Eligibility for Deduction u/s 80P(2)(d) on Interest Earned from Co-operative Banks: ITAT Grants Deduction [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal(ITAT)ruled in favor of the assessee, granting the deduction under Section 80P(2)(d) of Income Tax Act,1961 for interest earned from a cooperative bank.

The Sangeet Plaza IFTEX Office Premises Coop Soc Ltd., appellant-assessee,filed its return, which the Centralized Processing Centre(CPC) processed under section 143(1) and disallowed the deduction under section 80P(2)(d) for interest from a cooperative bank. A rectification request under section 154 was also rejected.

In the appeal before the Commissioner of Income Tax(Appeals) [CIT(A)], the appellant-assessee's contention was rejected, as the issue was deemed controversial and not final, falling outside the scope of section 154. The order was upheld.

Know Practical Aspects of Tax Planning, Click Here

The assessee's counsel argued that the CPC erred in disallowing the claim through section 143(1), as the issue was not applicable for such an adjustment. The counsel showed that the assessee had disclosed relevant bank accounts with cooperative banks, and since it was a cooperative society, the interest was eligible for deduction under section 80P(2). The CIT(A) had allowed a similar claim in AY 2020-21.

The tribunal considered the submissions of both parties and examined the material on record. The issue in the case was the denial of the deduction under Section 80P(2)(d) for interest earned from cooperative banks. The assessee had filed a rectification application with the CPC, which was rejected without proper reasons. The CIT(A) also did not decide the issue on merits but dismissed the appeal on technical grounds.

Read More:Cooperative Societies Eligible for Deduction on Interest Income from Cooperative Banks: ITAT Cites ‘Co-op Banks are basically Co-op Societies’

The appellate tribunal noted that similar issues had been decided in favor of the assessee by the Mumbai Tribunal in previous cases, such as Ashoka Palace Co-Op. Hsg. Soc. Ltd. v. ITO and Dheeraj Gaurav Heights Co-operative Housing Society Ltd., where the deduction under Section 80P(2)(d) for interest from cooperative banks was allowed.

Know Practical Aspects of Tax Planning, Click Here

The two member bench Anikesh Banerjee(Judicial Member) and Prabhash Shankar(Accountant Member) comprising that the claim of the assessee should be allowed based on these precedents, and it was decided that the CPC's disallowance was unjustified. The order of the CIT(A) was set aside, and the deduction under Section 80P(2)(d) was granted to the assessee.

In short,the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates