2025 (2) TMI 447 - AT - Income Tax

Denial of deduction u/s 80P(2)(a)(i) - interest earned from Sangli District Central Co-operative Bank - HELD THAT - Hon ble High Court of AP TS THE VAVVERU CO-OPERATIVE RURAL BANK LTD. VERSUS THE CHIEF COMMISSIONER OF INCOME TAX VIJAYAWADA 2017 (4) TMI 663 - ANDHRA PRADESH HIGH COURT held that Interest Income earned by investing Income derived from Business and Profession by a Co-Operative Society was eligible for deduction u/sec.80P(2)(a) of the Act. No contrary decision of the Hon ble jurisdictional High Court has been brought to our notice - As decided in Yashwant Nagari Sahakari Patsanstha Maryadit 2024 (6) TMI 1387 - ITAT PUNE held that the assessee was eligible for deduction u/sec.80P(2)(a) of the Act on the Interest earned by assessee. Decided in favour of assessee.

Summary

The appeal in this case was filed by the assessee against the order of the ld. Commissioner of Income Tax(Appeals) for Assessment Year 2021-22, challenging the treatment of an amount of Rs. 4,36,926 as income from other sources and disallowance of deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961. The core issue before the Appellate Tribunal was whether the interest income earned from Sangli District Central Co-operative Bank was eligible for deduction under section 80P(2)(a)(i) of the Act.The Assessing Officer disallowed the deduction claimed by the assessee based on the premise that the interest income from deposits in cooperative banks falls under 'income from other sources' and is not eligible for deduction under section 80P. The ld.CIT(A) upheld the disallowance, leading to the appeal before the Tribunal.The Tribunal considered the submissions and precedents in similar cases. It noted that the Hon'ble High Court of Andhra Pradesh and Telangana in the case of Vavveru Co-operative Rural Bank Ltd. held that interest income derived from business activities by a Co-Operative Society was eligible for deduction under section 80P(2)(a) of the Act. The Tribunal also referred to its own decisions in favor of the assessee on similar issues.Relying on the judicial precedents, the Tribunal directed the Assessing Officer to allow the deduction under section 80P(2)(a)(i) on the interest amount of Rs. 4,36,926. Consequently, the appeal of the assessee was allowed, and the order was pronounced on 10th February 2025.In conclusion, the Tribunal held that the interest income earned from Sangli District Central Co-operative Bank by the assessee, a Primary Agricultural Co-operative Credit Society, was eligible for deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961, based on established legal principles and precedents.