Assessee wins deduction u/s 80P(2)(d) for cooperative bank deposit interest income

ITAT Mumbai allowed assessee's appeal regarding deduction u/s 80P(2)(d) for interest income from cooperative bank deposits. CIT(A) had upheld AO's disallowance, incorrectly finding no claim was made and that cooperative banks don't qualify as cooperative societies. ITAT found the claim was properly made in return and relied on SC precedent in Mavilayi Service Co-op Bank Ltd establishing that cooperative banks are eligible for deduction unless they hold RBI license and operate as commercial banks. Lower authorities failed to examine the specific cooperative bank's eligibility criteria, and coordinate benches had previously allowed similar deductions.

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Issues:
1. Disallowance of deduction u/s 80P(2)(d) for interest income earned on deposits with Co-operative Banks.
2. Denial of credit for self-assessment tax claimed in the return.

Detailed Analysis:
Issue 1: The appeal was filed challenging the disallowance of deduction u/s 80P(2)(d) for interest income earned on deposits with Co-operative Banks. The Assessing Officer disallowed the deduction along with denying credit for self-assessment tax. The Commissioner of Income Tax (Appeals) upheld the disallowance, stating that Co-operative Banks do not fall under the category of 'Co-operative Society.' The Tribunal observed that the assessee had claimed the deduction in the return of income, contrary to the CIT(A)'s finding. The Tribunal referred to previous decisions and the judgment in The Mavilayi Service Co-op. Bank Ltd. vs. CIT, Calicut to establish the eligibility of Co-operative Banks for the deduction u/s 80P(2)(d). As there were no changes in circumstances, the Tribunal directed the AO to grant the deduction as claimed by the assessee.

Issue 2: The second issue pertained to the denial of credit for self-assessment tax. The Tribunal directed the AO to grant credit for the self-assessment tax amount subject to verification and in accordance with the law. As the Tribunal had decided the main issue on the merits of the appeal, the first ground raised by the assessee was considered academic and required no separate adjudication.

In conclusion, the Tribunal partly allowed the appeal filed by the assessee, granting relief on both the disallowance of deduction u/s 80P(2)(d) and the denial of credit for self-assessment tax. The judgment was pronounced in the open court on 24.09.2024.

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