The Income Tax Appellate Tribunal (ITAT) held that interest income derived by a co-operative society from its investments held with a co-operative bank would be entitled to claim of deduction under Sec.80P(2)(d) of the Act.
The ruling was made by the Tribunal in the case of M/s Solitaire CHS Ltd. v. Principal Commissioner of Income-tax. The bench consisted of Shri S.Rifaur Rehman and Shri Ravish Sood,
Here the assessee, which is a cooperative society, had filed its return of income for A.Y. 2014-15, declaring its total income at Rs.nil. The assessment under Sec.143(3) was framed by the A.O. and the returned income of the assesses was accepted. During assessing the records, the Pr. CIT found that the assessee claimed deduction under Sec.80P(2)(d) of the Act and the AO allowed it. The Pr.CIT, however, did not agree with the findings of AO and held that his order as erroneous, insofar it was prejudicial to the interest of the revenue.
The question here was a discussion on was whether the claim of the assessee for deduction under section 80P(2)(d) in respect of interest income earned from the investments/deposits made with the co-operative banks is in order, or not.
The assessee argued that the CIT has exceeded his jurisdiction and that the AO has made all necessary verification and took a plausible view.
The Revenue however contended that assessee was not eligible for claim of deduction under Sec.80P on the interest income received on the investments/deposits lying with the co-operative banks. Further, the Revenue argued that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled to claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with co-operative banks, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. The Pr. CIT further noted that the co-operative banks from where the assessee was in receipt of interest income were not co-operative societies, the interest income earned on such investments/deposits would not be eligible for deduction under Sec. 80P(2)(d) of the Act.
The Tribunal held that, “what is relevant for the claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co-operative society with any other co-operative society.”
The Tribunal also observed that with the “insertion of sub-section (4) of Sec. 80P, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank”.
The tribunal also relied on various judgements, including Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum), to conclude on the case.