2021 (6) TMI 312 - AT - Income Tax

Cooperative Society Wins Appeal: Eligible for Section 80P(2)(d) Deduction on Interest from Other Cooperatives.

MTNL Employees Co-op Thrift & Credit Society Ltd. Versus ACIT, Circle-52 (1)

The ITAT allowed the appeals, determining that the appellant, a cooperative society, was eligible for a deduction under Section 80P(2)(d) for interest ... Deduction u/s 80P - Income from other sources - Treatment to Interest earned from Cooperative Bank' and Commercial Bank - HELD THAT:- As decided in own case [2020 (7) TMI 715 - ITAT DELHI] assessee being a co-operative society not involved in banking operation is not eligible for deduction u/s. 80P(2)(a)(i).The assessee being a co-operative society is eligible for deduction u/s. 80P(2)(d) on the interest earned from other co-operative societies. The assessee is eligible for the expenditure u/s. 57 incurred in earning the interest income which is taxable under the head 'income from other sources' as per Section 56. Thus addition is hereby deleted. Issues:- Appeal against orders of CIT(A)- Determination of tax liability- Treatment of interest income from banks- Eligibility for deduction under Section 80P(2)(d)- Allowance of expenditure under Section 57Analysis:- The appeals were filed against the orders of the ld. CIT(A)-18, New Delhi. The issues in all appeals being common were heard together.- The appellant contested the orders on various grounds, including errors in law, non-compliance with procedures, and treatment of interest income from Cooperative and Commercial Banks under the head of Income from other sources.- The appellant relied on previous favorable orders for similar issues in other assessment years.- The Tribunal considered the submissions and material on record, noting that a similar issue was previously decided in favor of the assessee in other appeals.- The Tribunal analyzed the provisions of Section 80P(2)(d) and concluded that the assessee was eligible for deduction on interest income earned from cooperative societies.- Regarding expenditure under Section 57, the Tribunal directed the Assessing Officer to allow the expenditure related to earning interest from commercial banks.- The Tribunal held that the appellant, being a cooperative society not involved in banking operations, was not eligible for deduction under Section 80P(2)(a)(i) but was eligible for deduction under Section 80P(2)(d) for interest earned from other cooperative societies.- Additionally, the Tribunal ruled that the appellant could claim expenditure under Section 57 for earning interest income taxable under the head 'income from other sources' as per Section 56.- Consequently, in the absence of any material change in the facts, the addition was deleted, and all appeals of the assessee were allowed.