Interest from Co-op Banks qualifies for deduction under Section 80P!

The Tribunal allowed the appeal of the assessee regarding the disallowance of deduction under Section 80P(2)(d) of the Act. The Tribunal held that interest received from registered Co-operative Banks is eligible for deduction under Section 80P, following the decision of the Hon'ble Gujarat High Court. The Tribunal emphasized that Section 80P(2)(d) does not differentiate the source of investment, allowing deduction for any income derived by a co-operative society from any investment with a co-operative society. Consequently, the disallowance was overturned in favor of the assessee.

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Issues:
The appeal filed against the order passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2018-19.

Issue 1: Disallowance of deduction u/s.80P(2)(d) of the Act
The assessee, a Co-operative Society engaged in the business of cottage industry, claimed deduction under Section 80P for interest from Co-operative Banks and income from cottage industries. The Assessing Officer disallowed the interest amounting to Rs.28,04,714 under Section 80P(2)(d) of the Act. The CIT(A) confirmed this disallowance. However, the Tribunal held that the interest received from Co-operative Banks, being registered under Societies Act, is allowable under Section 80P(2)(d) as per the decision of the Hon'ble Gujarat High Court. The Tribunal observed that Section 80P(2)(d) does not distinguish the source of investment, allowing deduction for any income derived by a co-operative society from any investment with a co-operative society. Consequently, the Tribunal allowed the appeal of the assessee, overturning the disallowance.

Issue 2: Disallowance of employees' contribution to Provident Fund
Apart from the disallowance of interest under Section 80P(2)(d), the Assessing Officer also disallowed Rs.1,67,852 towards payment of employees' contribution to Provident Fund after the due date under Section 36(1)(va) of the Act. The CIT(A) upheld this disallowance, leading to the assessee filing an appeal. However, the Tribunal's decision focused solely on the disallowance under Section 80P(2)(d) and did not address this specific issue in its judgment.

Conclusion:
The Tribunal allowed the appeal of the assessee concerning the disallowance of deduction under Section 80P(2)(d) of the Act, emphasizing that interest received from registered Co-operative Banks is eligible for deduction under Section 80P. The Tribunal's decision was based on the interpretation of relevant legal provisions and precedents set by the Hon'ble Gujarat High Court, ultimately favoring the assessee in this matter.

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