2023 (11) TMI 28 - AT - Income Tax

Primary Agricultural Credit Society gets Section 80P(2)(d) deduction for interest income from Co-operative bank investment

M/s. Kangayam Primary Agricultural Co-operative Credit Society Versus The Income Tax Officer, Ward 1 (4), Tirupur.

ITAT Chennai allowed deduction u/s. 80P(2)(d) for interest income from investment in Co-operative bank. The assessee, a Primary Agricultural Credit ... Deduction u/s. 80P(2)(d) - interest income from investment in Co-operative bank - assessee is a Primary Agricultural Credit Society registered under the Tamil Nadu Cooperative Societies Act, 1983 carrying on the business of banking or providing credit facilities to its members - HELD THAT:- Hon’ble Supreme Court has considered the identical issue in the case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd [2023 (9) TMI 761 - SUPREME COURT] wherein as stated that the Central Co-operative Bank is a Co-operative Society which is registered under the Kerala State Co-operative Societies Act, then it is not a bank per se governed by RBI. Similarly in the present case before us, the Erode District Central Co-operative Bank also governed by Tamil Nadu Co-operative Societies Act and once it is governed by Co-operative Societies Act, the assessee is eligible for claim of deduction u/s. 80P(2)(d) - Claim of assessee allowed. Issues:The only issue in this appeal is the disallowance of deduction u/s. 80P(2)(d) of the Income Tax Act related to interest income from investment in a Co-operative bank.Facts:The appellant, a primary agricultural credit society, filed its return of income for the assessment year 2016-17, claiming deduction u/s. 80P of the Act. The AO disallowed the deduction and interest income from Erode District Central Co-operative Bank. The CIT(A) allowed the deduction on business income but upheld the disallowance of interest income. The appellant appealed to the Tribunal.Decision:The Tribunal noted that the Erode District Central Co-operative Bank is governed by RBI regulations and falls under section 80P(4) of the Act. The Tribunal referred to previous judgments and held that the appellant, being a Co-operative Society, is entitled to the deduction u/s. 80P(2)(d) of the Act. The Tribunal dismissed the Revenue's appeal and directed the Assessing Officer to allow the deduction for the appellant.Judge's Separate Opinion:No separate judgment was delivered by the judges in this case.This summary provides a detailed overview of the legal judgment regarding the disallowance of deduction u/s. 80P(2)(d) of the Income Tax Act related to interest income from investment in a Co-operative bank. The Tribunal ruled in favor of the appellant, a primary agricultural credit society, allowing the deduction based on the specific provisions and previous judgments cited in the case.