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2023 (6) TMI 164 - AT - Income TaxDeduction u/s 80P(2)(d) - interest income earned by the Cooperative Society on its investment made with co-operative bank - HELD THAT - As in case of Totgar s Co-operative Sale Society Ltd. 2017 (7) TMI 1049 - KARNATAKA HIGH COURT and case of State Bank of India 2016 (7) TMI 516 - GUJARAT HIGH COURT had held that interest income earned by a co-operative society on its investment held with co-operative bank would be eligible for claim of deduction u/s 80P(2)(d) of the Act. So following the decision rendered above and Palm Court M Premises Co-operative Society Ltd. 2022 (9) TMI 650 - ITAT MUMBAI we are of the considered view that assessee society who has earned an amount from its investment of surplus fund with co-operative banks is entitled for deduction u/s 80P(2)(d) - CIT(A) has erred in upholding the denial of deduction by the AO to the assessee under section 80P(2)(d) - Decided in favour of assessee.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Eligibility for deduction under section 80P(2)(a)(i) of the Income Tax Act. 3. Eligibility for deduction under section 80P(2)(d) of the Income Tax Act. 4. Eligibility for deduction under section 80P(2)(c) of the Income Tax Act. Issue-wise Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The appellant, M/s. Vaibhavnagar Co-op. Credit Soc. Ltd., sought condonation of a 440-day delay in filing the appeal, citing reasons such as the cooperative society's formation for the benefit of underprivileged members and lack of regular access to email. The delay was partly attributed to the pandemic, with 145 days already condoned by the Supreme Court. The Tribunal found sufficient cause to condone the remaining 295 days, emphasizing the principle that "substantial justice deserves to be preferred" over technical considerations. 2. Eligibility for Deduction under Section 80P(2)(a)(i): The assessee argued that the interest earned from other cooperative societies should be considered as income from business activities and thus eligible for deduction under section 80P(2)(a)(i). However, the Tribunal did not specifically address this issue in the detailed judgment, focusing instead on section 80P(2)(d). 3. Eligibility for Deduction under Section 80P(2)(d): The primary issue was whether the interest income earned by the cooperative society from investments with cooperative banks is eligible for deduction under section 80P(2)(d). The Tribunal referenced multiple cases where it was held that such interest income qualifies for the deduction. The Tribunal cited the case of Palm Court M Premises Cooperative Society Ltd. and others, which distinguished the Supreme Court's judgment in Totgars Co-operative Sale Society Ltd. vs. ITO. The Tribunal concluded that the interest income earned from investments with cooperative banks is indeed eligible for deduction under section 80P(2)(d), thus overturning the CIT(A)'s decision. 4. Eligibility for Deduction under Section 80P(2)(c): The assessee also claimed a deduction under section 80P(2)(c) amounting to Rs.50,000/-. However, the Tribunal's detailed judgment did not specifically address this deduction, focusing primarily on the issues under sections 80P(2)(a)(i) and 80P(2)(d). Conclusion: The Tribunal allowed the appeal, concluding that the assessee is entitled to the deduction under section 80P(2)(d) for the interest income earned from investments with cooperative banks. The CIT(A)'s decision to deny this deduction was overturned, and the AO was directed to allow the deduction. The appeal was thus allowed in favor of the assessee. The judgment emphasized the importance of substantial justice and provided a comprehensive analysis of relevant case law supporting the assessee's position.
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