Tribunal allows appeal, finds interest income of cooperative society deductible under Income-tax Act

The Tribunal allowed the appeal of the assessee, holding that the revisionary order under section 263 lacked jurisdiction. It was determined that the interest income earned by the cooperative society from cooperative banks qualified for deduction under section 80P(2)(d) of the Income-tax Act, 1961. The Tribunal also concluded that the interest income earned on investments with banks was eligible for exemption under section 80P(2)(a)(i). The appeal was allowed, and the revisionary order was deemed unsustainable in law.

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Issues involved:
The judgment involves issues related to the jurisdiction of revisionary orders under section 263 of the Income-tax Act, 1961 and the eligibility of the assessee to claim deduction under section 80P(2)(d).

Jurisdiction of Revisionary Order (Ground No. 1):
The appeal challenged the revisionary order under section 263, contending that the Assessing Officer had taken a possible view and allowed the deduction claim after verification. The appellant argued that the order lacked jurisdiction and should be set aside. Despite the absence of the assessee, the Tribunal proceeded with the hearing and found that the issue had been previously addressed by the Pune Tribunal in a similar case for the assessment year 2017-18. The Tribunal observed that the interest income earned by the cooperative society from cooperative banks qualified for deduction under section 80(P)(2)(d) of the Act.

Eligibility of Deduction under Section 80P(2)(d) (Ground No. 2):
The appellant contested the conclusion that the assessee was ineligible to claim deduction under section 80P(2)(d) for interest income earned on investments with cooperative banks. The appellant argued that the Assessing Officer had allowed the claim after due consideration and that the failure to examine the issue did not render the assessment order erroneous. The Tribunal referred to judicial precedents and held that the interest income earned on investments with banks was eligible for exemption under section 80P(2)(a)(i) of the Act. It was concluded that the revisionary order was not sustainable in law, and the appeal of the assessee was allowed.

Separate Judgment by the Tribunal:
The Tribunal, comprising Shri Partha Sarathi Chaudhury (Judicial Member) and Shri G. D. Padmahshali (Accountant Member), pronounced the judgment on Thursday, 15th June 2023, allowing the appeal of the assessee in terms of rule 34 of ITAT Rules.

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