Appeal granted for deduction on interest & dividends for credit cooperative society from cooperative bank.

The Tribunal allowed the appeal, overturning the denial of deduction under section 80P(2)(d) on interest and dividend income earned by a credit cooperative society from Pune District Cooperative Bank. The Tribunal emphasized that cooperative societies registered under relevant laws remained eligible for the deduction on income from investments in cooperative banks meeting specified criteria, despite certain co-operative banks being excluded from deduction eligibility under section 80P(4) from April 1, 2007. The decision was pronounced on 9th November 2022.

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Issues:
Denial of deduction u/s.80P(2)(d) on interest income and dividend income.

Analysis:
The appeal pertains to the denial of deduction u/s.80P(2)(d) on the interest income and dividend income earned by a credit cooperative society from Pune District Cooperative Bank. The Assessing Officer (AO) disallowed the deduction, a decision upheld by the CIT(A), leading to the appeal before the Tribunal. The key contention revolved around the interpretation of section 80P of the Income Tax Act, specifically whether the cooperative society was eligible for the deduction on interest and dividend income.

Upon review, the Tribunal noted that the cooperative society earned interest and dividend from Pune Central District Co-operative Bank. Referring to a previous decision by the Pune Benches in Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr.CIT, the Tribunal highlighted that while certain co-operative banks were excluded from deduction eligibility under section 80P(4) from April 1, 2007, this exclusion did not impact the eligibility of a cooperative society under section 80P(2)(d). The Tribunal emphasized that a cooperative society registered under the Co-operative Societies Act, 1912, or any applicable law, remained eligible for the deduction on interest income from investments/deposits in a cooperative bank meeting the defined criteria.

Relying on the precedent set by the Division Bench, the Tribunal overturned the previous order and directed the grant of deduction u/s.80P(2)(d) on the interest and dividend income earned from Pune District Central Co-operative Bank. Consequently, the appeal was allowed, and the decision was pronounced in the Open Court on 9th November 2022.

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