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Facts
The assessee, a co-operative society, claimed deduction under section 80P(2)(d) for interest income earned from co-operative banks. The Assessing Officer/CPC and the CIT(A) disallowed this deduction.
Held
The Tribunal held that co-operative banks are primarily co-operative societies, and interest income derived from them is eligible for deduction under section 80P(2)(d). Therefore, the disallowance was set aside.
Key Issues
Whether interest income earned by a co-operative society from co-operative banks is eligible for deduction under section 80P(2)(d) of the Income Tax Act.
Sections Cited
80P(2)(d), 80P, 143(1)
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PER PAWAN SINGH, JUDICIAL MEMBER;
This appeal by assessee is directed against the order of Ld. CIT(A)/NFAC dated 11.03.2025 for assessment year (AY) 2020-21. The assessee has raised following grounds of appeal:
“1. On the facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals) - NFAC, hereinafter referred to as the "CIT (A)", has erred in confirming the disallowance of Rs. 3,74,335/- u/s. 80P(2)(d) of the Income-tax Act as made by the Centralised Processing Centre (CPC) of the Income-tax department.
2. The CIT (A) has erred in confirming the impugned disallowance by wrongly observing that the deduction is not available in respect of interest income received from co-operative banks on the basis of sub-section (4) of section 80P.
The appellant respectfully submits that it is eligible to claim the above deduction as per the provisions of section 80P(2)(d) and the settled legal position in respect of the above claim.
Without prejudice to the above contentions, the appellant submits that the action of the CPC in disallowing the above deduction is beyond the scope of section 143(1) and therefore the impugned disallowance is not justified for this reason as well.
5. The appellant, therefore, prays that the above deduction may please be allowed to it and suitable directions may please be issued in respect of the same.”
Rival submissions of both the parties have heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that grounds of appeal
raised by assessee is covered by the series of decisions of Mumbai Tribunal wherein it has been consistently held that co-operative bank are primarily co-operative society registered under the Co-operative Societies Act and the interest income derived by co-operative society from its investment with co-operative bank is eligible for deduction under section 80(P)(2)(d). The ld. AR of the assessee relied n the following decision: KaliandasUdyog Bhavan Premises Co-op Society Ltd. vs ITO (2018) 94 taxmann.com 15 (Mumbai – Trib.) ITO vs Sangli Vaibhav Co-operative Credit Society (ITA No. 3769, 3770 & 3766/M/2023 dated 22.05.2024)
3. The ld. AR further submits that during the relevant financial year, the assessee earned interest on savings bank account with Greater Bombay Co- op. Bank Ltd. of Rs. 10,056/- interest from Maharashtra State Co-op. Bank Ltd. of Rs. 1,150/-. The assessee also earned interest from fixed deposit with the aforesaid co-operative banks of Rs. 3,08,400 and Rs. 54,729/- respectively. In addition to, the assessee also earned interest from Union Bank of India, however, such interest is not claimed as deduction under section 80P(2)(d). All details of such interest income is provided at page no. 16 & 17 of paper book.
4. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) submits that he supports the order of ld. CIT(A) wherein it has been held that interest earned from co-operative banks is not eligible for deduction under section 80P(2)(d).
I have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. I also deliberated on various case laws relied by ld. AR of the assessee. I find that there is no dispute about the quantum of interest earned by assessee from both the co- operative banks. I find that in a series of decision by this Tribunal as well as other benches of Tribunal, it has been consistently held that co-operative banks are primarily co-operative society and interest earned from such co- operative banks is eligible for deduction under section 80P(2)(d). Thus, respectfully following such decisions as has been relied by ld. AR of the assessee. I direct the assessing officer to allow the deduction of interest earned from Greater Bombay Co-op. Bank Ltd. and Maharashtra State Co-op.
Bank Ltd. to the assessee. In the result, grounds of appeal of assessee are allowed.
In the result, the appeal of the assessee is allowed.