Deduction under s. 80P(2)(d) allowed on interest from co-operative bank, following consistent precedents for assessee

The ITAT Surat allowed the assessee's claim for deduction under s. 80P(2)(d) on interest income received from a co-operative bank. The Tribunal held that the issue is squarely covered by consistent coordinate bench rulings and the binding precedent of the jurisdictional HC in Surat Vankar Sahakari Sangh Ltd., which recognize such interest as eligible for deduction under s. 80P(2)(d). Relying also on its recent decision in Althan Bhatar Cooperative Credit Society Ltd., the ITAT reversed the disallowance and allowed Ground No. 1 in favour of the assessee.

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Assessee, a co-operative society, appealed against disallowance of deduction under section 80P(2)(d) on interest of Rs. 2,08,760 received from Surat District Co-operative Bank for AY 2017-18. The lower authorities treated the interest from a co-operative bank as ineligible for deduction under section 80P(2)(d). The Tribunal noted that there was no dispute regarding the nature or amount of interest income and that this issue is "squarely covered" by a series of decisions of the Surat Bench and other benches of the Tribunal, as well as the jurisdictional High Court in The Surat Vankar Sahakari Sangh Ltd. v. ACIT. Following these precedents, including the recent decision in Althan Bhatar Cooperative Credit Society Ltd. v. ACIT, the Tribunal held that a co-operative bank is "primarily a co-operative society" and that interest received from it qualifies for deduction under section 80P(2)(d). Ground No. 1 was allowed, and the alternative grounds under sections 80P(2)(a)(i) and netting of interest were rendered academic.

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