The Pune Bench of the Income Tax Appellate Tribunal ( ITAT ) observed that the interest and dividend derived by one cooperative society from investment with another one is eligible for deduction under Section 80p(2)(d) of the Income Tax Act, 1961.
The appellant assessee is a credit co-operative society registered under the provisions of Maharashtra State Co-op. Societies Act and is engaged in the business of providing credit facilitates to its members. For the year under consideration the assessee earned net profit of ₹23,97,862/- from its business activities of providing credit facilities to its member and ₹15,98,301/- as interest and dividend from investment made with RDCC bank against which it has claimed a deduction under Section 80P(2)(a)(i) & 80P(2)(d) of the Income Tax Act respectively.
The assessment was framed denying the deduction under Section 80P(2)(d) of the Income Tax Act claimed against interest income of ₹29,08,880/- accrued/earned form investment made with RDCC bank.
The counsel for the appellant submitted that no portion of interest is earned from nationalised bank but from RDCC banks which is registered credit cooperative societies. In the facts and circumstances, the assessee is entitled to 100% deduction of under Section 80P(2)(d) of the Income Tax Act.
A Two-Member Bench comprising Partha Sarathi Choudhury, Judicial Member and GD Padmahshali, Accountant Member observed that “The interest and dividend earned by the appellant society from its investment held with co-operative banks namely RDCC, being a registered co-operative society under respective state laws, qualifies for deductions under Section 80P(2)(d) of the Income Tax Act. Consequently the views adopted by the tax authorities below are not in conformity with legal position and binding judicial precedents, hence deserves to be vacated. Resultantly, we set-aside the impugned order and reverse the denial of deduction.”
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