Interest Income from Cooperative Banks Qualifies for Deduction u/s 80P(2)(d), ITAT Rules in Favor of Assessee.

The ITAT allowed the assessee's appeal, directing the AO to delete the disallowance of deductions under Section 80P(2)(d) of the Income Tax Act. The Tribunal concluded that interest income earned from cooperative banks qualifies for deduction, aligning with prior decisions and interpreting cooperative banks as cooperative societies.

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Issues:
1. Disallowance of deduction under Section 80P(2)(d) of the Income Tax Act.
2. Interpretation of interest income earned from cooperative banks for deduction eligibility.

Analysis:

Issue 1: The appeal by the assessee was against the order of the National Faceless Appeal Centre, Delhi for the Assessment Year 2018-19. The assessee contended that the Commissioner of Income Tax (Appeals) erred in confirming the addition made by the Assessing Officer order passed under Section 154. The assessee also raised concerns regarding the disallowance of deduction under Section 80P(2)(d) of Rs. 1,21,015. The ld. CIT(A) upheld the adjustment made by the Central Processing Centre, disallowing the deduction claimed by the assessee. The Tribunal, after considering the submissions, directed the Assessing Officer to delete the entire disallowance, thereby allowing the appeal of the assessee.

Issue 2: The dispute revolved around the interpretation of interest earned on fixed deposit with Surat District Cooperative Bank for deduction under Section 80P(2)(d) of the Act. The Tribunal observed that the ld. CIT (A) did not dispute the earning of interest income from the cooperative bank. The Tribunal noted that the cooperative banks are primarily considered as cooperative societies, making interest earned on deposits with such banks eligible for deduction under Section 80P(2)(d) of the Act. Citing previous decisions and following the jurisprudence set by the Hon'ble Jurisdictional High Court, the Tribunal directed the Assessing Officer to delete the disallowance, thereby allowing the appeal of the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the eligibility of interest income earned from cooperative banks for deduction under Section 80P(2)(d) of the Income Tax Act. The decision was based on the consistent view taken in previous cases and in alignment with the interpretation of cooperative banks as cooperative societies.

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