Interest Income Earned By Co-Operative Society From Investments Made With Co-Operative Banks Is Eligible For Section 80P Deduction: ITAT
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has allowed the deduction under section 80P(2)(d) of the Income Tax Act in respect of interest earned by cooperative societies from investments made with cooperative banks.The two-member bench of Aby T. Varkey (Judicial Member) and Amarjit Singh (Accountant Member) has relied on the decision of the Karnataka high court in the case...
The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has allowed the deduction under section 80P(2)(d) of the Income Tax Act in respect of interest earned by cooperative societies from investments made with cooperative banks.
The two-member bench of Aby T. Varkey (Judicial Member) and Amarjit Singh (Accountant Member) has relied on the decision of the Karnataka high court in the case of PCIT VS Totagar's Cooperative Sales Society, in which it was held that the interest income derived by co-operative society by way of investment made with a co-operative bank would be entitled to a claim of deduction under Section 80P(2)(d).
The respondent-assessee is a cooperative society constituted by members (office tenement owners) for the purpose of maintaining the Mittal Court Building. The assessee society declared taxable income in its return of income. The AO noted that the assessee had invested funds as FDR with the Saraswat Co-op Bank Ltd., Abhudaya Co-op Bank Ltd., National Co-op Bank Ltd., and Shamrao Vithal Co-op Bank Ltd.
The AO noted that the assessee had received interest income from the deposit made with the Co-op Bank on which it claimed deduction under section 80P(2)(d) of the Income Tax Act. As a result, the AO issued a notice and requested justification for the deduction claim under Section 80P(2)(d). The assessee submitted a detailed explanation before the AO. The AO, however, was not satisfied with the assessee's response and denied the deduction.
The assessee filed an appeal with the CIT(A)/NFAC, which allowed the assessee's claim by ruling that interest income derived by a cooperative society from investments held with a cooperative bank is deductible under Section 80P(2)(d).
The ITAT upheld the order of the CIT(A) and the assessee's deduction claim under Section 80P(2)(d) was allowed.
Case Title: ITO Versus Mittal Court Premises Co. Op. Society Ltd
Citation: I.T.A. Nos.1535 to 1537/Mum/2022
Date: 31/10/2022
Counsel For Appellant: Sunil M. Lala
Counsel For Respondent: Sr. AR Mahita Nair