Prathamika Krushi Pathina Sahakara Sangha Niyamitha Nelaji Vs ITO (ITAT Bangalore)
ITAT Bangalore held that interest income received from co-operative society or co-operative banks is eligible for deduction under section 80P(2)(d) of the Income Tax Act. Accordingly, matter restored to AO to examine the source of interest income.
Facts- Assessee is a primary agricultural credit co-operative society registered under the Karnataka Co-operative Societies Act, 1959. It is engaged in the business of providing credit facilities to its members. For the Assessment Year 2021-22, the return of income was filed on 14.02.2022 declaring ‘Nil’ income, after claiming deduction u/s. 80P(2)(a)(i) and 80P(2)(a)(iv) of the Act, to the tune of Rs.38,15,140/-. The assessment was selected for scrutiny and notice u/s. 143(2) of the Act was issued on 28.06.2022. During the course of assessment proceedings, it was noticed that assessee had received interest income from Kodagu District Co-operative Central Bank Ltd., (KDCC Bank). The assessment was completed u/s. 143(3) of the Act vide Order dated 27.10.2022 by disallowing the claim of deduction u/s. 80P of the Act to the extent of Rs.11,54,058/-.
CIT(A) partly allowed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Apex Court in the case of Kerala State Co-operative Agricultural and Rural Development Bank Vs. ITO has held that only those co- operative banks which has RBI licence to do the business of banking alone would be considered as a Co-operative Bank and not other Co-operative societies. In light of the Hon’ble Apex Court judgment in the case cited supra, the matter is restored to the AO to examine whether interest is received from Co-operative Society or Co-operative Banks. If it is found that interest income is received from Co-operative Society, the same would be entitled to deduction under section 80P(2)(d) of the Act. The AO shall examine the aforesaid aspect as per the dictum laid down by the Hon’ble Apex Court in the case of Kerala State Co-operative Agricultural and Rural Development Bank Vs. ITO.
