Co-op Bank wins appeal for interest income deduction under Section 80P(2)(d)

The Tribunal allowed the appeal against the order of the National Faceless Appeal Centre (NFAC), Delhi, disallowing interest income from FDRs with the Ahmedabad District Cooperative Bank for the Assessment Year 2017-18. The Tribunal held that the bank, being a Co-operative Society, justified deduction under Section 80P(2)(d) of the Act, in line with relevant court decisions and the Gujarat High Court's stance. The appeal was allowed, overturning the CIT(A)'s decision, and the assessee was deemed eligible for the deduction.

---

---

Issues involved:
The appeal against the order passed by CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18.

Grounds of appeal:
1. Disallowance of interest received on FDRs with the Ahmedabad District Cooperative Bank under Section 80P(2)(d) of the Act.
2. Non-allowance of deduction of interest under Section 80P(2)(d) of the Act.
3. Distinguishing decisions of Gujarat High Court to justify the disallowance of interest on FD with ADC Bank.
4. Ignoring a decision directing the allowance of interest on FDR with ADC Bank.
5. Acceptance of NIL return of income without any addition.
6. Levy of interest u/s.234A, 234B, 234C, and 234D without furnishing the computation sheet.

Judgment Details:
The assessee, a Co-operative Society engaged in milk collection and supply, filed its return of income for A.Y. 2017-18 claiming deduction under Section 80P. The Assessing Officer disallowed interest income from FDR with Ahmedabad District Co-operative Bank, leading to an appeal before CIT(A) which was dismissed.

The AR argued that the bank being a Co-operative Society justifies deduction under Section 80P(2)(d), citing relevant court decisions and a similar case where deduction was allowed. The DR supported the previous orders and highlighted the distinction between Section 80P(2)(a)(i) and 80P(2)(d).

The Tribunal noted the bank's registration under the Societies Registration Act and the Gujarat High Court's stance on deductions under Section 80P(2)(d) for income from Co-operative Societies. As the bank is also a Co-operative Society, the assessee was deemed eligible for the deduction. The appeal was allowed, and the order was pronounced on May 10, 2023.

---