Vice President allows deduction under section 80P(2)(d) for interest income from cooperative banks.

The Vice President overturned the CIT(A)'s orders and directed the deduction u/s 80P(2)(d) of the Income-tax Act to be granted on interest income earned from cooperative banks for the assessment years 2018-19 & 2020-21. As a result, both appeals were allowed, with the judgment pronounced on 18th May 2023.

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Issues:
The judgment involves the issue of deduction u/s 80P of the Income-tax Act on interest income earned from cooperative banks for the assessment years 2018-19 & 2020-21.

Comprehensive Details:

1. Background and Appeal: The appeals by the assessee were filed against the ex parte orders passed by the CIT(A) in relation to the assessment years 2018-19 & 2020-21, disallowing the deduction claimed u/s 80P amounting to Rs.22,40,771/- and Rs.26,85,471/- towards interest income earned from cooperative banks.

2. Decision Basis: The issue revolved around the eligibility of cooperative societies for deduction u/s 80P(2)(d) of the Act on interest income from cooperative banks. The Pune Bench's decision in Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr.CIT clarified that despite certain co-operative banks not being eligible for deduction under section 80P(4) since 1.4.2007, a registered cooperative society can claim deduction u/s 80P(2)(d) on interest income from investments/deposits in a cooperative bank meeting the criteria of a registered cooperative society under the Act.

3. Judgment: The Vice President, following the precedent set by the Division Bench, overturned the orders of the CIT(A) and directed to grant deduction u/s 80P(2)(d) of the Act on the interest income earned from various cooperative banks for the respective assessment years.

4. Outcome: Consequently, both appeals were allowed, and the order was pronounced in the Open Court on 18th May 2023.

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