Interest Income Earned On Deposits Placed With Co-Operative Society Is Duly Eligible For Deduction U/s 80P(2)(D): Chandigarh ITAT
Pankaj Bajpai
12 March 2024 1:45 PM IST
Finding that that the assessee is a Cooperative Society (and not a co-operative bank) which was engaged in providing short term credit facility to its members, the Chandigarh ITAT ruled that interest income has been earned on deposits placed with a co-operative society and duly eligible for deduction under section 80P(2)(d) of the Income tax Act.Referring to the decision of Supreme Court in...
Finding that that the assessee is a Cooperative Society (and not a co-operative bank) which was engaged in providing short term credit facility to its members, the Chandigarh ITAT ruled that interest income has been earned on deposits placed with a co-operative society and duly eligible for deduction under section 80P(2)(d) of the Income tax Act.
Referring to the decision of Supreme Court in case of Mavilayi Service Co-operative Bank Limited 431 ITR 1 (SC), the Bench of Aakash Deep Jain (Vice President) and Vikram Singh Yadav (Accountant Member) observed that “Section 80P(2)(4) is relevant only where the assessee claiming the deduction under Section 80P of the Act is a cooperative bank and not where a co-operative society is claiming deduction on deposits placed with a co-operative bank”. (Para 7)
As per the brief facts of the case, the assessee is a cooperative society engaged in providing short term agriculture credit to its members and had also acted as an agent on behalf of Government of Himachal Pradesh for supply of food grains under the PDS system. The assessee filed its return claiming deduction under section 80P amounting to Rs. 25,73,020/- and which includes deduction under section 80P(2)(d) of the Act amounting to Rs. 20,51,316/- in respect of interest income on deposits placed with Kangra Central Cooperative Bank (KCCB) Ltd. The Assessing officer was of the view that since assessee has received interest income from a cooperative bank and not a cooperative society, the assessee was not eligible for claim of deduction under section 80P(2)(d) of the Act.
The Bench observed that what needs to be seen for the purpose of Section 80P(2)(d) is that firstly, the income should be by way of interest earned by Cooperative Society from its investment and secondly such investment should be with any other cooperative society.
These are only two conditions which have been provided in the statute as apparent from the plain reading of the provisions of Section 80P(2)(d) of the Act and nothing more has to be read and applied/tested besides these two conditions, added the Bench.
More particularly, the Bench clarified that it is not relevant to examine whether interest income is earned from any specified co-operative activity or for that matter, it is a case of deployment of surplus funds.
The ITAT therefore concluded that there is no justifiable basis in denying the claim of deduction by the assessee society under section 80P(2)(d) in respect of interest income on deposit placed with Kangra Central Cooperative Bank Ltd and the same is hereby directed to be allowed.
Counsel for Appellant/ Assessee:
Counsel for Respondent/ Revenue:
Case Title: Balduhak Co-operative Agriculture Service Society verses ITO
Case Number: ITA NO. 703/Chd/2022
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