Talegaon Nagari Sahakari Patsanstha Limited vs. Income Tax Officer - (Income Tax Appellate Tribunal) (03 Jun 2024)

Interest income earned by cooperative society on deposits made out of surplus funds with cooperative banks as well as schedule bank qualifies for deduction

MANU/IP/0120/2024

Direct Taxation

In facts of the case, the Appellant is a Cooperative Society registered under the Maharashtra Co-operative Societies Act, 1960. It is engaged in the business of providing credit facilities to its members and accepting deposits from them. The Return of Income for the assessment year 2020-21 was filed declaring Nil after claiming deduction of Rs.52,68,351 under Section 80P(2)(a)(i) of Income Tax Act, 1961 (IT Act).

Against the said return of income, the assessment was completed by the AO vide order disallowing the deduction claimed under Section 80P(2)(a)(i) of IT Act. While doing so, the Assessing Officer had brought to tax the interest income of Rs.52,68,351 earned on FDs with other co-operative banks holding that the said interest does not qualify for deduction.Being aggrieved, an appeal was filed before the NFAC, who vide impugned order confirmed the action of the Assessing Officer. Being aggrieved, the Appellant is in appeal before this Tribunal in the present appeal.

The only issue in the present appeal relates to the eligibility of the assessee for exemption under Section 80P(2)(a)(i) or under Section 80P(2)(d) of the IT Act in respect of interest income earned from cooperative banks. The issue is no more res integra as the same is covered by catena of decisions passed by the Pune Benches allowing the deduction under Section 80P(2)(a)(i) of the Act. The Co-ordinate Bench of the Tribunal in the case of The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO held in favour of the appellant society.

Following the decision of the Co-ordinate Bench of this Tribunal, present Tribunal is of the considered opinion that, even the interest income earned by cooperative society on deposits made out of surplus funds with cooperative banks as well as schedule bank qualifies for deduction both under the provisions of Section 80P(2)(a)(i) and Section 80P(2)(d) of the Act, therefore, the reasoning given by the lower authorities on this issue cannot be accepted. Thus, present Tribunal direct the Assessing Officer to allow deduction under Section 80P(2)(a)(i) and 80P(2)(d) in respect of interest income earned from cooperative banks. Appeal allowed.

Tags : ASSESSMENT INTEREST DEDUCTION