Appeal Dismissed: Deduction Denied for Interest Income from Banks

The Tribunal dismissed the appeal, upholding the decision to disallow the deduction under Section 80P(2)(d) for interest income from fixed deposits with cooperative banks and nationalized banks. The Tribunal relied on the jurisdictional High Court's judgment and legislative intent, stating that cooperative banks are excluded from the benefits of this deduction. The assessee can still avail of setting off losses as per the law.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Eligibility of deduction under Section 80P(2)(d) of the Income Tax Act, 1961 on interest income from fixed deposits with co-operative banks and nationalized banks.

Condonation of Delay:
The assessee filed an appeal with a delay of 57 days, explaining that the delay was due to the order being found in the 'Promotions Category' of their email. The Tribunal accepted the explanation and condoned the delay, citing the Hon'ble Apex Court judgment in the case of Collector, Land Acquisition Vs. MST. Katiji and Others (1987) 167 ITR 471, stating there was "sufficient and reasonable cause for the delay."

Eligibility of Deduction under Section 80P(2)(d):
The assessee, a cooperative society, claimed a deduction under Section 80P(2)(d) for interest income earned from fixed deposits with The Mysore and Chamrajnagar District Co-operative Central Bank Ltd. and Punjab National Bank. The AO disallowed the claim, treating the interest income as "income from other sources" under Section 56, not operational income, thereby denying the deduction. The CIT(Appeals) upheld the AO's decision, stating that cooperative banks are not the same as cooperative societies and are governed by the Banking Regulation Act, 1949.

The Tribunal referenced the jurisdictional High Court's judgment in PCIT v. Totagars Co-operative Sale Society (2017) 83 taxmann.com 140 (Karnataka), which clarified that interest income from investments in cooperative banks is not eligible for deduction under Section 80P(2)(d), as cooperative banks are excluded from the term 'cooperative society' for the purposes of this deduction.

The Tribunal also noted that the legislative intent, as clarified by amendments and judicial precedents, excludes cooperative banks from the benefits of Section 80P(2)(d). Therefore, the interest income earned from fixed deposits with cooperative banks and nationalized banks is not deductible under Section 80P(2)(d).

Conclusion:
The Tribunal dismissed the appeal, upholding the CIT(Appeals)'s decision to disallow the deduction under Section 80P(2)(d) for interest income from fixed deposits with cooperative banks and nationalized banks, following the jurisdictional High Court's judgment and legislative intent. The assessee is, however, eligible for setting off of losses as per law.

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