Shree Sarvodaya Sahakari Mandali Ltd Vs ITO (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT) Ahmedabad addressed appeals filed by Shree Sarvodaya Sahakari Mandali Ltd. concerning the eligibility of interest earned from co-operative bank deposits for deduction under Section 80P of the Income Tax Act. The core issue revolved around whether interest earned by a co-operative society from investments in co-operative banks qualifies for deduction under Section 80P(2)(d). The tribunal examined the assessee grounds, which included challenging the reassessment initiated under Section 147 and disputing the disallowance of deduction claimed under Section 80P. The assessee argued that the interest income was derived from funds received from its members and in-vested in co-operative banks, demonstrating a direct connection to its operational activities.
The ITAT referenced several judicial precedents, including judgments from the Gujarat High Court and previous tribunal orders, to establish the legal position. Specifically, the tribunal cited the case of Gujarat State Co.Op. Housing Finance Corporation, where a similar issue was addressed. The tribunal emphasized that Section 80P(2)(d) explicitly allows deduction for interest income derived by a co-operative society from investments with another co-operative society. The ITAT noted that the co-operative banks in question were registered under the respective state’s Co-operative Societies Act, thus fulfilling the criteria for deduction. The tribunal also addressed the argument regarding Section 80P(4), which excludes co-operative banks from certain provisions, clarifying that this exclusion does not negate the eligibility of co-operative societies to claim deduction under Section 80P(2)(d) for interest earned from such banks. Consequently, the ITAT allowed the assesses appeals, confirming that interest earned by a co-operative society from deposits in a co-operative bank is eligible for deduction under Section 80P of the Income Tax Act.
