Cooperative society entitled to full deduction under Section 80P(2)(d) for interest from cooperative bank investment

The ITAT Surat allowed the assessee's appeal regarding deduction under Section 80P(2)(d) for interest received from a cooperative bank. The tribunal held that this provision permits full deduction of income by way of interest or dividends derived by a cooperative society from investment with any other cooperative society, without distinction regarding the source of investment. The tribunal rejected the Revenue's argument about adjustments, stating that the provision does not require consideration of whether interest paid exceeds interest received or the nature of investment funds. The decision followed precedent from The Amroli Vibhag case, with Revenue unable to produce contrary material.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Deduction under Section 80P(2)(d) of the Income Tax Act, 1961.
3. Correct computation of demand by the Assessing Officer.

Condonation of Delay:
The appeal filed by the assessee was barred by a delay of 146 days. The assessee's counsel explained that the delay was due to the accountant's father's illness and subsequent death. The Tribunal noted that "substantial justice deserves to be preferred" over technical considerations and found the reasons for the delay convincing. Therefore, the delay was condoned, and the appeal was admitted for hearing.

Deduction under Section 80P(2)(d):
The assessee claimed a deduction under Section 80P(2)(d) of the Act, which was initially denied by the CIT(A). The Tribunal observed that the CIT(A) had merely copied the previous year's order without considering the specific facts of the current assessment year. It was noted that the issue was "squarely covered by the judgement of the Coordinate Bench of Surat" in a similar case. The Tribunal cited the Hon'ble Gujarat High Court's decision in Surat Vankar Sahakari Sangh Ltd. vs. ACIT, which held that interest income from deposits in co-operative banks is eligible for deduction under Section 80P(2)(d). Consequently, the Tribunal directed the Assessing Officer to allow the deduction.

Correct Computation of Demand:
The assessee contended that the Assessing Officer had not computed the correct demand as per the provisions of the Act. The Tribunal instructed the Assessing Officer to compute the correct demand in accordance with the law.

Conclusion:
The Tribunal allowed ground Nos. 1 and 2 raised by the assessee, directing the Assessing Officer to allow the deduction under Section 80P(2)(d) and to compute the correct demand. Ground Nos. 3 to 6 were deemed consequential/general and did not require adjudication. The appeal filed by the assessee was allowed, and the order was pronounced on 31/01/2024 in the open court.

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