The Income Tax Appellate Tribunal Ahmedabad observed that interest earned by Co-operative Society from Cooperative Bank would necessarily be deductible under section 80P(1) of the Act.
Facts
The two appeals are filed by two different Assessees as against separate Revision orders passed by the Principal Commissioner of Income Tax, Ahmedabad denying the claim of deduction under section 80P(2)(d) of the Income Tax Act, 1961 relating to the Assessment Year (A.Y) 2018-19.
Submissions
The assessee submitted, that during the assessment proceedings the Assessing Officer asked for explanation/details for deduction under Chapter-VIA and vide assessee replies, the assessee has elaborately explained with judicial decisions on the facts and figures thereby the Assessing Officer accepted the explanation and allowed the claim of deduction u/s. 80P(2)(d) of the Act.
The CIT-DR Sanjeev Jain appearing for the Revenue supported the order passed by Ld. PCIT and submitted the Jurisdictional High Court in the case of State Bank of India vs CIT held that interest income on deposit placed with commercial bank is not exempt u/s. 80P(2)(a)(i) of the Act.
Decision
The division bench of Waseem Ahmed, Accountant Member And T.R. Senthil Kumar, Judicial Member said that the assessing officer has made enquiries on the allowability of deduction under section 80(P)(2)(d) and passed the assessment order, thus, the Assessing Officer has taken a reasonable and possible view which cannot be held as erroneous.
The Tribunal observed that the Hon’ble Karnataka High Court in Totagars Cooperative Sales Society (supra) held that for the purpose of section 80P(2)(d) a Co-operative Bank should be considered by a Co-operative Society and interest earned by Co-operative Society from Cooperative Bank would necessarily be deductible under section 80P(1) of the Act. Further, the Hon’ble Jurisdictional High Court in Surat Vankar Sahakari Sangh Ltd. (supra) held that assessee co-operative society is eligible for deduction under section 80P(2)(d) in respect of gross interest received from co-operative bank without adjusting interest paid to said bank.
The Tribunal held that the PCIT erred in holding that the order passed by A.O. as erroneous and prejudicial to the interest of the Revenue on account of allowability of interest earned by the assessee from cooperative banks, coupled with the fact when the Assessing Officer had made due enquiries on the issue, during the course of original assessment proceedings.
Case title: The Peoples Co-Op Credit Society Ltd. v/s The Pr.CIT, Ahmedabad
Citation: ITA No. 322/Ahd/2023
