Deduction on Interest Income Earned from Co-Operative Bank u/s 80P(2)(d) allowed: ITAT sets aside order of CIT(A) [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) set aside the order of the Commissioner of Income Tax (Appeals) [CIT(A)] and directed the Assessing officer to allow the claim of deduction under Section 80P(2)(d) of the Income Tax Act,1961 on the interest income/dividend received /earned from the co-operative banks.

The assessee Gautam Dhan Co-op Housing Society Ltd. is a Housing cooperative society and has filed the return of income for the Assessment Year A.Y 2019-20 disclosing a total income of Rs. Nil after claiming deduction under Section 80P(2)(d) of the Income Tax Act of Rs.1,58,305/-and setoff of loss of Rs1,20,750/-.

During the assessment, the AO/CPC has denied the claim of setoff of loss and has not allowed deduction of claim under Section 80P(2)(d) of the Income Tax Act as the cooperative bank is an urban commercial bank and does not fall under the purview of cooperative society referred in the Section 80P(2)(d) of the Income Tax Act.

Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] , whereas the CIT(A) has sustained the disallowance under Section 80P(2)(d) of the Income Tax Act and partly allowed the assessee appeal. Further aggrieved assessee filed an appeal before the ITAT.

The Authorised Representative of the assessee Manan Mathuria, submitted that the CIT(A) has erred in confirming the action of the A.O in treating the interest income from cooperative bank is ineligible for deduction under Section 80P(2)(d) of the Income Tax, and emphasized that the claim has to be allowed as the cooperative bank is treated as a cooperative society for eligibility of deduction under Section 80P(2)(d) of the Income Tax.

Further the AR submitted that the interest income derived by a co-operative society from its deposits with the co-operative banks would be entitled for deduction under Section 80P(2)(d) of the Income Tax. The cooperative bank continues to be a co-operative society registered under the Co-operative Societies Act.

The Departmental Representative Kavita Kaushik relied on the order of the CIT(A).

A Single Bench comprising of Pavan Kumar Gadale, Judicial Member observed that the cooperative society receives/earns interest on deposits with the co-operative bank is eligible for claim of deduction under Section 80(2)(d) of the Income Tax Act.

Thus, following the judicial precedents the Tribunal set aside the order of the CIT(A) on this disputed issue and directed the Assessing officer to allow the claim of deduction under Section 80(2)(d) of the Income Tax Act on the interest income/dividend received /earned from the co-operative banks.

To Read the full text of the Order CLICK HERE

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