2023 (6) TMI 560 - AT - Income Tax

Deduction u/s 80P(2)(d) - interest income derived from fixed deposits - denial of deduction for reason that such receipts from cooperative societies is not eligible for the foregoing relief - HELD THAT - Find no merit in the Revenue s stand in the light of this Tribunal s recent decision in The Belagavi Manufacturers cooperative Industrial Estate Ltd., Udyambag Belagavi and others 2022 (4) TMI 339 - ITAT PANAJI held 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 involved:
1. Condoning delay in filing the appeal.
2. Eligibility of deduction under section 80P(2)(d) for interest income from cooperative societies.

Analysis:

Issue 1: Condoning delay in filing the appeal
The Appellate Tribunal condoned the delay of 151 days in filing the appeal based on the assessee's reasons attributed to communication gaps at various levels. Citing the landmark decision of the Hon'ble Supreme Court in Collector, Land Acquisition vs., MST Katiji, the Tribunal emphasized that technical aspects should not hinder substantial justice. The Revenue failed to rebut the assessee's reasons, leading to the condonation of the delay.

Issue 2: Eligibility of deduction under section 80P(2)(d) for interest income from cooperative societies
The assessee contended that the lower authorities erred in rejecting its deduction claim under section 80P(2)(d) for interest income from fixed deposits with a cooperative bank. The Tribunal reviewed the rival contentions and referred to a previous order involving cooperative societies investing in a cooperative bank. The Tribunal emphasized that the interest earned by the assessee from the cooperative bank should be eligible for deduction under section 80P(2)(d).

The Tribunal considered various judgments, including those from different High Courts and Tribunals, supporting the eligibility of interest income from cooperative banks for deduction under section 80P(2)(d). It was noted that the source of investment was not a relevant factor for claiming the deduction under this provision. The Tribunal also highlighted that the Hon'ble Supreme Court's decision in a related case focused on a different section and that the High Court had allowed the deduction under section 80P(2)(d) in a specific case.

Based on the detailed analysis and precedents, the Tribunal accepted the assessee's substantive ground related to the eligibility of deduction under section 80P(2)(d) for interest income from cooperative societies. Consequently, the assessee's appeal was allowed in favor of the assessee.

In conclusion, the Tribunal's judgment addressed the issues of condoning the delay in filing the appeal and the eligibility of deduction under section 80P(2)(d) for interest income from cooperative societies, providing a detailed analysis and referencing relevant legal precedents to support its decision.