Cooperative society gets section 80P(2)(a)(i) deduction for interest income from nationalized bank fixed deposits

ITAT Pune allowed deduction under section 80P(2)(a)(i) for interest income from fixed deposits with nationalized banks. The tribunal relied on its earlier decision in Sumitra Gramin Bigar Sheti Sahakari Pat Sanstha Maryadit and Madras HC ruling in Thorapadi Urban Co-operative Credit Society Ltd., which held similar interest income eligible for section 80P(2)(d) deduction. Following these precedents, ITAT directed the Assessing Officer to allow the deduction, deciding in favor of the assessee.

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Issues:
The issues involved in this case are the eligibility for deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 for interest income earned by a Credit Co-operative Society from banks, and the denial of deduction by the Assessing Officer leading to an appeal before the Appellate Tribunal ITAT Pune.

Issue 1: Deduction under section 80P(2)(a)(i) of the Act

The appellant contested the addition made by the Assessing Officer on the grounds that interest income earned from providing credit facility to members should be treated as an activity covered under section 80P(2)(a)(i) of the Act. The appellant argued that the interest income from cooperative banks is eligible for deduction under section 80P. The Tribunal referred to a previous decision by ITAT Pune in a similar case and upheld the deduction under section 80P(2)(a)(i) for the appellant, citing the rule of consistency.

Issue 2: Application of Principle of Consistency

The appellant also raised the issue of the Principle of Consistency, arguing that the claim for deduction under section 80P should be allowed based on consistent treatment in previous assessment years. The Tribunal acknowledged the principle of consistency and directed the Assessing Officer to allow the deduction under section 80P(2) of the Act for the interest income earned by the appellant from cooperative banks, in line with the previous decision and the rule of consistency.

Conclusion:

The Appellate Tribunal ITAT Pune allowed the appeal of the assessee, directing the Assessing Officer to allow deduction under section 80P(2) of the Act for the interest income earned by the Credit Co-operative Society from banks. The Tribunal relied on a previous decision by ITAT Pune and the rule of consistency in upholding the appellant's claim for deduction under section 80P.

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