Interest & Dividend Derived By One Cooperative Society From Its Investment Held With Another One Is Eligible For Deduction U/s 80P(2)(D): Pune ITAT
Pankaj Bajpai
16 March 2024 7:30 PM IST
On finding that the views adopted by the tax authorities are not in conformity with legal position and binding judicial precedents, the Pune ITAT set-aside the impugned order passed by the AO and reversed the denial of deduction u/s 80P(2)(d) of the Income Tax Act, 1961.The Bench of the ITAT comprising of Partha Sarathi Choudhury (Judicial Member) and G. D. Padmahshali (Accountant...
On finding that the views adopted by the tax authorities are not in conformity with legal position and binding judicial precedents, the Pune ITAT set-aside the impugned order passed by the AO and reversed the denial of deduction u/s 80P(2)(d) of the Income Tax Act, 1961.
The Bench of the ITAT comprising of Partha Sarathi Choudhury (Judicial Member) and G. D. Padmahshali (Accountant Member) observed that, “On perusal of section 80P(2)(d), it is ostensibly clear that interest & dividend income derived by one cooperative society from its investment held with other cooperative societies is eligible for deduction u/s 80P(2)(d) of the Act. For the purpose the chief determinant factor entitling a claim of deduction u/s 80P(2)(d) in the hands of assessee society is that, interest & dividend income should have been earned by it from an investment made with any other cooperative society registered under the provisions of law, irrespective of its nomenclature with which such paying society i.e. the payer is known for.” (Para 6)
As per the brief facts of the case, the assessee earned net profit of ₹23,97,862/- from its business activities of providing credit facilities to its member and ₹15,98,301/- as interest and dividend from investment made with RDCC bank against which it has claimed a deduction u/s 80P(2)(a)(i) & 80P(2)(d). Accordingly, the assessee filed its return declaring NIL income after claiming a deduction u/c VI-A. The AO sought documentary evidences supporting the claim of profit earned and deduction claimed. After and explanation, the AO accepted claim of deduction made u/s 80P(2)(a)(i) verification of submission however denied the claim for deduction against the interest income and dividend income both accrued/earned form investment made with RDCC bank.
The Bench noted that the solitary issue in the appeal hinges around allowability of deduction u/s 80P(2)(d).
The Bench observed that the reasoning given by the lower tax authorities in denying the claim for deduction u/s 80P(2)(d) is that interest and dividend was received from RDCC a cooperative bank, however this reasoning has no legs to stand as a cooperative bank is principally a cooperative society and holds a banking license to operate on a larger scale under the guidelines of RBI.
The Bench further observed that the interest and dividend earned by the appellant society from its investment held with co-operative banks namely RDCC, being a registered co-operative society under respective state laws, qualifies for deductions u/s 80P(2)(d).
Therefore, on finding that the assessee qualifies the deduction, the ITAT allowed the assessee's appeal.
Counsel for Appellant/Taxpayer: Giteesh Kalyani
Counsel for Respondent/Department: Gaurav Singh
Case Title: Konkan Education Society Sevak Sahakari Patpedhi Ltd. verses Income Tax Officer
Case Number: ITA No. 046 & 047/PUN/2024
