Parshuram Nagri Vs ITO (ITAT Pune)
The ITAT Pune allowed two appeals filed by a credit cooperative society against the orders of the CIT(A) sustaining the denial of deduction under Section 80P(2)(d) of the Income-tax Act on interest earned from deposits with cooperative banks. Delay of 34 days in filing the appeals was condoned after considering the affidavit filed by the assessee.
For AY 2015-16, the Assessing Officer reopened the assessment after noticing that the assessee had not filed its return despite substantial cash deposits in cooperative banks. The assessee subsequently filed its return claiming deduction under Section 80P. The Assessing Officer denied deduction under Section 80P(2)(d) on interest received from cooperative banks, and the CIT(A) affirmed the denial.
The Tribunal noted that the issue had already been considered in ITO Ward.-5, Sangli Vs. Shree Ganesh Nagari Sahakari Pat Sanstha Maryadit, wherein it was held that a primary credit cooperative society is entitled to deduction under Section 80P(2)(d) on interest and dividend earned from investments with cooperative banks that are themselves cooperative societies. The Tribunal also referred to the Bombay High Court decision in Annasaheb Patil Mathadi Kamgar Sahkari Pathpedhi Ltd., which was subsequently approved by the Supreme Court, holding that a credit cooperative society cannot be treated as a cooperative bank merely because it grants credit to its members and is entitled to exemption under Section 80P(2).
