Cooperative society without RBI banking license eligible for section 80P(2)(d) exemption on interest income from cooperative banks

ITAT Pune held that a cooperative society without RBI banking license remains eligible for exemption under section 80P(2)(d) for interest income from cooperative banks. Following precedent from coordinate bench, the tribunal ruled that absence of banking license means the entity cannot be termed a cooperative bank, thus qualifying for deduction under sections 80P(2)(a)(i) and 80P(2)(d). The assessing officer was directed to allow the deduction, and the assessee's appeal was allowed.

---

---

Issues involved: Allowability of exemption u/s 80P(2)(d) for interest income earned by a cooperative society from a cooperative bank.

The judgment deals with an appeal filed by the assessee against the order of the National Faceless Appeal Centre, Delhi, for the assessment year 2018-19. The appellant, a Cooperative Society, was denied deduction of interest income earned on fixed deposits with a cooperative bank by the Assessing Officer. The NFAC confirmed this decision based on relevant case laws. The appellant then appealed to the Tribunal. Despite no representation from the assessee, the Tribunal proceeded to hear the case. The main issue at hand was the allowability of exemption u/s 80P(2)(d) for interest income earned by a cooperative society from a cooperative bank. The Tribunal referred to a previous decision in favor of the appellant society and held that the interest income qualifies for deduction under both sections 80P(2)(a)(i) and 80P(2)(d) of the Act, directing the Assessing Officer to allow the deduction. Consequently, the appeal filed by the assessee was allowed.

In the present case, the only issue was the allowability of exemption u/s 80P(2)(d) for interest income earned by a cooperative society from a cooperative bank. The Tribunal considered relevant case laws and previous decisions to conclude that the interest income derived from deposits made with cooperative banks qualifies for deduction under both sections 80P(2)(a)(i) and 80P(2)(d) of the Act. The Tribunal rejected the reasoning of the lower authorities and directed the Assessing Officer to allow the deduction, ultimately allowing the appeal filed by the assessee.

---