2023 (10) TMI 1365 - AT - Income Tax

Cooperative housing society entitled to section 80P(2) deduction on interest income from cooperative banks

Navrang Basant Co-operative Housing Society Limited Versus ITO 17 (2) (4), Mumbai

ITAT Mumbai held that a cooperative housing society was entitled to deduction under section 80P(2) on interest income received from cooperative banks. The ... Deduction u/s 80P - interest received by the assessee from cooperative banks - HELD THAT:- Assessee is a cooperative society more precisely a housing society and not a cooperative bank therefore the provision section 80P (4) does not apply to assessee and therefore assessee is eligible for deduction u/s 80 P (2) of the Act. Assessee has invested in saraswat Cooperative bank, shamrao Vithal cooperative bank and Maharashtra District cooperative bank limited. There is no doubt that assessee is not a cooperative bank. Section 80P (4) denies deduction to cooperative banks only. Now this view is upheld by the honourable supreme court in case of Kerala State Co-Operative Agricultural & Rural Development Bank Ltd [22023 (9) TMI 761 - SUPREME COURT] In view of this, we direct the ld AO to allow deduction to assessee cooperative housing society deduction on interest income. We reverse the order of the ld CIT (A) and allow solitary issue in appeal. Issues Involved:The judgment involves the following issues: 1. Allowance of deduction u/s 80P(2)(d) for interest earned from Co-operative Banks.2. Interpretation of deduction under section 80P(2)(d) as opposed to section 80P(4).3. Consideration of written submissions and past decisions regarding similar deductions.4. Condonation of delay in filing the appeal.Issue 1: Allowance of Deduction u/s 80P(2)(d) for Interest Earned from Co-operative Banks:The appeal was filed by the Navrang Basant Co-operative Housing Society Limited against the appellate order dismissing their appeal regarding the denial of deduction u/s 80P(2)(d) for interest earned from Co-operative Banks. The Assessing Officer rejected the claim for deduction under section 80P(2)(d) on the grounds that interest received from cooperative banks was not eligible for deduction under section 80P as they are not cooperative societies. The Tribunal, after considering the facts, held that the assessee, being a cooperative housing society and not a cooperative bank, was eligible for deduction u/s 80P(2) of the Act. The Tribunal reversed the order of the CIT (A) and allowed the deduction on interest income, citing relevant Supreme Court judgments to support its decision.Issue 2: Interpretation of Deduction under Section 80P(2)(d) as Opposed to Section 80P(4):The Assessing Officer contended that deduction under section 80P(2)(d) was not allowable as per sub-section 4 of section 80P of the Act. The Tribunal clarified that section 80P(4) denies deduction to cooperative banks only, not to cooperative housing societies like the appellant. By differentiating between the nature of the appellant's entity and a cooperative bank, the Tribunal upheld the eligibility of the appellant for deduction under section 80P(2)(d).Issue 3: Consideration of Written Submissions and Past Decisions:The appellant argued that the CIT (A) erred in not considering the written submissions filed, the decision of the CIT(A) for A.Y. 2015-16 in the appellant's own case, and decisions of the jurisdictional Tribunal where deduction u/s 80P(2)(d) was allowed for interest income earned from Co-operative Banks. The Tribunal reviewed these arguments and found merit in the appellant's contentions, ultimately allowing the deduction based on the appellant's status as a cooperative housing society.Issue 4: Condonation of Delay in Filing the Appeal:The appeal of the appellant was filed late, leading to a delay of 82 days. The appellant attributed the delay to not receiving the order of the CIT (A) in time. The Tribunal, following the principle that a pedantic approach should not be taken in condoning delays, accepted the appellant's explanation and condoned the delay. Despite objections from the Departmental Representative, the Tribunal allowed the appeal on its merits after considering the delay issue.This judgment by the Appellate Tribunal ITAT Mumbai highlights the importance of correctly interpreting the provisions of the Income-tax Act, particularly regarding deductions for entities like cooperative housing societies. The Tribunal's decision to allow the deduction u/s 80P(2)(d) for interest income earned from Co-operative Banks in the case of the appellant sets a precedent based on the entity's nature and eligibility criteria specified in the relevant sections of the Act.