SHREE VEGAM URBAN CO OP CREDIT SOCIETY LIMITED ,SURAT vs. ACIT, CIRCLE-1(2), SURAT

Facts

The assessee, a co-operative society, claimed deduction under section 80P(2)(d) for interest income earned from fixed deposits in co-operative banks. The Assessing Officer made an addition for this interest income and dividend income. The assessee appealed to the CIT(A) against this addition.

Held

The Tribunal held that interest earned by a co-operative society from investments made in co-operative banks is eligible for deduction under section 80P(2)(d) of the Income-tax Act. This is based on the understanding that co-operative banks are considered co-operative societies for the purpose of this deduction, and the exclusion under section 80P(4) does not affect this eligibility when the co-operative bank itself is not liable to pay tax.

Key Issues

Whether interest income received by a co-operative society from co-operative banks is eligible for deduction under Section 80P(2)(d) and if Section 80P(4) excludes such deduction.