Appeal Allowed: Cooperative Credit Society Eligible for Deduction on Interest Income from Cooperative Banks

The Appellate Tribunal ITAT Pune allowed the appeal, overturning the decision to deny deduction u/s.80P for interest income earned from deposits with cooperative banks. The Tribunal held that the assessee, a Cooperative credit society, was eligible for deduction u/s 80P(2)(d) on interest income from investments/deposits with cooperative banks, despite limitations on deductions for cooperative banks. The order was pronounced on 07th June, 2023.

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Issues:
The denial of deduction u/s.80P in respect of interest income earned from deposits with other cooperative banks.

Summary:
The Appellate Tribunal ITAT Pune addressed the appeal against the order passed by the CIT(A) regarding the denial of deduction u/s.80P for interest income from deposits with cooperative banks. The assessee, a Cooperative credit society, claimed deduction u/s. 80P(2) for interest income earned. The AO disallowed the deduction based on a Supreme Court judgment and this decision was upheld in the first appeal. The assessee appealed contending that the deduction should be allowed u/s 80P(2)(d) of the Act.

After reviewing the submissions and relevant material, it was noted that the assessee earned interest income from deposits with cooperative banks. Referring to previous decisions, including Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr. CIT, it was established that despite certain limitations on deductions for cooperative banks, a cooperative society is eligible for deduction u/s 80P(2)(d) on interest income from investments/deposits with a cooperative bank. The Tribunal overturned the previous order and directed to grant deduction u/s.80P(2)(d) on the interest earned from various cooperative banks.

Therefore, the appeal was allowed, and the order was pronounced in the Open Court on 07th June, 2023.

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