Karumandurmedu MPCS Ltd Vs DCIT (ITAT Chennai)
ITAT Chennai held that interest earned out of savings bank account maintained in a co-operative bank cannot be treated as income or dividend from investment and accordingly deduction u/s. 80P(2)(d) of the Income Tax Act not eligible.
Facts- The assessee claimed deduction under section 80P(2)(d) of the Income Tax Act, 1961 of ₹.1,72,880/- earned as interest income received from Co-operative Bank out of which ₹.1,58,273/- is from FDs and ₹.14,607/- from saving account and others. The Assessing Officer CPC disallowed entire deduction claimed under section 80P(2)(d) of the Act. CIT(A) confirmed the disallowance of ₹.14,607/- for the reason that the amount kept in saving bank account is not an investment.
Conclusion- Held that the assessee earned interest income of ₹.1,72,880/- from Co-operative Bank, out of which ₹.1,58,273/- is from FDs and ₹.14,607/- from saving account and others, which was disallowed by the Assessing Officer, CPC. Since, the interest of ₹.1,58,273/- on investment in the Co-operative society received by the assessee is eligible for deduction under section 80P(2)(d) of the Act, the ld. CIT(A) deleted the same. However, since, the interest earned out of saving bank account maintained in a co-operative bank cannot be treated as income or dividend from investment, the ld. CIT(A) confirmed the disallowance of ₹.14,607/-.
