to the decisions of various Coordinate Benches and High Courts, which consistently held that interest income earned from cooperative banks is eligible for deduction under Section 80P(2)(d). The tribunal emphasized that the term "cooperative society" includes cooperative banks, and thus, the interest income derived from investments with cooperative banks qualifies for the deduction. Conclusion: The tribunal concluded that the assessee, a cooperative society, is eligible for deduction under Section 80P(2)(d) of the Income Tax Act for interest income earned from deposits in cooperative banks. The tribunal dismissed the Revenue's appeal, upholding the decision of the Learned Commissioner of Income-tax (Appeals) and relying on consistent judicial precedents that support the assessee's entitlement to the deduction. The tribunal's order was pronounced in the open court on 30.09.2022.
|
