2026 (7) TMI 1028

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....(3) of the Income Tax Act [hereinafter referred as "the Act"]. 2. The brief facts of the case are that the assessee had filed its return of income for A.Y. 2017-18 on 05.09.2017 declaring total income of Rs. 78,100/- after claiming deduction of Rs. 1,22,83,349/- u/s. 80P of the Act. The case was selected for limited scrutiny under CASS to examine the deduction claimed us/. 80P(2)(d) of the Act. The assessee is a Cooperative Credit Society engaged in providing credit facilities to its members. The AO noticed that the assessee had received interest of Rs. 1,67,82,071/- from Co-operative banks which was not eligible for deduction us/. 80P(2)(d) of the Act. Therefore, the entire interest of Rs. 1,67,82,071/- received from Co-operative banks ....

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....e to add, alter and/or to amend all or any of the grounds of appeal on or before the final date of hearing of the appeal. 5. Ground No. 1 pertains to not allowing deduction of Rs. 1,22,83,349/- u/s. 80P(2)(d) of the Act, in respect of interest received from Co-operative societies/banks. Shri Shailesh Gandhi, the Ld. AR of the assessee explained that though the assessee had claimed deduction of Rs. 1,22,83,349/- only u/s. 80P(2)(d) of the Act in its ITR, the AO had disallowed the gross interest of Rs. 1,67,82,071/- received from three Cooperative banks in the assessment order. He submitted that the Cooperative Societies and Co-operative banks are not separate and distinct legal entity but both have the same legal personality as the Co-ope....

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....ion u/s. 80P(2)(d) of the Act. This issue has since been adjudicated by the Hon'ble Jurisdictional High Court. The Hon'ble Gujarat High Court in the case of Ashwinkumar Arban Co-operative Society Limited (supra) has held that the Co-operative Bank is a Co-operative Society registered under Gujarat State Co-operative Societies Act and accordingly deduction under Section 80P(2)(d) of the Act was admissible to the interest derived from Co-operative Banks. Therefore, the Assessing Officer was not correct in denying the deduction under Section 80P(2)(d) of the Act in respect of interest income received from other Co-operative Banks. From the details available on record, it is found that the entire FDR interest of Rs. 1,67,82,071/- was received f....