In a recent ruling, the Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) held that interest income derived from FDRs with other cooperative banks is eligible for deduction under Section 80 P (2)(d) of the Income Tax Act, 1961, and deleted the disallowance of Rs. 24.5 lakhs.
In this case, the assessee is Kamran Vikas Coop. Credit Society Ltd. is engaged in providing credit facilities to its members. After the original assessment proceedings for the assessment year ( AY ) 2013-14, it was noticed by the assessing officer ( AO ) that the assessee had derived FD interest of Rs. 34,54,048 from The Sabarkantha District Cooperative Bank Ltd. in and on which deduction under Section 80P of the Income Tax Act, 1961 was claimed.
The AO completed the reassessment proceedings and disallowed the deduction of Rs. 24,48,040 claimed under Section 80P in respect of interest income from the above-mentioned cooperative bank. The Commissioner of Income Tax ( Appeals ) [ CIT(A) ] upheld the disallowance made by the AO.
Know Practical Aspects of Tax Planning, Click Here
It was submitted by the counsel on behalf of the assessee that the Sabarkantha District Co-operative Bank Ltd., which was first registered as a cooperative society and later on got permission to carry out banking activities, and thus the AO erred in disallowing the claim under the provision of section 80P(2)(a)(i) of the Act without considering the fact that the case of the assessee was covered under the provision of section 80P(2)(d) of the Act.
It was submitted by the counsel on behalf of the department that the Sabarkantha District Co-operative Bank Ltd., cannot be considered as a cooperative society.
It was observed by the bench that the deduction under Section 80P(2)(d) of the Income Tax Act is available with respect to interest derived by a cooperative society from its investment with any other cooperative society.
Know Practical Aspects of Tax Planning, Click Here
The bench held that the cooperative banks are essentially cooperative societies.
The ITAT, comprising Suchitra Kamble ( Judicial Member ) and Narendra Prasad Sinha ( Accountant Member ) allowed the appeal filed by the assessee.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
