Cooperative Banks Qualified As Cooperative Societies : CESTAT Allows Section 80P Deduction On Interest Received From Co-Operative Banks
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that cooperative banks qualified as cooperative societies and the interest received from cooperative banks by the assessee in the present case qualified for deduction under section 80P(2)(d) of the Income Tax Act.The two-member bench of Madhumita Roy (Judicial Member) and Annapurna Gupta (Accountant Member) has observed...
The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that cooperative banks qualified as cooperative societies and the interest received from cooperative banks by the assessee in the present case qualified for deduction under section 80P(2)(d) of the Income Tax Act.
The two-member bench of Madhumita Roy (Judicial Member) and Annapurna Gupta (Accountant Member) has observed that the order passed under section 263 of the Income Tax Act was not in accordance with the law.
The assessee/appellant is a cooperative society engaged in the activity of providing loans and accepting deposits from its members. The return of income was filed by the assessee, who declared nil income after claiming deductions under Section 80P, which were accepted by the AO.
On verification of records, the PCIT noted that the assessee had received substantial interest on fixed deposits from various banks, including ADC Bank and Mehsana Urban Bank, which did not qualify for deduction under section 80P(2)(d). The deduction was not allowed on the grounds that the banks from which interest had been earned did not qualify as cooperative societies.
The assessee contended that the order issued under Section 263 did not provide it with a fair opportunity to present its case. When even the PCIT was not sure whether there was any error in the order of the AO in allowing the claim of deduction in respect of interest earned from the FDRs in the bank and without dealing with the claim of the assessee that the deduction was alternately allowable under Section 80P(2)(d), it was not in accordance with law and needed to be set aside.
The ITAT held that the assessee was not put on notice by the PCIT about the premise on which the assessment order was ultimately found erroneous while assuming jurisdiction under Section 263 of the Act, which renders the order passed under Section 263 invalid.
Case Title: M/s.Laxmi Bachat Sharafi Sahkari Mandali Ltd. Versus ITO
Citation: ITA No.963/Ahd/2019
Date: 31/08/2022
Counsel For Appellant: CA Mehul Thakkar
Counsel For Respondent: CIT-DR Alokkumar