ITAT allows Deduction u/s 80P(2)(d) for Interest on Deposits with Co-operative Banks, Condones 9 Days Delay [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) has allowed a deduction under Section 80P(2)(d) of the Income Tax Act, 1961, to Khedbrahma Taluka Primary Teachers Co-operative Credit Society Ltd. for interest earned on deposits with The Sabarkantha District Central Co-operative Bank, Khedbrahma. The Tribunal also condoned a nine-day delay in filing the appeal.

The assessee, a Co-operative Credit Society, claimed a deduction of Rs. 2,55,000/- u/s 80P(2)(d) for the interest income received from the Co-operative Bank. The Assessing Officer (AO) disallowed the deduction.

Aggrieved by the AO’s order, the assessee had appealed to the Commissioner of Income Tax (Appeals) (CIT(A)). The CIT(A) dismissed the appeal, primarily relying on the Supreme Court’s judgement in Totgar Co-operative Sale Society Limited v. ITO. However, the CIT(A) did concede that the assessee was eligible for a deduction of pro-rata expenses under section 57, citing the ITAT, Ahmedabad’s decision in the Uttar Gujarat Uma Co-operative Credit Society Limited case.

The assessee then appealed to the ITAT, arguing that it was eligible for the deduction under Section 80P(2)(d) for the interest income received from deposits with Co-operative Banks. The assessee relied on judgements of the Gujarat High Court in Surat Vankar Sahakari Sangh Ltd. v. ACIT and State Bank of India v. CIT, which held that such interest income is deductible.

The ITAT bench of Ramit Kochar (Accountant Member) and T R Senthil Kumar (Judicial Member), following the Gujarat High Court decisions, allowed the appeal. However, it directed the AO to verify that the Sabarkantha District Central Co-operative Bank, Khedbrahma, is a co-operative society duly registered under the Co-operative Societies Act or the State Act before granting relief to the assessee.

The tribunal also condoned the nine-day delay in filing the appeal, stating that the assessee had shown reasonable and sufficient cause for the delay.

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