Cooperative society gets Section 80P(2)(d) deduction on bank interest; verification needed for second bank's status

ITAT Indore upheld CIT(A)'s decision allowing deduction u/s 80P(2)(d) on interest from Bhopal Cooperative Central Bank for cooperative society assessee. However, regarding interest from Malwa Narmada Gramin Bank, the matter was remanded to AO for verification of bank's cooperative society status. If MNGB is confirmed as registered cooperative society, deduction u/s 80P(2)(d) must be allowed. Revenue's appeal dismissed; assessee's cross-objection allowed for statistical purposes.

---

---

Issues Involved:
1. Deduction claim u/s 80P(2)(d) for interest earned on FDR.
2. Deduction claim u/s 80P(2)(d) for dividend income.

Summary:

Issue 1: Deduction Claim u/s 80P(2)(d) for Interest Earned on FDR
The core issue revolves around whether the interest income received by a Cooperative Society from fixed deposits with a Cooperative Bank qualifies for deduction under Section 80P(2)(d) of the Income Tax Act. The Assessing Officer (AO) disallowed the deduction on the ground that the interest was received from a Cooperative Bank and not a Cooperative Society. However, the Commissioner of Income Tax (Appeals) [CIT(A)] allowed the deduction for interest received from Bhopal Cooperative Central Bank but disallowed it for interest from Malwa Narmada Gramin Bank (MNGB) due to lack of evidence proving MNGB as a Cooperative Society.

The Tribunal referred to the decision of the Pune Bench in the case of Rena Sahakari Sakhar Karkhana vs. Pr. CIT, which held that Cooperative Banks are essentially Cooperative Societies and interest income from such banks qualifies for deduction under Section 80P(2)(d). The Tribunal also cited the Indore Bench's decision in Indore Pragatishil Sahakari Sakh Sanstha Maryadit vs. ITO, which supported the view that interest income from Cooperative Banks is eligible for deduction under Section 80P(2)(d).

The Tribunal concluded that the CIT(A) correctly allowed the deduction for interest received from Bhopal Cooperative Central Bank, as it qualifies as a Cooperative Society. Thus, the revenue's appeal on this ground was dismissed.

Issue 2: Deduction Claim u/s 80P(2)(d) for Dividend Income
The Tribunal dismissed the revenue's appeal regarding the deduction for dividend income, stating that the conclusion on the first issue also applies to this matter. Therefore, the CIT(A)'s decision to allow the deduction for dividend income was upheld.

Cross Objection (CO) by the Assessee:
The assessee's CO pertained to the disallowance of the deduction for interest received from MNGB. The CIT(A) had disallowed this deduction due to insufficient details proving MNGB as a Cooperative Society. The assessee requested a remand to provide necessary details. The Tribunal agreed, remanding the issue to the AO for fresh adjudication after verifying whether MNGB is a Cooperative Society. If proven, the deduction under Section 80P(2)(d) should be allowed.

Conclusion:
The Tribunal dismissed the revenue's appeal and allowed the assessee's CO for statistical purposes, directing the AO to re-examine the eligibility of the interest income from MNGB for deduction under Section 80P(2)(d).

---