2024 (10) TMI 305 - AT - Income Tax

Deduction u/s. 80P(2)(d) - interest income earned on deposits with Co-operative Bank - CIT(A) upheld the order of the AO / CPC on the disallowance made u/s. 80P(2)(d) on the ground that the Cooperative Bank does not fall under the category of Co-operative Society and on other findings - HELD THAT - As observed that the assessee has claimed deduction u/s. 80P(2)(d) of the Act in its return of income, towards the interest received out of the deposits made in the Co-operative Societies. The finding of the ld. CIT(A) that the assessee had not made any claim is factually incorrect. AR brought our attention where in the return of income, the said claim has been made by the assessee. With regard to whether the assessee is eligible to claim deduction u/s. 80P(2)(d) of the Act towards the interest received from the Co-operative Bank, it is the settled proposition of law where the Hon'ble Apex Court in The Mavilayi Service Co-op. Bank Ltd. 2021 (1) TMI 488 - SUPREME COURT has given a categorical finding as to the eligibility of the Co-operative Banks which are akin to that of the Co-operative Society unless the said co-operative bank holds a license issued by the RBI and whether its activities are as that of commercial banks. We do not find any such arguments in the order of the lower authorities as to the eligibility of the Co-operative Banks, in which the assessee has made deposits. We are also conscious of the fact that the co-ordinate benches of the Tribunal have in earlier years given the benefit of deduction u/s. 80P(2)(d) and the Revenue has also not brought anything on record as to any change in facts and circumstances for the year under consideration. We, therefore, direct the A.O. to grant the deduction claimed by the assessee u/s. 80P(2)(d) of the Act in the light of the decision of The Mavilayi Service Co-op. Bank Ltd. 2021 (1) TMI 488 - SUPREME COURT Hence, we allow ground raised by the assessee.

Summary

Issues:
1. Disallowance of deduction u/s 80P(2)(d) for interest income earned on deposits with Co-operative Banks.
2. Denial of credit for self-assessment tax claimed in the return.

Detailed Analysis:
Issue 1: The appeal was filed challenging the disallowance of deduction u/s 80P(2)(d) for interest income earned on deposits with Co-operative Banks. The Assessing Officer disallowed the deduction along with denying credit for self-assessment tax. The Commissioner of Income Tax (Appeals) upheld the disallowance, stating that Co-operative Banks do not fall under the category of 'Co-operative Society.' The Tribunal observed that the assessee had claimed the deduction in the return of income, contrary to the CIT(A)'s finding. The Tribunal referred to previous decisions and the judgment in The Mavilayi Service Co-op. Bank Ltd. vs. CIT, Calicut to establish the eligibility of Co-operative Banks for the deduction u/s 80P(2)(d). As there were no changes in circumstances, the Tribunal directed the AO to grant the deduction as claimed by the assessee.

Issue 2: The second issue pertained to the denial of credit for self-assessment tax. The Tribunal directed the AO to grant credit for the self-assessment tax amount subject to verification and in accordance with the law. As the Tribunal had decided the main issue on the merits of the appeal, the first ground raised by the assessee was considered academic and required no separate adjudication.

In conclusion, the Tribunal partly allowed the appeal filed by the assessee, granting relief on both the disallowance of deduction u/s 80P(2)(d) and the denial of credit for self-assessment tax. The judgment was pronounced in the open court on 24.09.2024.