2023 (6) TMI 171 - AT - Income Tax

Exemption u/s 80P - interest income earned on fixed deposits with other co-operative banks - HELD THAT - As relying on Vaibhav Nagari Sahakari Pat Sanstha Maryadit 2023 (6) TMI 95 - ITAT PUNE interest income earned on fixed deposits with other co-operative banks qualifies for exemption u/s 80P(2)(d) - direct the CPC to rectify the intimation and allow the exemption u/s 80P(2)(d) - Decided in favour of assessee.

Summary

Issues involved:
The appeal filed by the assessee against the order of National Faceless Appeal Centre (NFAC) regarding denial of exemption u/s 80P of the Income-tax Act, 1961.

Facts of the case:
The appellant, a Co-operative society, filed a return of income for the assessment year 2019-20 declaring nil income. The return was processed u/s 143(1) of the Act, denying exemption u/s 80P. A rectification petition was filed to rectify the intimation, which allowed the exemption but denied the threshold exemption limit. An appeal before the CIT(A) resulted in the enhancement of taxable income by excluding interest income earned on fixed deposits and savings bank, not qualifying for exemption u/s 80P(d).

Decision:
The Tribunal, citing precedent, held that interest income earned on fixed deposits with co-operative banks qualifies for exemption u/s 80P(2)(d) of the Act. The decision was based on previous rulings establishing the eligibility of co-operative societies for deduction on interest income from investments/deposits with co-operative banks. The Tribunal directed the rectification of the intimation to allow the exemption u/s 80P(2)(d) of the Act, thereby allowing the grounds of appeal raised by the assessee.

Result:
The appeal filed by the assessee was allowed by the Tribunal, with the order pronounced on 31st May, 2023.