Deduction allowed on interest income from cooperative and nationalized banks under sec. 80P(2)(d) and 80P(2)(a)(i). The Tribunal allowed the deduction u/s.80P(2)(d) on interest income from cooperative banks, citing eligibility of cooperative societies for such ...
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Deduction allowed on interest income from cooperative and nationalized banks under sec. 80P(2)(d) and 80P(2)(a)(i).
The Tribunal allowed the deduction u/s.80P(2)(d) on interest income from cooperative banks, citing eligibility of cooperative societies for such deduction. Additionally, the Tribunal upheld the deduction u/s.80P(2)(a)(i) on interest income from nationalized banks, following the precedent set by the Karnataka High Court due to conflicting views from other High Courts. The impugned order was overturned, and the appeal was allowed for both deductions.
Issues involved: The denial of deduction u/s.80P of the Income-tax Act in relation to interest income earned from Cooperative banks and Nationalised banks.
Deduction u/s.80P on interest income from Cooperative banks: The appellant claimed deduction u/s.80P on net interest income after reducing expenses from the gross amount earned from banks. The Assessing Officer initially denied the deduction, but the first appeal upheld it. The Tribunal referred to previous decisions by the Pune Benches and cited Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr.CIT, stating that co-operative societies are eligible for deduction on interest income from investments/deposits with registered co-operative banks. Following this, the impugned order was overturned, and deduction u/s.80P(2)(d) was directed to be granted on interest earned from various cooperative banks.
Deduction u/s.80P on interest income from Nationalised banks: Regarding the allowability of deduction u/s.80P(2)(a)(i) on interest income from deposits with Nationalised banks, the Tribunal referenced the case of Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT. The Tribunal noted conflicting views from different High Courts but ultimately followed the precedent set by the Hon'ble Karnataka High Court. As no direct judgment from the jurisdictional High Court was presented, the Tribunal upheld the deduction on interest income earned from nationalised banks under u/s.80P(2)(a)(i) of the Act. Consequently, the impugned order was overturned, and the appeal was allowed.
Separate Judgment: The order was pronounced by Shri R.S. Syal, Vice President, in the Open Court on 19th May 2023.
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