Cooperative society entitled to section 80P(2)(d) deduction for interest income from fixed deposits with banks

ITAT PUNE allowed the appeal regarding deduction under section 80P(2)(d) for interest income earned by a cooperative society on fixed deposits with cooperative and nationalized banks. The tribunal relied on a coordinate bench decision in Ugar Sugar Works case, which held that interest income from deposits made from surplus funds with both cooperative and scheduled banks qualifies for deduction under sections 80P(2)(a)(i) and 80P(2)(d). The AO was directed to allow the deduction, rejecting the lower authorities' reasoning that denied the claim.

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Issues:
- Appeals filed against NFAC orders for AYs 2017-18, 2018-19, and 2020-21.
- Disallowance of deduction claimed under section 80P(2)(d) for interest income.
- Interpretation of eligibility for exemption under section 80P(2)(a)(i) and 80P(2)(d) for interest income from cooperative and nationalized banks.

Analysis:
AY 2017-18:
- The appellant, a Cooperative Society, filed a return for AY 2017-18 declaring Nil income after claiming deductions under Chapter VIA of the Act.
- The AO disallowed the deduction claimed under section 80P(2)(d) for interest income earned on FDs with cooperative and nationalized banks.
- NFAC confirmed the AO's action based on Karnataka and Gujarat High Court decisions.
- The appellant appealed to the Tribunal, but no representation was made by the appellant during the hearing.
- The Sr. DR supported the lower authorities' orders citing a Bangalore Tribunal decision.
- The only issue was the eligibility of the appellant for exemption under section 80P(2)(a)(i) or 80P(2)(d) for interest income from banks.
- The Tribunal referred to its earlier decision and held in favor of the appellant, allowing the deduction under both sections for interest income from cooperative and scheduled banks.

AYrs. 2018-19 & 2020-21:
- The facts in the appeals for these years were identical to AY 2017-18.
- The decision in AY 2017-18 was held applicable to the appeals for these years.
- Consequently, all three appeals were allowed in favor of the assessee.

In conclusion, the Tribunal allowed the appeals for AYs 2017-18, 2018-19, and 2020-21, directing the AO to allow deductions under section 80P(2)(a)(i) and 80P(2)(d) for interest income earned from cooperative and nationalized banks. The Tribunal's decision was based on the interpretation of relevant provisions and previous decisions favoring the assessee's eligibility for the exemptions claimed.

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