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of <h1>Cooperative society entitled to Section 80P(2)(d) deduction on interest from cooperative bank deposits</h1> ITAT Chennai allowed deduction u/s 80P(2)(d) for interest earned from deposits with Chennai Central Cooperative Bank. The tribunal held that cooperative ... Deduction u/s. 80P(2)(d) - interest earned received from deposits made with Chennai Central Cooperative Bank - HELD THAT:- Admittedly, Chennai Central Co-operative Bank is a co-operative society and registered under Co-operative Society’s Act of Tamil Nadu. This issue has been settled by the Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. [2021 (1) TMI 488 - SUPREME COURT] Also see The Tiruchengode Agricultural Producers Co-operative Marketing Society Ltd. [2022 (7) TMI 679 - ITAT CHENNAI] as relying on S-1308, Ammapet Primary Agricultural Co-operative Bank Ltd. [2019 (1) TMI 116 - MADRAS HIGH COURT] held that t the provision of Section 80P(4) of the Act is to be read as a proviso, which proviso now specifically excludes co-operative banks which are co-operative societies engaged in the banking business, i.e. engaged in lending money to members of the public, which have a license in this behalf from the Reserve Bank of India. Clearly, therefore, the Assessee’s case is out of the provisions of Section 80P(4) of the Act In relation to the Associate members, we are of the view that the provisions of Section 22 read with Rule 32 of the Tamil Nadu Co-operative Societies Act, 1983 and Tamil Nadu Co-operative Societies Rules clearly determine the procedure to admit Associate members and accordingly in the present case, the Assessee’s Co-operative Society has admitted the same. In view of the above finding, we hold that the Assessee is entitled for the claim of deduction u/s. 80P(2)(a)(i) of the Act. Decided in favour of assessee. Issues Involved: The judgment addresses the issue of disallowance of deduction u/s. 80P(2)(d) of the Income Tax Act, 1961, concerning interest earned from deposits made with Chennai Central Cooperative Bank for assessment years 2017-18 and 2018-19.Issue 1: Disallowance of Deduction u/s. 80P(2)(d) The appeals arose from separate orders by the Commissioner of Income Tax (Appeals) regarding disallowance of deduction u/s. 80P(2)(d) for interest earned from deposits with Chennai Central Cooperative Bank. The Assessing Officer disallowed the deduction based on Supreme Court precedents and added the amount to the assessee's income. The CIT(A) upheld this decision, citing section 80P(4) and considering the interest income as part of the cooperative society's business. The Tribunal referred to relevant case laws and concluded that the assessee, being a cooperative society not engaged in banking activities, is entitled to the deduction u/s. 80P(2)(d). The Tribunal directed the Assessing Officer to allow the deduction, thereby allowing both appeals of the assessee.In conclusion, the judgment from the Appellate Tribunal ITAT Chennai dealt with the disallowance of deduction u/s. 80P(2)(d) for interest earned from deposits with Chennai Central Cooperative Bank. The Tribunal ruled in favor of the assessee, emphasizing the cooperative nature of the society and its entitlement to the deduction under the Income Tax Act.
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