Bardoli Vibhag Gram Vikas Co.Op. Credit Society Ltd. Vs PCIT (ITAT Surat)
Income Tax Appellate Tribunal (ITAT), Surat Bench, recently delivered a ruling in the case of Bardoli Vibhag Gram Vikas Co.Op. Credit Society Ltd. vs. PCIT, asserting that interest income earned by a co-operative society from deposits with co-operative banks is eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961. This decision overturns a revisionary order passed by the Principal Commissioner of Income Tax (PCIT), bringing clarity to a contentious area of tax law for co-operative societies.
The appellant, Bardoli Vibhag Gram Vikas Co.Op. Credit Society Ltd., operates as a co-operative society providing credit facilities to its members. For the Assessment Year (AY) 2014-15, the society filed its Income Tax Return on August 21, 2013, declaring ‘Nil’ income and claiming a substantial deduction of Rs. 7,03,56,728/- under Section 80P of the Act. The return was selected for scrutiny, and the assessment was completed under Section 143(3) on February 18, 2016. During the original assessment, the Assessing Officer (AO) identified interest income from savings accounts with HDFC Bank and UTI Bank. The AO, adhering to Section 80P(2)(a)(d), concluded that only interest from investments/deposits with co-operative societies or co-operative banks was eligible for deduction. Consequently, a minor amount of Rs. 12,497/- representing interest from non-cooperative banks was disallowed. The bulk of the deduction claimed for interest from co-operative banks, however, was allowed by the AO.
