2023 (3) TMI 718 - AT - Income Tax

Deduction u/s.80P(2)(d) - interest and dividend income from another cooperative bank - HELD THAT - Assessee is a co-operative society which earned interest and dividend from Pune Central District Cooperative Bank. It is seen that the Pune Benches of the Tribunal in Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr.CIT 2022 (1) TMI 419 - ITAT PUNE has held, vide its order dated 07-01-2022, that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co-operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. Pune District Central Co-operative Bank is also a co-operative society, being, registered as such. Respectfully following the decision of the Division Bench, we overturn the impugned order and direct to grant deduction u/s.80P(2)(d) of the Act on the amount of interest and dividend income earned from Pune District Central Co-operative Bank, a co-operative society. Assessee appeal is allowed.

Summary

Issues involved:
The only issue raised in this appeal is against not allowing deduction u/s.80P(2)(d) in respect of interest and dividend income from another cooperative bank.

Summary:

Issue 1: Deduction u/s.80P(2)(d) for interest and dividend income from cooperative bank

The assessee appealed against the order disallowing deduction u/s.80P(2)(d) for interest and dividend income from Pune District Central Cooperative Bank. The Assessing Officer and CIT(A) did not allow the deduction based on a judgment of the Supreme Court. The Tribunal noted that co-operative societies are eligible for deduction u/s.80P(2)(d) for interest income on investments/deposits with a co-operative bank. Referring to a previous decision, the Tribunal held that the provision of section 80P(4) does not affect the eligibility of co-operative societies for deduction u/s.80P(2)(d). As Pune District Central Co-operative Bank is a registered co-operative society, the Tribunal directed to grant deduction u/s.80P(2)(d) for the interest and dividend income earned from the bank. The appeal was allowed, overturning the previous order.

Conclusion:
The appeal was allowed, and the deduction u/s.80P(2)(d) for interest and dividend income from Pune District Central Co-operative Bank was granted by the Tribunal.