Jalsampda Karmchari Sahakari Patsanstha Maryadit Wardha Vs ITO (ITAT Nagpur)
ITAT Nagpur held that deduction under section 80P(2)(a)(i) of the Income Tax Act admissible in case of interest earned from fixed deposit with bank. Accordingly, deduction claimed by the assessee is allowed by deleting the addition.
Facts- The Assessee is a cooperative society engaged in accepting deposits and providing credit facilities to its members, consisting of only employees of Irrigation department of Maharashtra State in Wardha District. AO observed that the Assessee has made the investment including fixed deposits with Bank and had received interests Rs. 6,51,733/- from Bank of India and Rs.2,51,251/- from Axis Bank. Since the said amount has been earned from other than cooperative societies, the same cannot be included in the deduction as per section 80P(2)(d) of the Act. AO consequently, disallowed the amount of Rs. 9,02,984/- as detailed above. AO in absence of documentary evidence of expenses debited to the profit & loss account to the tune of Rs.14,831/- as ‘donation’, also disallowed the same and added to the total income of the Assessee.
Commissioner dismissed the appeal of the Assessee, affirming the additions under consideration. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Coordinate Benches of this Tribunal in various cases including in the case of The Ismailia Urban Co-op. Society vs. ITO in ITA No. 122/Nag/2023, decided on 18/06/2024, has also dealt with the identical issue and ultimately allowed the identical claim qua deduction u/sec. 80P(2)(a)(i) of the Act. It was held that surplus funds not immediately required for day to day banking were kept in Bank deposits. The income earned there from thus would be income from banking business eligible for deduction u/s 80P(2)(a)(i).
