Deduction u/s 80P(2)(d) available to Income of Co-operative Society: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has recently, in an appeal filed before it, held that deduction under Section 80P(2)(d) of the Income Tax Act, is available to the income derived by co-operative society.

The aforesaid observation was made by the Ahmedabad ITAT, when an appeal was preferred before it by the assessee, as against the order passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, for the Assessment Year 2017-18.

The ground of the assessee’s appeal being that the CIT(A) has grievously erred in confirming the disallowance of interest received on FDRs with the Ahmedabad District Cooperative Bank of Rs.3,01,911/, claimed as ‘Exempt’ under Section 80(P)(2)(d) of the Income Tax Act, the brief facts of the case were that the assessee was a Co-operative Society, engaged in the business of collecting milk from its members and supplying it to the member union i.e. the Ahmedabad District Co-operative Milk Producers Union Limited.

The assessee had filed its return of income for A.Y. 2017-18, declaring the total income at Rs. Nil, thereby claiming deduction amounting to Rs.16,90,725/, under Section 80P of the Income Tax Act, 1961. However, it was so observed by the Assessing Officer that the assessee had received interest income from FDR with Ahmedabad District Co-operative Bank amounting to Rs.3,01,911/-.

Subsequently, after taking cognisance of the reply of the assessee, the Assessing Officer made a disallowance of Rs.3,01,911/- as claimed deduction under Section 80P(2)(d) of the Income Tax Act by the assessee. And being aggrieved by the said assessment order, the assessee filed an appeal before the CIT(A).

The CIT(A) however, dismissed the appeal of the assessee. And, it is in this circumstance, that the assessee has presently preferred an appeal before the Ahmedabad ITAT.

In the hearing before the Ahmedabad ITAT, it was submitted by Shri P.F. Jain, the AR for the assessee, that the assessee was a Co-operative Society and that the interest received from the Ahmedabad District Co-operative Bank is also from a Co-operative Society, as it is also a Co-operative Society. The AR relying upon the decision of the Gujarat High court in the case of Surat VankarSahkari Sangh Limited vs. ACIT, thus submitted that the claim of the assessee as regards to deduction under Section 80P(2)(d) of the Income Tax Act, is therefore justifiable.

However, on the other hand, Shri V.K. Mangla, the Sr. DR on behalf of the Revenue, relied upon the Assessment Order as well as the order of the CIT(A) and further submitted that the CIT(A) has distinguished other decisions quoted by the assessee, and that the provisions contained in Section 80P(2)(d) of the Income Tax Act is different. He added that therefore, the decision of Gujarat High Court will not be applicable to the present case.

Hearing the opposing contentions of both sides, and thereby perusing the materials available on record, the ITAT coram comprising of Suchitra Kamble, the Judicial Member thus held:

“The Hon’ble Gujarat High Court in case of Surat VankarSahkari Sangh Limited categorically mentioned provision of Section 80P(2)(d) of the Act does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a Co-operative Society. The Ahmedabad District Co-operative Bank is also a registered Co-operative Society and, therefore, the assessee is eligible for claiming deduction under Section 80P(2)(d) of the Act.”

To Read the full text of the Order CLICK HERE

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