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

ITAT Chennai allowed deduction u/s. 80P(2)(d) for interest income from investment in Co-operative bank. The assessee, a Primary Agricultural Credit Society registered under Tamil Nadu Cooperative Societies Act, 1983, claimed deduction on interest from Erode District Central Co-operative Bank. Following SC precedent in Kerala State Co-operative Agricultural and Rural Development Bank Ltd, ITAT held that since the Co-operative Bank is governed by State Co-operative Societies Act rather than RBI regulations, it qualifies as a co-operative society, making the assessee eligible for the deduction.

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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.

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