2024 (9) TMI 1268 - AT - Income Tax

Deduction u/s. 80P(2)(d) - interest income earned by cooperative society on deposits made out of surplus funds with cooperative bank - HELD THAT -Admittedly the interest income was earned on deposits made with a Cooperative Bank. On perusal of provisions of section 80P(2)(d), it is clear that the income derived by a cooperative society from its investment held with other cooperative societies shall be exempt from the total income of a cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. This issue was considered in the case of CIT vs. Totagars Cooperative Sale Society 2017 (1) TMI 1100 - KARNATAKA HIGH COURT wherein after referring to the decision of Totgar s Co-operative Sale Society Ltd 2010 (2) TMI 3 - SUPREME COURT held that the ratio of decision of the Hon ble Supreme Court is not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. Thus interest income earned by cooperative society on deposits made out of surplus funds with cooperative bank qualifies for deduction under the provisions of section 80P(2)(d) - Decided in favour of assessee.

Summary

The appeal was filed by the assessee against the order of Addl./JCIT(A)-1, Lucknow dated 19.03.2024 for the assessment year 2021-22. The appellant, a Primary Credit Cooperative Society, claimed deduction u/s. 80P(2)(d) for interest income earned on deposits with a Cooperative Bank. The Tribunal allowed the appeal, stating that interest income on deposits made with a cooperative bank qualifies for deduction under section 80P(2)(d) of the Act.