SAHYADRI SAHAKARI SAKHAR KARKHANA LTD,KOLHAPUR vs. ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1., KOLHAPUR

This assessee’s appeal for AY 2016-17 arises against the CIT(A)-1, Kolhapur’s order dated 16-01-2020 passed in case No. KOP/10408/2018-19 involving proceedings under Section 143(3) of the Income Tax Act, 1961 in short the Act.

The assessee’s sole substantive grievance raised in the instant appeal seeks to reverse both the lower authorities action disallowing its 80P(2)(d) deduction claim of Rs.33,56,546/- in the course of assessment dt. 14-12-2018 as upheld in the CIT(A)’s order.

I have given my thoughtful consideration to Revenue’s vehement contentions supporting the impugned disallowance and find no merit therein. It is an undisputed fact that the assessee has derived the impugned interest income from its deposits with cooperative bank which has been held as not eligible for the impugned deduction in light of Sec.80P(4) of the Act. The Revenue’s case is that this statutory provision does not apply in an instance of a cooperative bank. I observe that the same only bars a cooperative bank from claiming the impugned deduction itself rather than a cooperative society deriving interest income from its deposits made in such an institution. Coupled with this, case law in State Bank of India Vs.CIT (2016) 389 ITR 578 (Guj.) and CIT Vs. Totagar Cooperative Society (2017) 392 ITR 74 (Kar.) already decides the instant issue in assessee’s favour and against the department thereby holding that interest income derived from a cooperative bank is indeed allowable as Sec.80P deduction. I accordingly delete the impugned disallowance in very terms.

This assessee’s appeal is allowed. Order pronounced in the Open Court on 30th May, 2022.