DCIT Vs Sardar Patel Cooperative Credit Society Limited (ITAT Ahmedabad)
ITAT Ahmedabad held that the interest earned on the investment made with the Coopearitve Society which was carried out the banking business is eligible for deduction under section 80P(2)(d) of the Income Tax Act.
Facts- The assessee is a Cooperative Society and is engaged in providing credit facilities to its members only from the deposits received from them. During the year under consideration, the assessee declared total income of Rs. ‘Nil’ after claiming deduction section 80P(2)(a)(i), 80P(2)(c)(ii) and 80P(2)(d) of the Act of Rs.3,23,92,639/-.
The assessing officer denied the claim of deduction under section 80P of the Act in totality and taxed the interest income as “income from other sources” under section 56 of the Act.
CIT(A) accepted the assessee’s contention and allowed deduction under section 80P(2)(d) of the Act and held that that the income earned by the appellant is not allowable u/s 80P of the Act in respect of interest earned from investment of surplus funds kept in nationalized banks. However, deduction u/s. 80P(2)(d) was allowed in respect of interest received on surplus funds deposited with other cooperative banks. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that this issue is no more res integra by the very recent Jurisdictional High Court judgment in the case of Ashwin Kumar Arban Cooperative Society Ltd. which has considered Karnataka High Court and Supreme Court judgment in the case of Totagars Coopeartive Sale Society and amendment in Section 194C(3)(v) of the Act and held that the interest earned on the investment made with the Coopearitve Society which was carried out the banking business, the assessee cannot be denied the deduction u/s. 80P(2)(d) of the Act.
