Co-op society wins appeal for deduction on interest income from co-op banks

The appeal was allowed by the Tribunal, overturning the decision of the CIT(A) and directing the grant of deduction u/s.80P(2)(d) on the interest income earned from cooperative banks by the cooperative credit society. The Tribunal clarified that co-operative societies are eligible for this deduction on interest income from investments/deposits in co-operative banks registered under the Co-operative Societies Act, in line with previous decisions by the Pune Benches.

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Issues involved:
The denial of deduction u/s.80P of the Income-tax Act on interest income earned from various cooperative banks.

Comprehensive details:
The appeal arises from an order passed by the CIT(A) in National Faceless Appeal Centre (NFAC), Delhi, regarding the assessment year 2018-19. The sole issue raised is the denial of deduction u/s.80P on interest income of Rs.22,52,021/- earned from cooperative banks. The assessee, a cooperative credit society, had this interest income disallowed by the AO under section 80P(2)(d) and added back to total income as 'income from other sources'. The CIT(A) upheld this decision, leading the assessee to approach the Tribunal.

Upon review, it was found that the question at hand pertains to granting deduction u/s.80P on interest income from cooperative banks. Referring to previous decisions by the Pune Benches, it was clarified that co-operative societies are eligible for deduction u/s.80P(2)(d) on interest income from investments/deposits in co-operative banks, provided the banks are registered as per the Co-operative Societies Act. Following a specific case law, the Tribunal overturned the previous order and directed the grant of deduction u/s.80P(2)(d) on the interest earned from various cooperative banks.

As a result of the Tribunal's decision, the appeal was allowed, and the order was pronounced in the Open Court on 26th April, 2023.

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