The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) allowed the deduction under Section 80P(2)(d) Of Income Tax Act,1961 for interest received from Co-operative Banks.
The State Transport Employees Co Operative Credit and Thrift Society, appellant-assessee,filed its return showing no income after claiming a deduction of Rs.34,32,392 under Section 80P of the Act. The case was selected for scrutiny, and notices were issued.
During the assessment, the assessee claimed a deduction of Rs.34,33,392, including Rs.1,73,036 for interest on deposits with the State Bank of India, a nationalized bank. The Assessing Officer added this amount, citing the Supreme Court’s decision in the Totgar case.
The assessee also earned Rs.95,242 from savings bank interest and Rs.3,62,719 from fixed deposits with Mehsana District Central Co-operative Bank. The total deduction claimed was Rs.4,57,961, which the Assessing Officer disallowed.
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The assessee aggrieved by the order of Assessing Officer(AO) appealed before the Commissioner of Income Tax (Appeals)[CIT(A)] who later dismissed the appeal.The assessee then appealed before the tribunal.
The assessee’s counsel explained that the interest received from the Co-operative Bank, claimed under Section 80P(2)(d), came from investments with other Co-operative societies/banks and should be disallowed, referring to the Gujarat High Court’s decision in Surat Vankar Sahakari Sangh Ltd. v/s ACIT (421 ITR 134).
The counsel also clarified that the interest was from Mehsana District Central Co-operative Bank Limited, which is registered under the Co-operative Societies Act, and its members qualify for the deduction under Section 80P(2)(d).
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The two member bench comprising Suchitra Kamble (Judicial Member) and Makrand Vasnat Mahadeokar(Accountant Member) reviewed the case and found no dispute about the interest of Rs.4,57,961 received by the assessee from a Co-operative bank registered under the Co-operative Societies Act. Based on the Gujarat High Court’s decision in Surat Vankar Sahakari Sangh Ltd. (Supra), the interest was allowed under Section 80P(2)(d) of the Act.
In short,the appeal allowed by the assessee was allowed.
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