Credit cooperative society eligible for Section 80P(2)(d) deduction on interest income from cooperative banks, reopening under Section 147 invalid

ITAT Mumbai held that reopening of assessment under Section 147 was invalid as no tangible material existed to justify reopening beyond four years, constituting mere reappraisal of facts. The tribunal ruled that assessee, being a credit cooperative society and not a cooperative bank, was eligible for deduction under Section 80P(2)(d) on interest income from cooperative banks. The AO erroneously treated assessee as primary cooperative bank without basis. Following SC precedents in Kerala State Cooperative Agricultural Rural Development Bank Ltd and Mavilayi Service Cooperative Bank Ltd, the tribunal allowed the appeal and directed grant of Section 80P(2)(d) deduction.

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Issues Involved:
The judgment involves appeals filed by the assessee for various assessment years regarding the allowability of deduction under Section 80P(2)(a) or 80P(2)(d) of the Income-tax Act, 1961, related to interest income earned from cooperative banks.

A.Y. 2013-14:
The assessee contested the validity of reopening of assessment, denial of deduction under Section 80P(2)(a) and (d) of the Act, and the application of the judgment of the Honorable Supreme Court. The Assessing Officer denied the deduction under Section 80P(2)(a) and (d) of the Act, considering the assessee as a primary cooperative bank. The CIT (A) allowed the deduction under Section 80P(2)(d) based on the Supreme Court decision and directed the assessment of interest earned from cooperative banks separately.

A.Y. 2014-15:
The same issues as in A.Y. 2013-14 were raised, and the CIT (A) partly allowed the appeal. The Tribunal reversed the lower authorities' orders, holding that the assessee is eligible for deduction under Section 80P(2)(d) of the Act.

A.Y. 2017-18:
The Assessing Officer disallowed the deduction under Section 80P(2)(a) and (d) of the Act. The CIT (A) directed eligibility for deduction under Section 80P(2)(d) only from cooperative societies and banks without RBI licenses. The Tribunal allowed the appeal, granting deduction under Section 80P(2)(d) for interest income from cooperative banks.

A.Y. 2018-19 and 2020-21:
Similar issues of denial of deduction under Section 80P(2)(d) for interest income from cooperative banks were raised. The Tribunal allowed the appeals, following the reasoning from previous years and granting the deduction under Section 80P(2)(d) of the Act.

Conclusion:
The Tribunal allowed all five appeals filed by the assessee, holding that interest income earned from cooperative banks is eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961. The orders of the lower authorities were reversed, and the Assessing Officer was directed to grant the deductions accordingly.

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