Tribunal Grants Deduction u/s 80P(2)(d) for Interest from Cooperative Bank Investments, Citing Precedent.

The Tribunal ruled in favor of the appellant, a cooperative society, allowing the deduction under Section 80P(2)(d) for interest earned from investments with a cooperative bank. It found that both the appellant and the bank qualify as cooperative societies, aligning with the Jurisdictional High Court's precedent. The AO was directed to grant the claimed deduction.

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Issues:
1. Eligibility of deduction u/s. 80P(2)(d) for interest earned from investments with a cooperative bank.

Detailed Analysis:
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) by a cooperative society manufacturing sugar, claiming deduction u/s. 80(P) for interest earned from investments with a cooperative bank. The Assessing Officer (AO) held that interest earned from investments made in a non-cooperative bank is not eligible for deduction u/s. 80P(2)(d) and rejected the claim. The appellant contended that as per the Co-operative Societies Act, financial transactions are expected to be with a cooperative bank only, and hence, the funds were deposited with the bank. However, the AO denied the deduction stating that the bank, although registered as a cooperative society, is not considered one due to being governed by special laws like the Banking Regulation Act, 1949.

The appellant relied on a decision by the Jurisdictional High Court in a similar case and argued that interest received from investing in a district cooperative bank is eligible for deduction u/s. 80P(2). The Tribunal found merit in the appellant's submission, emphasizing that both the appellant and the bank are cooperative societies engaged in banking business. The Tribunal referred to the decision of the Jurisdictional High Court, which held that income derived from investments made in a cooperative society is eligible for deduction under Section 80P(2)(d) of the Act.

Further analysis revealed that the interest income earned by the appellant from investments in the cooperative bank falls within the ambit of the law and previous judicial interpretations. The Tribunal cited relevant case laws and held that the appellant is entitled to the benefit under Section 80P(2)(d) of the Act. The Tribunal rejected the contentions of the Income Tax Department and directed the Assessing Officer to grant the deduction claimed by the appellant u/s. 80P(2).

In conclusion, the Tribunal allowed the appellant's appeal, emphasizing that the facts of the case align with the decision of the Jurisdictional High Court and directing the Assessing Officer to grant the deduction claimed by the appellant u/s. 80P(2). The order was pronounced in favor of the appellant on Thursday, 20th February 2020 at Chennai.

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