Tribunal grants cooperative housing society deduction for interest income, remands case for further examination.

The Tribunal allowed the appeal filed by the cooperative housing society for statistical purposes, directing the Assessing Officer to examine the expenditure incurred for earning interest income from cooperative banks under the head 'income from other sources' and allowing it as a deduction under section 57 of the Income Tax Act. The case was remanded back to the A.O. for further examination, with the assessee required to provide necessary evidence for a prompt resolution. The decision was rendered in favor of the cooperative housing society on November 30, 2021.

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Issues:
1. Interpretation of deduction u/s 80P(2)(d) for a cooperative housing society.
2. Applicability of the judgment of Totagar Co-operative Sale Society Limited (2017) 395 ITR 611 (Kar.) on interest from banks.
3. Allowance of deduction u/s 80P(2)(d) for interest earned on deposits from cooperative banks.
4. Claim for deduction u/s 80P(2)(d) on interest received from a cooperative bank.
5. Entitlement to deduction u/s 80P(2)(a)(i) for interest income from cooperative banks.
6. Consideration of expenditure for earning interest income under deduction u/s 57 of the I.T. Act.

Analysis:
1. The case involved the interpretation of deduction u/s 80P(2)(d) for a cooperative housing society. The Assessing Officer (A.O.) denied the deduction for interest income/dividend from investments made with cooperative banks, citing the judgment of Tatagars Co-operative Sale Society Ltd. v. ITO. The CIT(A) upheld the A.O.'s decision. The Tribunal noted the assessee's argument that interest income from cooperative banks should be allowed as a deduction u/s 80P(2)(a)(i) of the I.T. Act. However, as the plea was not raised before lower authorities, the Tribunal rejected this contention.

2. The issue of the applicability of the judgment of Totagar Co-operative Sale Society Limited (2017) 395 ITR 611 (Kar.) on interest from banks was raised. The Tribunal considered the argument that interest income should be assessed as income from other sources, and the expenditure for earning such income should be allowed as a deduction u/s 57 of the I.T. Act. The Tribunal referred to the judgment in Totagars Cooperative Sale Society Ltd. v. ITO [2015] 58 Taxmann.com 35 (Kar.) and held that if interest income is assessed as income from other sources, the expenditure incurred for earning such income should be allowed as a deduction u/s 57.

3. The Tribunal directed the A.O. to examine whether the assessee had incurred any expenditure for earning interest income assessed under the head 'income from other sources.' If so, the same should be allowed as a deduction u/s 57 of the I.T. Act. The case was restored to the files of the A.O. for this purpose, with the assessee instructed to cooperate and furnish necessary evidence for the matter's expeditious disposal.

4. Ultimately, the Tribunal allowed the appeal filed by the assessee for statistical purposes, indicating that the case was decided in favor of the assessee. The order was pronounced on November 30, 2021.

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