Interest Income received from Co-Operative Bank is eligible deduction u/s 80(2)(d) of Income Tax Act: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Mumbai bench held that interest income received from cooperative banks is eligible for a claim of deduction under section 80(2)(d) of the Income Tax Act, 1961. The assessee, Chetak Co-Operative Housing Society Ltd, is a cooperative housing society registered under the Maharashtra Society Act, 1960. The assessee filed the return of income for the A.Y 2013-14 on 29.10.2013, disclosing a total income of Rs. Nil after claiming a deduction under section 80P(2)(d) of the Income Tax Act of Rs. 12,35,591/-. The return of income was processed under section 143(1) of the Income Tax Act.

Subsequently, the case was selected for scrutiny. During the scrutiny proceedings, the Assessing Officer (AO) found that the assessee disclosed gross income, including interest income on fixed deposits from three cooperative banks aggregating to Rs. 12,35,591/-, and claimed a deduction under section 80P(2)(d) of the Income Tax Act. However, the AO, dealing with the facts and provisions, did not allow the deduction under section 80P(2)(d) of the Act, stating that the cooperative bank, being an urban cooperative commercial bank, does not fall under the purview of the cooperative society referred to in Sec. 80P(2)(d) of the Income Tax Act.

Aggrieved, the assessee filed a further appeal before the CIT(A), which was dismissed. Therefore, the assessee filed a second appeal before the tribunal. During the proceedings, Anuj Kisnadwala, Counsel for the assessee, argued that the claim has to be allowed as the cooperative bank is treated as a cooperative society for eligibility for a deduction under section 80P(2)(d) of the Income Tax Act. Therefore, interest income derived by a cooperative society from its deposits with cooperative banks would be entitled to a deduction under section 80P(2)(d) of the Income Tax Act.

G.J. Ninawe, Counsel for Revenue, supported the order of the lower authorities. After analyzing the facts, the single-member bench of Pavan Kumar Gadale (Judicial Member) held that interest on deposits of a cooperative society with the cooperative bank is eligible for a claim of deduction under section 80(2)(d) of the Income Tax Act.

Therefore, the bench allowed the appeal of the assessee.

To Read the full text of the Order CLICK HERE

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