The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) ruled that interest income from deposits with Co-operative Banks qualifies for deduction under section 80P(2)(d) of the Income Tax Act,1961.
The Bhagyoday Sharafi Sahakari Mandli Ltd.,appellant-assessee, a Cooperative Society, filed its Return of Income for the assessment year 2017-18 on 30-10-2017, showing a total income of Rs. 31,291/-. During scrutiny, the Assessing Officer (AO) classified the interest income from banks and Gujarat Electricity Board as income from other sources and disallowed the deduction under section 80P of the Act.
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The assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] against the assessment order, but the CIT(A) upheld the additions made by the AO.The assessee then appealed before the tribunal raising several grounds.
The assessee’s counsel mentioned that the Gujarat High Court initially ruled in favor of the Revenue in the case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. v. ACIT (2022), but later modified its decision in April 2024, ruling in favor of the taxpayer. The counsel also noted that similar rulings were made by the ITAT Ahmedabad, including in the case of The Kalol Co-operative Credit and Supply Society Limited in 2024.
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The Revenue counsel was unable to challenge the submissions made by the assessee.
The two member bench comprising T.R Senthil Kumar (Judicial Member) and Narendra Prasad Sinha (Accountant Member) ruled that the interest income from deposits with the Co-operative Bank was eligible for deduction under section 80P(2)(d) of the Act and it directed the Jurisdictional Assessing Officer (JAO) to verify the matter.
The tribunal sent the matter of the deduction for expenses on interest income from bank deposits and the deduction for income from other activities by Co-operative Societies back to the JAO. for verification and to be decided according to the law, following the return of the first issue to the JAO.
In short,the appeal filed by the assessee was allowed for statistical purposes.
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