Blue Rose Industrial Premises Co-op. Society Limited Vs CIT(A) (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai recently ruled on the case of Blue Rose Industrial Premises Co-op. Society Limited vs. CIT, addressing the claim for deduction under Section 80P(2)(d) of the Income Tax Act, 1961. The case revolved around whether interest income earned from deposits with co-operative banks qualifies for deduction under this provision. The ITAT ruled in favor of the assessee, reversing the disallowance made by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) [CIT(A)].
The dispute arose after the assessee claimed a deduction of ₹33,57,902 under Section 80P(2)(d) on interest income earned from various banks, including scheduled commercial banks and co-operative banks. The AO rejected this claim, stating that co-operative banks should be excluded from the benefits of Section 80P. Relying on this interpretation, the AO disallowed the deduction, treating the interest as “income from other sources” under Section 56. The CIT(A) upheld this disallowance, prompting the assessee to appeal before the ITAT.
The ITAT examined various judicial precedents, including Pathare Prabhu Co-operative Housing Society Ltd. vs. ITO (2023), where the Tribunal had ruled that interest income from co-operative banks is eligible for deduction under Section 80P(2)(d). The Tribunal also referred to the Supreme Court’s judgment in Mavilayi Service Co-operative Bank Ltd. vs. CIT, which clarified that Section 80P(4) applies only to co-operative banks functioning as regular banking institutions, not to co-operative societies earning interest from such banks. Other ITAT decisions, such as Kaliandas Udyog Bhavan Premises Co-op. Society Ltd. vs. ITO, also supported this interpretation.
