KOLHAPUR Z P K S P S M,MAHARASHTRA vs. INCOME TAX OFFICER, WARD 1(1), KOLHAPUR, WARD ONE (ONE)

Assessee has raised following grounds of appeal:-

Whether on the facts and circumstances of the case and the law AO and CIT(A) is correct in concluding that interest earned from co operative bank of RS 9,14,916 being interest earned on investment is not eligible for deduction under section 80P(2)(a)(i)without appreciating the fact that these deposit are part and parcel of business activity. 4.Whether on the facts and circumstances of the case and the law AO and CIT(A) is correct in not allowing interest earned from co operative bank of RS 9,14,916 as deduction under section 80P(2)(d) without appreciating the fact that these deposit or investment are with co operative societies which includes co operative bank. 5. AO and CIT (A) have earred in calculating penalty /interest. 6. The assessee craves leave to amend, alter or delete any of the above grounds of appeal

On the other hand Ld. AO supported the orders of the lower authorities.

We have heard rival contentions and perused the record placed before us. The assessee has been denied deduction u/s 80P(2)(a)(i) of Rs. 9,14,916/- which includes interest and dividend from Co-operative Banks and Form fees. The alternate ground is that the assessee is entitled for its deduction u/s 80P(2)(d) of the Act for the interest and dividends earned from Co-operative Banks. From the perusal of written submissions filed by the assessee out of the alleged sum of Rs. 9,14,916/-, Rs. 9,12,640/- is interest and dividend received from Kolhapur District Central Co-operative Banks Kanista Sevakanchi Sahakar Pat Sanstha Ltd. and NKGSB Co-operative Bank. Section 80P(2)(d) provides that interest on dividend earned by the Co- operative Society from its investment from any other Co- operative Society is eligible for deduction u/s 80P(2)(d) the Act. We further notice that a consistent view has been taken in Plethora of decisions including that of Kolhapur District Central Co-operative Banks Kanista Sevakanchi Sahakar Pat Sanstha Ltd. vs. ITO in dated 01.01.2024 that since the co-operative Banks are basically Co-operative Societies, therefore even the interest and dividends earned from Co-operative Banks is eligible for deduction u/s 80P(2)(d) of the Act. Taking consistent view we are inclined to up hold that in the instant case interest and dividend from Co-operative Bank at Rs. 8,72,600/- and Rs. 40,040/- respectively total Rs. 9,12,640/- is to be allowed as deduction u/s 80P(2)(d) of the Act. Finding of Ld. CIT(A) is partly affirmed. Effective grounds of appeal raised by the assessee are partly allowed.

In the result, appeal of the assessee is partly allowed.