Interest Income from Co-operative Banks Eligible for Deduction u/s 80: ITAT Dismisses Appeal Against RBI Officers Credit Society
ITAT upholds deduction on co-operative bank interest, grants relief to RBI Officers Credit Society, subject verification
The Income Tax Appellate Tribunal (ITAT) Mumbai Bench has upheld the eligibility of deduction on interest income earned from co-operative banks by the Reserve Bank Officers Co-operative Credit Society Ltd. dismissing the Revenue’s appeal while directing limited verification of the claim. The assessee which was a co-operative credit society, claimed a deduction of ₹6.70 crore...
The Income Tax Appellate Tribunal (ITAT) Mumbai Bench has upheld the eligibility of deduction on interest income earned from co-operative banks by the Reserve Bank Officers Co-operative Credit Society Ltd. dismissing the Revenue’s appeal while directing limited verification of the claim.
The assessee which was a co-operative credit society, claimed a deduction of ₹6.70 crore in terms of Section 80P(2)(d) on account of the interest received on the deposits placed with co-operative banks during the assessment year 2018-19.
However, such a deduction was denied by the AO under Section 143(3) along with Section 144B and thus, an appeal was preferred before the Commissioner of Income Tax (Appeals).
This claim was allowed by the CIT(A) on the basis of past decisions of the ITAT relating to the same assessee for assessment years prior to the current one.
The Revenue department submission was that interest received could not be allowed as a deduction considering the conditions specified in Section 80P(4). In contrast, the assessee maintained that the co-operative banks are also co-operative societies as per the provisions of the Income Tax Act, and therefore, the interest earned by them would be deductible under Section 80P(2)(d).
The Tribunal observed that Section 80P(4) applies only to co-operative banks claiming deduction and not to co-operative credit societies. It further noted that co-operative banks fall within the definition of co-operative society under Section 2(19) thereby making the interest income eligible for deduction.
The Tribunal held that a co-operative credit society is entitled to claim deduction under Section 80P(2)(d) of the Income Tax Act on interest income derived from investments made with co-operative banks. However, the Assessing Officer (AO) was directed to verify the quantum of deduction claimed.
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