2023 (5) TMI 417 - AT - Income Tax

Appellate tribunal grants deduction under section 80P(2)(d) for interest income from Co-operative Bank.

Oberoi Spring Co–operative Housing Society Limited Versus Income Tax Officer Ward–24 (3) (1), Mumbai

Oberoi Spring Co–operative Housing Society Limited Versus Income Tax Officer Ward–24 (3) (1), Mumbai - TMI Issues:The judgment involves the challenge against the impugned order passed under section 250 of the Income Tax Act, 1961 by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for the assessment year 2016-17.Grounds Raised by Assessee:1. The appellant contested the restriction of deduction under section 80P(2)(d) in respect of interest received from Co-operative Bank.2. The appellant argued that interest directly credited to the Balance sheet should be eligible for deduction under section 80P(2)(d).3. The appellant claimed that total interest received from the Co-operative Bank should be allowed as a deduction under section 80P(2)(d).Assessee's Grievance:The sole issue in the appeal was the addition of interest received from Co-operative Bank directly credited to the Reserves and Surplus in the balance sheet.Facts of the Case:The assessing entity is a co-operative housing society formed for maintaining and protecting buildings. The Assessing Officer disallowed the deduction claimed under section 80P(2)(d) for interest income received from the Co-operative Bank, both directly credited to the Reserves and disclosed in the return of income.Decision on Grounds:- The learned CIT(A) upheld the deduction for interest income claimed in the return, citing that cooperative banks remain cooperative societies eligible for deduction under section 80P(2)(d).- However, the appeal regarding interest income transferred to repair and sinking funds was dismissed as it was not claimed in the return or under section 80P(2)(d).Appellate Tribunal's Ruling:- The Tribunal found that the interest credited to specific funds in the balance sheet, as per statutory requirements, should also be eligible for deduction under section 80P(2)(d).- Previous rulings and statutory compliance supported the assessee's claim for deduction on the entire interest income from the Co-operative Bank.- The Tribunal allowed the appeal, granting the assessee the deduction under section 80P(2)(d) on the total interest income received from the Co-operative Bank.Conclusion:The appeal by the assessee was allowed, and the judgment was pronounced on 08/05/2023.