ITO Vs Railway Employees Co-operative Credit Society Limited (ITAT Chennai)
80P(2)(a)(i) deduction on bank interest upheld – Totgars distinguished; Revenue appeals dismissed – ITAT Chennai
In ITO vs Railway Employees Co-operative Credit Society Ltd. (A.Ys. 2017-18 & 2018-19), the AO denied deduction u/s 80P(2)(a)(i) on interest income of ₹6.72 crore earned from deposits with co-operative and commercial banks, treating it as “Income from Other Sources”. The CIT(A) allowed the claim following earlier Tribunal orders in assessee’s own case.
The ITAT noted that the issue was already settled in favour of the assessee by coordinate bench decisions and Karnataka High Court ruling in Guttigedarara Credit Co-op Society Ltd. It held that interest earned from temporary deployment of funds is attributable to the business of providing credit facilities to members, and therefore eligible for deduction u/s 80P(2)(a)(i). The Tribunal also distinguished the Supreme Court decision in Totgars, observing that the facts were materially different, as the funds invested were not liabilities payable to members.
Since no change in facts or law was shown by the Revenue, the Tribunal upheld CIT(A)’s order allowing deduction and dismissed both Revenue appeals.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
Both these appeals in ITA No.2096/Chny/2025 and 2095/Chny/2025 are filed by the Revenue are directed against orders of the Learned Commissioner of Income Tax, National Faceless Appeal Centre, Delhi [herein after “ld.CIT(A)] dated 30.09.2024 for the assessment years 2018-19 and 2017-18 against the order of the Assessing officer (NFAC) passed u/s.143(3) of the Act dated 10.02.2021 and 26.12.2019 respectively.
