Laburnum Mahindra Gardens Co. Op. Hsg. Limited Vs ITO (ITAT Mumbai)
ITAT Mumbai held that deduction under section 80P(2)(d) of the Income Tax Act admissible in respect of the interest on FDR and savings account earned by co-operating housing society from investment with the Co-operative Banks.
Facts- The assessee is a co-operative housing society duly registered under the Maharashtra State Co-operative Society Act. During the assessment proceedings, the assessee was asked to furnish the details/documents, inter-alia, pertaining to the deduction of Rs.28,73,620 claimed u/s. 80P(2)(d) of the Act. Upon verification of the details furnished by the assessee, it was noticed that the deposits/investments in Co-operative Banks/commercial banks are out of the surplus funds of the society. Accordingly, the assessee was asked to show cause as to why the deduction of Rs.28,73,630 representing interest on FDR and savings account earned from the Co-operative Bank should not be disallowed u/s. 80P(2)(d) of the Act.
AO held that the deduction u/s. 80P(2)(d) of the Act cannot be extended to the interest earned from the investment in any Co-operative Bank as subsection (4) to section 80P excludes Co-operative Banks from the applicability of section 80P of the Act. Therefore, it was held that even the interest earned by the assessee from the deposits with the Co–operative Bank would not be exempted or deductible u/s. 80P(2)(d) of the Act. Accordingly, the AO disallowed interest income of Rs.28,73,630, claimed u/s. 80P(2)(d) of the Act, and added the same to the total income of the assessee. CIT(A) dismissed the appeal filed by the assessee. Being aggrieved, the assessee is in appeal before us.
