Co-operative Society’s Investment in Co-operative Society's Fixed Deposit Accounts Eligible for Deduction u/s 80P (2) (d) of IT Act: ITAT [Read Order]

The Amritsar Bench of the Income Tax Appellate Tribunal (ITAT) recently held that the investment of a co-operative society  in another co-operative society’ s fixed deposit accounts are eligible for deduction under Section 80 P (2) (d) of Income Tax Act, 1961.

The Assessee Urapar Coop. Agri. Service Society Ltd was a co-operative agricultural service society dealing in the business of providing credit facilities to its members and it was formed for the purposes of development of agriculture. The assessee is duly registered under the Punjab Societies Registration Act, 1961, with the office of the Registrar co-operative societies, Punjab.

During the Assessment Year 2017-18, the year relevant, the assessee deposited its reserve funds with the Nawanshahr Central Co-operative Bank Ltd; Nawanshahr [another cooperative society] in the shape of FDR and Saving Bank Account.

 The assessee received interest from the Banks during the year under consideration to the tune of Rs. 1,35,63.303/-. The Assessing Officer  had denied deduction of a sum of Rs. 54,00,164/- out of the said interest income claimed by the appellant from Banks under Section 80-P(2)(d) of the Income Tax Act, 1961, by applying the provisions of sub- section 4 of Section 80-P of Income Tax  Act.

Counsel for the assessee submitted that the Commissionar of Incomr Tax (Appeals)/National Faceless Assessment Center had erred in law and the facts on record by confirming the disallowance of deduction us 80P(2)(d) of the Income Tax Act without appreciating the primary facts that the appellant-assessee is a Cooperative Society and not a Co-operative Bank. The appellant-assessee being a Co-operative Society, it is eligible for exemption on its entire interest income received from the investment with a Co-operative Bank as deductible under Section 80 (2) (d) of the Income Tax Act.

The Bench consisting of a Judicial Member Section 80P (2) (d) and an Accountant Member Dr. M. L. Meena observed that the appellant-assessee was a Co-operative Society and not a Co-operative Bank. The appellant assessee being a Co-operative Society, it is eligible for exemption on its entire interest income received from the investment with a Co-operative Bank as deductible under Section 80P (2) (d) of the Income Tax Act.

The Bench further held that since, appellant society being a cooperative society and investment in FDR’s was made in another cooperative Society and hence, it is eligible for deduction under Section 80P (2) (d) of the Income Tax Act.

In result, the appeal filed by the assessee was allowed and the addition of Rs. 54,00,164/- was deleted.

To Read the full text of the Order CLICK HERE

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