Kumbarara Gudi Kaigarika Vs ITO (ITAT Bangalore)
ITAT Bangalore: Deduction under Section 80P Allowed on Interest from Co-operative Banks
The ITAT Bangalore Bench allowed the appeals of a co-operative society, holding that interest income earned from investments with co-operative banks / co-operative societies is eligible for deduction under section 80P. The Tribunal observed that merely because interest income is earned from bank deposits, it does not cease to be business income of a co-operative society engaged in eligible activities.
It was noted that the Assessing Officer himself accepted eligibility under section 80P(2)(d) for interest from co-operative societies, and therefore there was no justification to deny deduction under section 80P(2)(b). The CIT(A)’s view that such interest should be taxed as “income from other sources” was rejected in the absence of any finding that the income was not connected with the assessee’s business.
Accordingly, the Tribunal held that the assessee was entitled to deduction under section 80P(2)(b) and, alternatively, under section 80P(2)(d), and allowed both appeals in full.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. ITA No. 1463/Bang/2025 and 1464/Bang/2025 for Assessment Year 2017-18 and 2018-19 are filed by Kumbarara Gudi Kaigarika Sahakara Sangha Niyamitha against the Appellate Order passed by the National Faceless Appeal Centre dated 12.03.2024 and 07.04.2025 wherein the Appeal filed by the Assessee against the Assessment Order was dismissed. Therefore, these two appeals are filed by the Assessee wherein the only issue is the claim of deduction u/s. 80P of the Act denied to the Assessee.
