Tribunal grants exemption to credit cooperative society, allows deductions under sections 80P(2)(a)(i) and 80P(2)(d)

The tribunal allowed the assessee's appeal, rejecting the Revenue's disallowance of deductions under sections 80P(2)(a)(i) and 80P(2)(d). It held that the assessee, registered as a credit cooperative society, is eligible for exemption of income received from cooperative banks under section 80P(2)(d). Interest income earned by the appellant society on investments with cooperative banks, considered cooperative societies, is exempt. The Assessing Officer was directed to allow the deduction under section 80P(2)(d), and the appeal was allowed on 28th December 2022.

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Issues involved:
1. Disallowance of deductions under section 80P(2)(a)(i) and 80P(2)(d) by lower authorities.
2. Assessee's status as a cooperative bank or credit cooperative society.
3. Eligibility of exemption of income received from cooperative banks under section 80P(2)(d) of the Income Tax Act.

Analysis:
1. The appeal was against the Commissioner of Income Tax (Appeals) order disallowing deductions under section 80P(2)(a)(i) and 80P(2)(d). The first issue was the assessee's status as a cooperative bank or credit cooperative society. The tribunal referred to a recent landmark decision by the apex court which stated that the registration under the respective cooperative law determines the status. As the assessee was registered as a credit cooperative society, the Revenue's argument was rejected.

2. The second issue revolved around the eligibility of exemption of income received from cooperative banks under section 80P(2)(d). The tribunal cited a previous order which highlighted that cooperative banks are also cooperative societies despite having a banking license. Referring to decisions by various high courts and the Supreme Court, the tribunal held that interest income earned by the appellant society on investments made with cooperative banks, which are also cooperative societies, is exempt under section 80P(2)(d). The Revenue's arguments were rejected, and the Assessing Officer was directed to allow the deduction under section 80P(2)(d).

3. The tribunal rejected all arguments presented by the Revenue and allowed the assessee's appeal, directing the Assessing Officer to compute necessary deductions in accordance with the law. No other grounds or arguments were raised during the hearing, and the appeal was allowed accordingly. The order was pronounced in open court on 28th December 2022.

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