2024 (9) TMI 1897 - AT - Income Tax

Deduction for interest from co-operative bank deposits upheld for co-operative society under section 80P(2)(d).

Interest income earned by a co-operative society from deposits with a co-operative bank qualifies for deduction under section 80P(2)(d) because that ... Deduction u/s 80P(2)(d) - Interest received from co-operative bank - whether any interest received by the Cooperative Society from the 'Cooperative Bank' is eligible for deduction u/s(80P (2) (d)? HELD THAT: - The Tribunal held that the controversy stood covered by earlier Chandigarh Bench decisions which had construed the provision granting deduction for interest or dividend derived by a co-operative society from investments with another co-operative society. Following that view, it accepted that interest earned by a co-operative society from deposits with a co-operative bank qualifies for deduction under section 80P(2)(d). It also adopted the reasoning that the exclusion concerning co-operative banks operates where the assessee itself is a co-operative bank claiming deduction, and does not defeat the claim of a co-operative society receiving interest from a co-operative bank. [Paras 7, 8, 9] The disallowance of the deduction claimed on interest from The Ludhiana Central Co-operative Bank Limited was deleted. Final Conclusion: The Tribunal allowed the appeal and held that the assessee, being a co-operative society, was entitled to deduction under section 80P(2)(d) on the interest earned from deposits with The Ludhiana Central Co-operative Bank Limited. Issues: Whether interest income earned by a co-operative society from deposits placed with a co-operative bank is eligible for deduction under section 80P(2)(d) of the Income-tax Act, 1961.Analysis: The deduction under section 80P(2)(d) applies where the assessee is a co-operative society and the income is by way of interest or dividend derived from investments with any other co-operative society. The provision does not impose any further restriction based on the nature or source of the investment. The exclusion in section 80P(4) operates only in relation to a co-operative bank claiming deduction under section 80P and does not take away the entitlement of a co-operative society under section 80P(2)(d). Applying the jurisdictional precedent, interest received from a co-operative bank, being a co-operative society, satisfies the statutory condition for deduction.Conclusion: The interest income earned from the co-operative bank was held eligible for deduction under section 80P(2)(d), and the disallowance was deleted.