NAGPUR GRIHA NIRMAN & SHETRVIKAS MANDAL KARMACHARI SAHAKARI PAT SANSTHA,NAGPUR vs. INCOME TAX OFFICER, WARD1(3), NAGPUR

The assessee is aggrieved by the denial of deduction u/s.80P in respect of interest income amounting to Rs.5,55,810/- earned from deposits kept with banks.

Tersely stated, the facts of the case are that the assessee is a Cooperative society and is engaged in the business of accepting deposits and lending money to its members. It filed the return of income declaring total income at Nil. The case was selected for scrutiny. It was noticed by the AO that the assessee claimed deduction u/s.80P on the income earned as interest amounting to Rs.5,55,810/- on the deposits kept with financial institutions other than cooperative societies. Eventually, the AO, invoking the provisions of section 80P(2)(d), made the disallowance of deduction on such interest income. The assessee remained unsuccessful before the CIT(A), against which the assessee has approached the Tribunal.

I have heard both the sides and gone through the relevant material on record. The issue raised in the extant appeal is no more res integra by virtue of series of orders passed by the Pune Tribunal. The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT (ITA No.713/PUN/2016) decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014) has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon’ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 Taxman 309 (Kar.) allowing deduction u/s. 80P on interest income and that of the Hon’ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from banks. Both the Hon’ble High Courts took into consideration the ratio laid down in the case of Totagar’s Cooperative Sale Society Ltd. (supra). No direct judgment from the Hon’ble jurisdictional High Court on the point having been pointed out, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon’ble Karnataka High Court in the (supra). I, therefore, overturn the impugned order on this score and allow the deduction.