THE GUNDUGOLANU LARGE SIZE COOPERATIVE SOCIETY LTD,ELURU vs. ADDL/JOINT/DCIT/ INCOME TAX OFFICER, ELURU

Facts

The assessee, a Co-operative Society, filed its return of income for A.Y. 2022-23 declaring Rs. Nil income. The A.O. observed that the society earned interest of Rs. 16,88,240/- from investments/deposits with nationalized banks (DCCB Bank and Union Bank). The A.O. treated this interest income as 'income from other sources' and denied deduction under Section 80P, a decision upheld by the CIT(A).

Held

The Tribunal, following its earlier decision in 'The Chebrole Large Sized Co-operative Society Limited Vs. ITO', held that interest income derived by a primary agricultural co-operative society from fixed deposits in nationalized banks, made from its own surplus funds, is eligible for deduction under Section 80P(2)(a)(i) of the Act. Consequently, the disallowance made by the A.O. for Rs. 16,88,240/- was directed to be vacated.

Key Issues

Whether interest income earned by a co-operative society from deposits with nationalized banks is eligible for deduction under Section 80P of the Income Tax Act.