2025 (6) TMI 2086 - AT - Income Tax

Co-operative society's interest from co-operative bank investments qualifies for s.80P(2)(d) tax deduction; denial overturned, claim allowed.

The dominant issue was whether interest earned by a co-operative society from investments with co-operative banks qualifies for deduction under s. ... Denial of benefit u/s. 80P(2)(d) - interest earned from Cooperative Banks - HELD THAT:- We notice that the assessee is a Cooperative Society and has earned interest from the investments made with Cooperative Banks. Assessee has claimed deduction u/s.80P which is less than the interest income from Cooperative Banks. This Tribunal is taking consistent view that interest income received from Cooperative Banks is also eligible for deduction u/s. 80P(2)(d) of the Act as the Cooperative Banks are basically Cooperative Societies. Issue decided in favour of the assessee and allow the claim of deduction u/s. 80P(2)(d). 1. ISSUES PRESENTED AND CONSIDERED 1. Whether interest earned by a co-operative society from investments made with co-operative banks qualifies for deduction under section 80P(2)(d) of the Income Tax Act, 1961. 2. Whether, on the facts of the year, the assessee's claimed deduction amount (being less than the interest income from co-operative banks) was to be allowed under section 80P(2)(d). 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Deductibility under section 80P(2)(d) of interest earned from co-operative banks Legal framework (as considered by the Court): The Tribunal examined the assessee's claim specifically under section 80P(2)(d) in relation to 'interest income received from co-operative banks' and assessed eligibility on the premise that co-operative banks are 'basically co-operative societies'. Interpretation and reasoning: The Tribunal noted that the assessee is a co-operative society and that the interest in question arose from investments placed with co-operative banks. It applied its consistent view that interest received from co-operative banks is eligible under section 80P(2)(d) because co-operative banks are essentially co-operative societies. The Tribunal relied on and followed its own decision in the assessee's case for a later year, treating it as determinative of the same issue, and also recorded that the departmental side did not oppose the assessee's request. Conclusion: Interest earned from investments with co-operative banks was held to be eligible for deduction under section 80P(2)(d). Issue 2: Allowability of the deduction amount claimed for the year Legal framework (as considered by the Court): The Tribunal confined itself to the deduction claim under section 80P(2)(d) in respect of interest from co-operative banks. Interpretation and reasoning: The Tribunal recorded that the assessee earned interest of Rs. 1,48,18,262 from co-operative banks and claimed deduction under section 80P at Rs. 72,30,149, which was less than the interest income from co-operative banks. Following the earlier co-ordinate bench decision in the assessee's own case and reiterating the consistent approach on this question, the Tribunal held that the deduction claim for the stated amount should be granted. Conclusion: The deduction under section 80P(2)(d) was allowed to the extent of Rs. 72,30,149, and the appeal was allowed.