2023 (11) TMI 440 - AT - Income Tax

Deduction u/s 80P(2)(d) - interest income received from the Co-operative Banks - HELD THAT - From the perusal of section 80P(2)(d) of the Act, it is sufficiently evident that there is no restriction on claiming deduction under the said section in respect of interest income earned from the Co-operative society operating in multiple states. Section 80P(4) of the Act is of relevance only in a case where the taxpayer, who is a Co-operative Bank, claims a deduction under section 80P of the Act which is not the facts of the present case. We find that in Mavilayi Service Co-operative Bank Ltd 2021 (1) TMI 488 - SUPREME COURT while analysing the provisions of section 80P(4) of the Act held that section 80P(4) is a proviso to the main provision contained in section 80P(1) and (2) and excludes only Co-operative Banks, which are Co-operative Societies and also possesses a licence from RBI to do banking business. Also held that the limited object of section 80P(4) is to exclude Co-operative Banks that function at par with other commercial banks i.e. which lend money to members of the public. Therefore, we find no merits in the reasoning adopted by CIT(A) in denying deduction u/s 80P(2)(d) to the assessee. Decided in favour of assessee.

Summary

Issues Involved:
The judgment involves issues related to denial of deduction claimed under section 80P(2)(d) of the Income Tax Act, 1961 by the Commissioner of Income Tax (Appeals) for the assessment year 2015-16.

Grounds Raised by Assessee:
1. Challenge to the denial of interest under sections 234A, 234B, 234C.
2. Request for the flexibility to add, alter, modify, or delete grounds of appeal.
3. Dispute regarding the adjustment made by the Centralised Processing Centre.
4. Claim for deduction under section 80P(2)(d) in relation to interest income from co-operative banks.
5. Disagreement with the determination that certain banks are not co-operative banks.

Summary of Judgment:

The appellant, a Co-operative Housing Society, challenged the denial of deduction under section 80P(2)(d) of the Act for interest income earned from investments in Co-operative Banks. The Commissioner of Income Tax (Appeals) dismissed the appeal, leading to the current appeal before the tribunal.

The tribunal analyzed the relevant provisions of section 80P of the Act, emphasizing the conditions for claiming deductions related to interest income from investments in Co-operative Societies. It highlighted the definition of a "co-operative society" as per section 2(19) of the Act.

The tribunal noted that the appellant satisfied the conditions for claiming deduction under section 80P(2)(d) as a Co-operative Housing Society investing in Co-operative Banks. It clarified that restrictions on deductions did not apply to multi-state Co-operative Banks based on the provisions of the Act.

Referring to a previous Supreme Court judgment, the tribunal emphasized that section 80P(4) of the Act excludes only Co-operative Banks with banking licenses, not Co-operative Societies like the appellant. It disagreed with the reasoning of the Commissioner of Income Tax (Appeals) and allowed the appellant's appeal on grounds related to deduction under section 80P(2)(d).

The tribunal considered the remaining grounds of appeal as consequential or left open based on the submissions. Ultimately, the appeal by the assessee was allowed, and the judgment was pronounced in their favor on 08/11/2023.