Interest on Investment by Co-operative Society with another Co-operative Society Eligible for Income Tax Deduction u/s 80P: ITAT [Read Order]
The deduction claimed by the co-operative society on interest income earned from another co-operative society was allowed by ITAT, and the matter was remitted to JAO.
The Income Tax Appellate Tribunal, (ITAT), Pune Bench, held that the interest income earned by a Co-operative society from investment made with another Co-operative society is eligible for deduction under section 80P(2)(d) of Income Tax Act, 1961. The tribunal set aside the order passed by the Commissioner of Income Tax (Appeals) ( CIT(A) ).
The appellant, Amrapur Vikas Seva Sanstha Marya Aurwad, is a primary credit society registered under the Maharashtra State Co-operative Act, 1960 and is engaged in providing agricultural loans to its members. The main source of income for the appellant is interest earned on loans advanced to its members and interest received on deposits made with Co-operative Banks and other Co-operative Societies.
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The appellant claimed a deduction of ₹2,67,412 under section 80P(2)(d) of the Income Tax Act, 1961 during Assessment Year 2015-16. During the assessment, the assessing officer observed that the appellant invested with Kolhapur District Central Co-operative Bank and with other banks and had earned interest income of ₹6,18,874 from such investments.
The AO disallowed the deduction claimed by the appellant on the ground that the income was earned from other banks. Aggrieved, the appellant filed an appeal before CIT(A) who confirmed the disallowance of the deduction by the AO.
No representation was made on behalf of the appellant in the present appeal before the ITAT despite serving notice of hearing. The tribunal heard the counsel represented for respondent, Vishwajit Shinde and adjudicated with the available material on the record
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Manish Borad, Accountant member, observed that on the perusal of the grounds of appeal, the appellant had submitted documentary evidence showing the exact bifurcation of interest income of ₹11,83,347. The assessing officer has incorrectly presumed the proportionate interest from other banks at ₹6,18,874.
It was also noted that ₹3,00,000 pertained to the reversal of interest provision; interest earned from investment with Kolhapur District Central Co-operative Bank was at ₹8,06,158 and interest earned from fixed deposits with the other banks amounts to ₹77,189.
The tribunal relied upon the decision of the Madras High Court in CIT vs The Salem Agricultural Producers Co-operative Marketing Society Ltd (2015), where it was held that a cooperative society is entitled to avail the benefit u/s.80P(2)(d) of the Act.
Accordingly, the tribunal held that interest income earned from cooperative banks is eligible for deduction under section 80P(2)(d). The tribunal remitted the file back to the Jurisdictional Assessing Officer (JAO) for the purposes of verification of interest income earned from cooperative banks.Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
