Co-Operative Banks Are Also Registered Co-Operative Societies: ITAT Allows Section 80P(2)(d) Deduction

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has allowed the income tax deduction under Section 80P(2)(d) of the Income Tax Act on the grounds that cooperative banks are also registered cooperative societies.

The bench of Suchitra Kamble (Judicial Member) has observed that the provision of Section 80P(2)(d) does not make any distinction in regard to the source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a co-operative society.

The assessee/appellant is a cooperative society engaged in the business cottage industry, working for the development and welfare of women in the business of manufacturing and selling Khakhra, Papad, and spices. The assessee filed its return of income on October 30, 2018, declaring a total income of Rs. 18,26,660 for the assessment year 2018–19.

The return of the assessee was processed under Section 143(1) of the Income Tax Act, 1961. The case was selected for limited scrutiny and assessment on the issue of deduction from total income under Chapter VI-A. The assessee claimed deductions under Section 80P, particularly interest from the Co-operative Bank and income from cottage industries.

The interest received from co-banks was disallowed to the extent of Rs. 28,04,714 which was claimed under Section 80P(2)(d) of the Act. The Assessing Officer also disallowed Rs. 1,67,852 towards payment of employee contributions to the Provident Fund after the due date under Section 36(1)(va).

The tribunal, while relying on the decision of the Gujarat High Court in the case of Surat Vankar Sahakari Sangh Limited vs. ACIT and held that Panchmahal District Co-operative Bank Limited and Dahod Urban Co-operative Bank Limited are both registered under the Societies Act and the interest received from these co-operative banks is allowable under Section 80P(2)(d) of the Income Tax Act.

Case Title: Manila Sahayak Gruh Udyogsaha Versus Asstt. Commissioner of Income Tax Anand Circle, Anand

Case No.: ITA No.7/Ahd/2023

Date: 28.04.2023

Counsel For Appellant: M.K. Patel

Counsel For Respondent: R.R. Makwana

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