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2024 (6) TMI 941 - AT - Income TaxIssues Involved: 1. Allowance of deduction u/s 80P(2)(d) on interest income earned from investments with Co-operative Banks. 2. Denial of deduction u/s 80P(2)(d) on interest income directly credited to "Repair and Maintenance Fund" and "Sinking Fund". Summary: 1. Allowance of Deduction u/s 80P(2)(d) on Interest Income Earned from Investments with Co-operative Banks: The Revenue challenged the CIT(A)'s decision to allow the deduction u/s 80P(2)(d) of the Income Tax Act, 1961, for interest income earned from investments with Co-operative Banks. The assessee, a Co-operative Housing Society, had claimed this deduction on interest income of Rs. 5,70,79,573. The AO had disallowed this deduction, arguing that Co-operative Banks do not qualify as Co-operative Societies for the purposes of section 80P. However, the CIT(A) allowed the deduction, following the decision in the case of Amore Commercial Premises Co-op Society Ltd. The Tribunal upheld the CIT(A)'s decision, noting that section 80P(4) excludes only Co-operative Banks that function at par with commercial banks, and this exclusion does not apply to the assessee. The Tribunal also referred to consistent decisions by coordinate benches that interest earned from Co-operative Banks is deductible u/s 80P(2)(d). 2. Denial of Deduction u/s 80P(2)(d) on Interest Income Directly Credited to "Repair and Maintenance Fund" and "Sinking Fund": The assessee appealed against the denial of deduction for interest income of Rs. 30,19,574, which was directly credited to "Repair and Maintenance Fund" and "Sinking Fund" and not included in the total income. The AO had treated this interest as "income from other sources" and added it to the total income. The CIT(A) upheld the AO's decision, stating that a revised return was required for claiming this deduction, which was not filed. The Tribunal, however, allowed the assessee's appeal, citing the Supreme Court's ruling in Goetz India Ltd. v/s CIT and the jurisdictional High Court's ruling in CIT v/s Pruthvi Brokers and Shareholders Pvt. Ltd., which allow appellate authorities to entertain fresh claims. The Tribunal concluded that the assessee is entitled to the deduction u/s 80P(2)(d) for this interest income as well. Conclusion: The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal, affirming the CIT(A)'s decision to allow the deduction u/s 80P(2)(d) for interest income earned from investments with Co-operative Banks and extending the same deduction to interest income credited to specific funds.
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