S. 80P(2) Deduction Disallowed for Lack of License: ITAT Remands Matter on Deduction claim on Co-operative bank Interest Income [Read Order]
The tribunal directed the AO to ascertain whether the cooperative banks from which the assessee earned interest income held a license under Section 22 of the Banking Regulation Act, 1949, to determine the eligibility for the deduction.
![S. 80P(2) Deduction Disallowed for Lack of License: ITAT Remands Matter on Deduction claim on Co-operative bank Interest Income [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/05/bank-interest-site-img.jpg "S. 80P(2) Deduction Disallowed for Lack of License: ITAT Remands Matter on Deduction claim on Co-operative bank Interest Income [Read Order]")
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has remanded a case involving the disallowance of deductions under Sections 80P(2)(d) and 80P(2)(a)(i) of the Income Tax Act to the Assessing Officer (AO) for fresh verification. M/s Gobichettipalayam Rev Dev VAO & VA T&C Society Ltd. (assessee), a cooperative society filed appeals for Assessment Years (AY) 2020-21...
The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has remanded a case involving the disallowance of deductions under Sections 80P(2)(d) and 80P(2)(a)(i) of the Income Tax Act to the Assessing Officer (AO) for fresh verification.
M/s Gobichettipalayam Rev Dev VAO & VA T&C Society Ltd. (assessee), a cooperative society filed appeals for Assessment Years (AY) 2020-21 and 2021-22. The assessee claimed deductions of Rs. 13.48 lakh under Section 80P(2)(d) for interest income earned from investments with cooperative banks and under Section 80P(2)(a)(i) for income from its cooperative activities.
The Centralized Processing Centre (CPC) denied the deduction under Section 80P(2)(d) in its intimation. Aggrieved by the CPC’s order, the assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)].
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The CIT(A) held that the interest income should be treated as Income from other sources which was ineligible for Section 80P(2)(d) deduction, and that the assessee could claim expenses under Section 57 of the Income Tax Act. The CIT(A) disallowed the deduction under Section 80P(2)(a)(i) of the Income Tax Act.
Aggrieved by the CIT(A)’s order, the assessee appealed to the ITAT. The assessee’s counsel argued that the CIT(A) erred in issuing contradictory directions and disallowing the deduction under Section 80P(2)(a)(i), which was already allowed by the CPC and not under appeal.
The two-member bench comprising Aby T. Varkey (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member) observed that the CIT(A)’s directions were contradictory. The tribunal observed that the deduction under Section 80P(2)(a)(i) was already allowed by the CPC. The CIT(A)’s directions to disallow this deduction were reversed by the tribunal.
The tribunal held that interest income from cooperative banks registered as cooperative societies and not holding a license under Section 22 of the Banking Regulation Act, 1949, would be eligible for the deduction, as supported by prior tribunal decisions.
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The tribunal directed the AO to verify whether the cooperative banks in question lacked the requisite license and instructed the assessee to provide necessary details to facilitate this verification.
The tribunal remanded to the AO for fresh verification. The tribunal further noted that the facts for AY 2021-22 were identical to those of AY 2020-21. Therefore, the same adjudication was applied to both years. Both appeals of the assessee were partly allowed.
To Read the full text of the Order CLICK HERE
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