Income Of Co-Operative Society By Way Of Interest Derived From Investment With Any Other Cooperative Society, Is Allowable U/s 80P: Mumbai ITAT
Pankaj Bajpai
16 April 2024 9:30 AM IST
Finding that assessee in the present case is not a cooperative bank, since the office of Central registrar of cooperative societies, New Delhi has issued a certificate of registration to the assessee registering it u/s 11 of Multistate Cooperative Societies Act, 2002, the Mumbai ITAT ruled that the income earned by a co-operative society by way of interest derived by from its investment...
Finding that assessee in the present case is not a cooperative bank, since the office of Central registrar of cooperative societies, New Delhi has issued a certificate of registration to the assessee registering it u/s 11 of Multistate Cooperative Societies Act, 2002, the Mumbai ITAT ruled that the income earned by a co-operative society by way of interest derived by from its investment with any other cooperative society, is deductible u/s 80P.
The Bench of Amit Shukla (Judicial Member) and Prashant Maharishi (Accountant Member) observed that “even if it is accepted that bank interest on from cooperative banks by the assessee is not the income from the business of the assessee and therefore the claim of the assessee fails under section 80 P (2) (a) of the act, but the claim is still allowable and therefore cannot be denied under section 80P(2)(d)”. (Para 19)
As per the brief facts of the case, the assessee is a co-operative society primarily engaged in making suitable arrangements for prompt payment to beneficiaries of diseased employees of Indian oil Corp. It accepts any amount or deposits from members only and it pays interest to its members on credit balance standing on the last day of financial year. The assessee filed its return at Rs.10,622,078/- after claiming deduction of Rs.7,645,872/-. During scrutiny, the AO made disallowance with respect to the fact that assessee has received income in the form of fixed deposit interest from cooperative bank and savings bank interest. The assessee also claimed standard deduction u/s 80P(2)(c). However, the AO disallowed the said deduction.
The Bench found that the assessee is a co-operative society primarily engaged into arranging for prompt payment to beneficiaries of diseased employees, and arrangements have been made to refund the welfare Society dues to employees who ceases to the member of the society due to superannuation, voluntary retirement, termination, resignation etc.
The Bench noted that the claim of the revenue authorities is that the amount of interest earned by this entity is not the business income of the assessee and therefore, the interest income does not fall into the amount of profits and gains of business attributable to the activities of the society, and therefore, the deduction u/s 80P(2)(a) was denied.
However, the Bench opined that if the assessee is a co-operative society, then according to subsection 2 (d) in respect of income earned by way of interest or dividends received by the cooperative society from its investment with any other cooperative society, then the whole of such income is deductible.
Hence, the ITAT allowed the assessee's appeal and directed the AO to allow deduction to the assessee on interest income earned from various cooperative banks u/s 80P(2)(d).
Counsel for Appellant/ Assessee: Viraj Mehta
Counsel for Respondent/ Revenue: H.M. Bhatt
Case Title: Indian Oil Employees Welfare Cooperative Society Ltd. Verses ACIT
Case Number: ITA No. 3518/Mum/2023
