The Mumbai bench of Income Tax Appellate Tribunal (ITAT) held that the co-operative banks or co-operative societies which are carrying on banking business but not registered with RBI, are eligible for deduction under Section 80P(2)(d) of Income Tax Act 1961.
The assessee is a co-operative housing society and eligible for deduction under section 80P of the Income Tax Act 1961.During the assessing year 2020-21,the assessee had received interest income from Maharashtra State Co-operative bank amounting to Rs.1,04,981/- and Saraswat Co-operative Bank amounting to Rs.7,21,808/-, both totaling to Rs.8,26,789/-.
The assessee claimed deduction under section 80P(2)(d) of the Act, in return of income in respect of this sum of interest of Rs.8,26,789/- The centralized processing center(CPC) while processing the return under section 143(1)of the Act denied deduction under section 80P(2)(d) of the Act in respect of interest income derived from co-operative bank amounting to Rs.8,26,789/-.The assessee preferred an appeal before the commissioner of income tax(CIT(A)).
The commissioner of income tax CIT (A) reproduced the provisions of Section 80P (2) (d) of the Act and concluded that the said clause shall apply only if the interest is earned from co-operative societies and not from co-operative banks.
The Coram comprising the account member, M.Balaganesh and the judicial member Sandeep Singh Karhail observed that the assessee society would be entitled for deduction under section 80P (2)(d) of the Income Tax Act 1961, in respect of interest received from cooperative banks. Accordingly, the ground raised by the assessee on this issue got allowed for both the years. The bench further observed that the challenging of the levy of interest under section .234B and 234C of the Income Tax Act 1961, by assessee, are consequential in nature and did not require any specific adjudication.
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