2019 (1) TMI 2066 - AT - Income Tax

Tax Exemption Granted: Cooperative Society Wins Deduction Claim for Interest Income Under Section 80P(2)(a)(i)

ITO, Ward-1 (1), Nashik Versus Swa Ashokrao Bankar Nagari Sahakari Patsanstha Maryadit, Sanskruti

ITAT Pune ruled in favor of a cooperative society, allowing a deduction under Section 80P(2)(a)(i) for interest income earned from banks. Following the ... Deduction u/s. 80P(2)(a)(i) on interest income earned from banks other than cooperative banks - assessee is a cooperative society engaged in providing credit facilities to its members. Return was filed declaring NIL income after availing deduction u/s. 80P - AO observed that the assessee earned interest income from banks, which, in his opinion was not eligible for deduction u/s. 80P - HELD THAT:- As no change in the legal position prevailing on this issue after the passing of the order by the Pune Bench of the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit [2015 (8) TMI 1085 - ITAT PUNE] and a host of other orders reiterating the similar view, respectfully following the precedent, we approve the impugned order in allowing deduction u/s. 80P on the interest income. Revenue appeal dismissed. The judgment from the ITAT Pune involves an appeal by the Revenue against the order of the CIT(A)-1, Nashik, concerning the assessment year 2013-14. The central issue is whether the interest income of Rs. 72,93,770/- earned by a cooperative society from banks other than cooperative banks qualifies for a deduction under Section 80P(2)(a)(i) of the Income-tax Act, 1961.The Assessing Officer (AO) had disallowed this deduction, a decision upheld in the first appeal. However, the Tribunal referenced a precedent set by the Pune Bench in the case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO, which allowed such a deduction under similar circumstances. This decision considered conflicting judgments from the Karnataka High Court, which allowed the deduction, and the Delhi High Court, which did not, both referencing the Supreme Court's decision in Totgar's Cooperative Sale Society Ltd.The Tribunal, noting the absence of a direct judgment from the jurisdictional High Court, chose to follow the Karnataka High Court's favorable view for the assessee. Consequently, the Tribunal upheld the CIT(A)'s order allowing the deduction under Section 80P for the interest income, leading to the dismissal of the Revenue's appeal. The order was pronounced on January 23, 2019.