Co-operative society wins deduction under section 80P(2)(d) for gross interest from co-operative bank without adjusting interest paid

The ITAT Surat ruled in favor of the assessee co-operative society, allowing deduction under section 80P(2)(d) for gross interest received from a co-operative bank. The tribunal held that the deduction should be calculated on gross interest without adjusting interest paid to the bank, relying on the Gujarat HC decision in Surat VankarSahakari Sangh Ltd. The assessee's appeal was allowed, establishing that the issue was no longer res judicata.

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Issues:
The judgment involves appeals filed by the assessee for Assessment Year (AY) 2017-18 against separate orders passed by the Learned Commissioner of Income Tax (Appeals), Surat, National Faceless Appeal Centre, arising out of separate assessment/rectification orders u/s 154 and 143(3) of the Income Tax Act, 1961.

Delay Condonation Issue:
The appeal in ITA No.115/SRT/2024 for AY 2017-18 was barred by limitation by 386 days. The assessee moved a petition for condonation of delay citing reasons such as delay due to the disposal of rectification application taking longer time from the office of the CIT(A). The delay was condoned by the Tribunal as the reasons provided were considered convincing and constituted a reasonable and sufficient cause for the delay in filing the appeal.

Merits of the Appeal:
On the merits, the assessee claimed deduction u/s 80P(2)(d) of the Act for interest received from a Co-operative Bank. The Tribunal, after considering arguments from both parties, relied on the decision of the Hon`ble Jurisdictional High Court of Gujarat in the case of Surat Vankar Sahakari Sangh Ltd. The High Court held that the interest received from a Co-operative Bank is an allowable deduction under section 80P(2)(d) of the Act, without adjusting interest paid to the bank. The Tribunal, respecting the High Court's decision, allowed the appeal filed by the assessee in ITA No.115/SRT/2024 for AY 2017-18.

Conclusion:
The appeal in ITA No.35/SRT/2024, against the order u/s 154 of the Act, was rendered infructuous and dismissed since the appeal in ITA No.115/SRT/2024 was allowed. In summary, the appeal in ITA No.115/SRT/2024 for AY 2017-18 was allowed, while the appeal in ITA No.35/SRT/2024 was dismissed.

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