Co. Op. Banks Are Co. Op. Societies In Banking Business; Delhi ITAT Allows Section 80P(2)(d) Deduction

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has allowed the deduction under Section 80P(2)(d) of the Income Tax Act to the Grand Paradi Co-op Housing Society and held that cooperative banks are cooperative societies that are doing banking business.

The bench of Prashant Maharishi (Accountant Member) has observed that, as per Section 2(10) of the Maharashtra Cooperative Societies Act, “co-operative bank” means a co-operative society that is doing the business of banking as defined in Section 5(1)(b) of the Banking Companies Act, 1949, and includes any society that is functioning or is to function as an agricultural and rural development bank.

Section 80P of the Income Tax Act relates to deductions with respect to the income of cooperative societies. As per Section 80P(2)(d), the deduction is allowable in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income.

The appellant/assessee is a cooperative in society and filed its return of income. The assessee claims a deduction under Section 80P(2)(d) with respect to the interest income earned by the assessee from the cooperative banks.

The assessee was issued an intimation under Section 143(1), by which the claim of the assessee for deduction under Section 80 P(2)(d) was denied.

The assessee filed an appeal before the CIT (A) after a delay of 3642 days, which was not condoned by the CIT (A). The appeal of the assessee was dismissed as not maintainable.

The assessee contended that the assessee is a cooperative housing society and was run by the management. The assessee was granted deductions from year to year. It is the only year in which the assessee has been denied the deduction under Section 80 P(2)(d), and for all these years, the identical deduction is allowed. The amount of investment made by the assessee with respect to the interest income earned is eligible for deduction under Section 80 P(2)(d).

The department contended that the assessee has not filed the appeal in time, and therefore the learned CIT (A) is justified in not condoning the exorbitant's delay in filing the appeal.

The letter of intimation under Section 143(1) stated that the department carries out a preliminary assessment of all the returns filed and informs taxpayers of the result of such a preliminary assessment. This assessment primarily includes arithmetical errors, internal inconsistencies, tax calculation, and verification of tax payment.

The tribunal, while allowing the appeal, held that the assessee is entitled to the deduction under Section 80P(2)(d) with respect to the amount of interest income earned from cooperative banks of Rs. 3,013,558.

Counsel For Appellant: H.N. Motiwalla

Counsel For Respondent: R.R. Makwana

Case Title: Grand Paradi Co-op Housing Vs. Society Ltd. Versus The Income Tax Officer

Case No.: I.T.A. No. 4675/Mum/2023 (A.Y. 2012-13)

Click Here To Read The Order