2025 (2) TMI 1677 - AT - Income Tax

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

Interest earned by a co-operative housing society from deposits placed with co-operative banks qualifies for deduction under section 80P(2)(d) of the ... Deduction u/s 80P(2)(d) - Interest received from co-operative banks - Co-operative bank treated as co-operative society AO disallowed claim of deduction u/s 80P(2)(d) on the plea that that as per section 2(19) the definition of Co-operative societies does not include 'bank' and accordingly co-operative banks can not be treated as co-operative societies - HELD THAT:- The Tribunal accepted the assessee's contention by following decision in Ashok tower 'D' Co. Op. Housing Society Ltd.[2024 (7) TMI 84 - ITAT MUMBAI] where in it was held that assessee co-operative housing society was eligible for deduction u/s 80P(2)(d) in respect of interest income earned by it from a co-operative bank and accordingly, AO was directed to grant deduction to assessee on interest income earned from cooperative banks u/s 80(2)(d) Proceeding on that basis, it held that the controversy stood covered in favour of the assessee and that the disallowance confirmed by the appellate authority could not be sustained. [Paras 9, 10] Final Conclusion: Following the co-ordinate Bench decision on the same point, the Tribunal held that the assessee was entitled to deduction under section 80P(2)(d) on interest received from co-operative banks. Assessee appeal allowed. Issues: Whether interest income earned by a co-operative housing society from investments with co-operative banks is eligible for deduction under section 80P(2)(d) of the Income-tax Act, 1961, and whether the disallowance sustained by the lower authorities was justified.Analysis: The Tribunal followed its coordinate bench decision holding that a co-operative bank falls within the expression co-operative society for the purpose of section 80P(2)(d). It noted that the statutory language grants deduction in respect of interest derived by a co-operative society from its investment with any other co-operative society, and that the definition of co-operative society under section 2(19) supports this reading. The Tribunal accepted that interest earned on deposits with co-operative banks is covered by the provision and that the lower authorities were not justified in denying the deduction.Conclusion: The issue was decided in favour of the assessee, and the deduction under section 80P(2)(d) was held allowable on interest received from co-operative banks.Final Conclusion: The assessee succeeded on the common issue in both assessment years, and the disallowances made by the revenue authorities were reversed.Ratio Decidendi: Interest earned by a co-operative society from deposits placed with a co-operative bank qualifies for deduction under section 80P(2)(d) of the Income-tax Act, 1961 because the bank is treated as a co-operative society for that purpose.