GOBICHETTIPALAYAM REV DIV VAO & VA CO-OP THRIFT & CREDIT SOCIETY LTD.,ERODE vs. ITO, WARD-2(1),, ERODE

In the intimation. CPC denied deduction of Rs.13.48 Lacs as claimed by the assessee u/s 80P(2)(d). The Ld. CIT(A), in para 5.2 of the impugned order, considering certain judicial decisions, held that the interest income earned out of investments made with cooperative bank that do not have license under Sec.22 of Banking Regulation Act, 1949 falls outside the definition of Banking Company as defined in Sec.5(c) of Banking Regulation Act, 1949 and therefore, interest income so earned by the assessee would be eligible for deduction u/s 80P(2)(d). The Ld. AO was directed to carry out the necessary verification and allow the impugned deduction. However, Ld. CIT(A) held that the assessee would not be eligible to claim deduction u/s 80P(2)(a)(i). In para 5.3, it has further been observed that the interest income was to be computed under the head ‘Income from other sources’ and deduction u/s 80P(2)(d) would not be available in respect of interest income earned from cooperative banks. The assessee would be eligible to claim expenses u/s 57 and accordingly, Ld. AO was directed to carry out necessary verifications. Aggrieved, the assessee is in further appeal before us.

Quite clearly, the directions of Ld. CIT(A) are quite contradictory to each other. It could be seen that the deduction claimed by the assessee u/s 80P(2)(a)(i) was already allowed by CPC and the same was not subject matter of assessee’s first appeal. Therefore, no such directions could have been issued by Ld. CIT(A) qua deduction u/s 80P(2)(a)(i). These directions stand reversed.