Successful Appeal Allows Deduction for Interest Income from Co-operative Bank under Section 80P(2)(d) The appeal against the CIT(A)'s order for the Assessment Year 2018-19 was successful. The dispute revolved around whether interest received from Mehsana ...
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Successful Appeal Allows Deduction for Interest Income from Co-operative Bank under Section 80P(2)(d)
The appeal against the CIT(A)'s order for the Assessment Year 2018-19 was successful. The dispute revolved around whether interest received from Mehsana Urban Co-operative Bank qualified for deduction under Section 80P(2)(d). The Supreme Court's interpretation of Section 80P favored the assessee, recognizing the Mehsana Urban Co-operative Bank as eligible for the deduction. Consequently, the disallowance of Rs.17,30,372 was rejected, allowing the deduction claimed under Section 80P(2)(d) for the interest received from Mehsana Urban Co-operative Bank.
Issues: The appeal against the order passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2018-19.
Details: The assessee, a Co-operative Bank, filed a return of income declaring total income of Rs. Nil. The case underwent limited scrutiny due to discrepancies in disclosed loans/investments compared to capital. The Assessing Officer noted interest income discrepancies and disallowed Rs.17,30,372 claimed under Section 80P(2)(d) as interest received from Mehsana Urban Co-operative Bank, stating Urban Co-operative Banks are not within the ambit of Co-operative Societies.
Being dissatisfied, the assessee appealed before the CIT(A) who upheld the disallowance. The assessee argued entitlement to deduction under Section 80P(2)(d) citing a Supreme Court decision.
The dispute centered on whether interest received from Mehsana Urban Co-operative Bank qualified for deduction under Section 80P(2)(d). The Apex Court's liberal interpretation of Section 80P was crucial, emphasizing the promotion of the co-operative sector. Distinct from previous cases cited, the Mehsana Urban Co-operative Bank was considered a member Co-operative Society Bank, falling under the Co-operative Societies' umbrella and thus eligible for the claimed deduction.
Conclusively, the appeal was allowed, rejecting the disallowance and acknowledging the deduction under Section 80P(2)(d) for the interest received from Mehsana Urban Co-operative Bank.
Order pronounced on March 17, 2023.
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