Case Law Details
Balduhak Co-operative Agriculture Service Society Ltd. Vs ITO (ITAT Chandigarh)
Introduction: The case of Balduhak Co-operative Agriculture Service Society Ltd. vs ITO (ITAT Chandigarh) revolves around the eligibility of interest income for deduction under Section 80P(2)(d) of the Income Tax Act. The society challenged the disallowance of its claim under this section, pertaining to the Assessment Year 2018-19.
Detailed Analysis: The core issue in this case was whether the interest income earned by Balduhak Co-operative Agriculture Service Society Ltd. from deposits placed with Kangra Central Cooperative Bank (KCCB) Ltd. qualifies for deduction under Section 80P(2)(d) of the Income Tax Act. The Assessing Officer (AO) disallowed the deduction on the grounds that the society received interest income from a cooperative bank, not a cooperative society.
However, the society contended that the interest income earned from deposits placed with KCCB Ltd., a cooperative society, should be eligible for deduction under Section 80P(2)(d). They argued that there was no requirement in the statute that the interest income must be earned from a cooperative society alone, and as long as the income is from investments with a cooperative society, it should qualify for deduction.
The Tribunal referred to various precedents, including the decision of the Hon’ble Punjab & Haryana High Court in CIT Vs. Doaba Co-op Sugar Mills Limited, and the decision of the Hon’ble Supreme Court in Mavilayi Service Co-operative Bank Limited. It emphasized that Section 80P(2)(d) only requires two conditions to be met: the income should be by way of interest or dividends earned by a cooperative society from its investments, and such investments should be with any other cooperative society.
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