2024 (3) TMI 536 - AT - Income Tax

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

Ajayshree Gramin Bigar Sheti Sahakari Patasanstha Maryadit, Versus The National Faceless Assessment Centre (NFAC), Delhi.

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 ... Disallowance of deduction claimed u/s 80P(2)(a)(i) - assessee had received interest income from fixed deposits kept with Nationalized Banks - HELD THAT:- We observed that the issue is covered by ITAT Pune Bench’s order in the case of Sumitra Gramin Bigar Sheti Sahakari Pat Sanstha Maryadit Mahaveer Path [2019 (1) TMI 1994 - ITAT PUNE] which has decided the same issue in favour of assessee. The Hon'ble Madras High Court in the case of Thorapadi Urban Co-operative Credit Society Ltd. [2023 (11) TMI 779 - MADRAS HIGH COURT] held that the assessee was eligible for deduction under section 80P(2)(d) of the Act on the Interest Received from Co-operative Banks. No direct decision of the Hon'ble Jurisdictional High Court has been brought to our notice. Therefore, respectfully following the above precedent and adopting the detailed reasoning above, we direct the Assessing Officer to allow deduction under section 80P(2) of the Act for the impugned income - Decided in favour of assessee. 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 ActThe 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 ConsistencyThe 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.