The Income Tax Appellate Tribunal Mumbai Granted deduction for Interest Income from Co-operative Banks.
Facts
The appeals have been filed by the assessee challenging the impugned order, for the assessment year 2018–19 and order, for the assessment year 2017–18, passed under section 250 of the Income Tax Act, 1961 by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi.
The assessee is a registered Co-operative Housing Society. For the assessment year 2018-19, the assessee filed its return of income on 27/07/2018, declaring a total income of Rs.NIL. During the year, the assessee earned interest income of Rs. 50,39,861, from the investments made in various Co-operative Banks and claimed the same as a deduction under section 80P(2)(d) of the Act. During the assessment proceedings, the assessee submitted that it is entitled to a 100% deduction in respect of interest earned/received from the Cooperative Banks under the provisions of section 80P(2)(d) of the Act.
The Assessing Officer vide order, passed under section 143(3) read with sections 143(3A) & 143(3B) of the Act did not agree with the submissions of the assessee and held that the deduction under section 80P(2)(d) of the Act cannot be extended to the interest earned from the investment in any Co-operative Bank as sub-section (4) to section 80P excludes Co-operative Banks from the applicability of section 80P of the Act.
Decision
The two member bench of G.S. Pannu, President, And Sandeep Singh Karhail, Judicial Member observed that there is no dispute that the assessee is a Co-Operative Housing Society. Thus, if any income as referred to in sub-section (2) to section 80P of the Act is included in the gross total income of the assessee, the same shall be allowed as a deduction.
The bench noted that since the assessee is registered under the Maharashtra Co-operative Societies Act, 1960, it is required to invest or deposit its funds in one of the modes provided in section 70 of the aforesaid Act, which includes investment or deposit of funds in the District Central Co-operative Bank or the State Cooperative Bank.
The Tribunal viewed that section 80P(4) of the Act is of relevance only in a case where the assessee, who is a Co-operative Bank, claims a deduction under section 80P of the Act which is not the facts of the present case.
It found no merits in the reasoning adopted by the AO and upheld by the CIT(A) in denying deduction under section 80P(2)(d) of the Act to the assessee.
The bench upheld the plea of the assessee and directed the AO to grant the deduction under section 80P(2)(d) of the Act to the assessee in respect of interest income earned from investment with Cooperative Banks.
The Tribunal directed the AO to grant deduction under section 80P(2)(d) of the Act to the assessee in respect of interest income earned from investment with Co-operative Banks.
Case title: Pathare Prabhu Co–operative Housing Society Ltd. v/s Income Tax Officer
Citation: ITA No.1346/Mum./2023
