Co-operative Society Entitled to Deduction u/s 80P(2)(d) of Income Tax for Deposits in Co-operative Banks: ITAT [Read Order]

In a recent ruling, the Income Tax Appellate Tribunal ( ITAT ) allowed the appeal filed by the co-operative society and held that it was entitled to deductions under Section 80P(2)(d) of the Income Tax Act, 1961, for deposits in co-operative banks

In this case, the assessee, Sumel 6 Commercial Co-op. Service Society Limited, had filed its Income Tax Returns for the Assessment Year 2020-21 and declared the income at ‘Nil’.  The case of the assessee was selected for scrutiny, and a notice was issued to the assessee.

 The Assessing Officer (AO) noted that the assessee received interest income of Rs. 1,01,92,937  from time deposits with Kalupur Commercial Co-operative Bank and Kankaria Maninagar Nagrik Sahakari Bank.

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The assessee claimed this amount as a deduction under Section 80P(2)(d) of the Income Tax Act, 1961. Despite the assessee’s response to the show cause notice, the AO disallowed the deduction and added Rs. 1,01,92,937  to the assessee’s income.

The aseesee, who was aggrieved by the above order, appealed before the Commissioner of Income Tax (Appeals) [CIT(A)], but the appeal was dismissed.

The counsel on behalf of the assessee contended that the appellant is a  Co-operative Housing Society and a non-trading corporation and its sole objective is engaging in the activities relating to the maintenance of Sumel Business Park-VI and that the assessee is not involved in any trading or manufacturing activity.

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The counsel on behalf of the respondent contended that Kalupur Commercial Co-operative Bank Limited and Kankaria Maninagar Nagrik Sahakari Bank Limited are commercial banks and cannot be treated as societies for obtaining deduction under Section 80P(2)(d) of the Income Tax Act. The department representative relied upon the Assessment Order and the order of the CIT(A).

The ITAT bench observed that the assessee has given the details of cooperative societies, which are listed under cooperative banks issued by the Ministry of Corporation, Government of India, and thus, the disallowance made by the AO under Section 80P(2)(d) of the Act is not justified.

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The ITAT bench, comprising of Narendra Prasad Sinha and Suchitra Kamble, allowed the appeal in favor of the assessee.

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