The Mumbai bench Income Tax Appellate Tribunal ( ITAT ) held that income from the fixed deposit of cooperative banks are eligible for deduction under Section 80P(2)(d) of Income Tax Act, 1961.
In this case the Assessee, Reserve Bank Staff and Officers co-op credit society Ltd. case was selected for scrutiny after filing the return of Income. Later on, it was found that the assessee has claimed deduction under Section 80P(2) of the Income Tax Act on interest income amounting to ₹257,97,789/- and the same was allowed.
Therefore the After observing held that the assessee has earned income from co-operative banks and not from co-operative societies on which deduction under Section 80P(2)(d) of the Act is not available .Accordingly the AO passed the assessment order.
Aggrieved by the order assesee filed an appeal before the CIT(A). The CIT(A) partly allowed the appeal filed by the assessee. Thereafter the assessee filed an appeal before the tribunal.
The tribunal observed that the assessee is a co-operative credit society engaged in the business of providing credit facilities to its members only. The whole of the amount of profits and gains of such business attributable to such activities is deductible under Section 80P(2)(a) of the Income Tax Act.
Furthermore the tribunal determined that any income by way of interest or dividend derived by the cooperative society from its investment with any other cooperative society is also allowable as deduction fully under Section 80P(2)(d) of the Act, the facts are clear that assessee is a co-operative society and cooperative banks are also cooperative societies.
After analyzing the submission of both parties, the bench comprising Sandeep Singh Karhail ( Judicial Member ) and Om Prakash Kant, ( Accountant Member ) held that interest income earned by the assessee on fixed deposits with the co-operative banks are eligible for deduction under Section 80P(2)(d) of the Income Tax Act.
Siddesh Mayekar, the counsel appeared for assessee and Mahita Nair, counsel appeared for Department.
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