GSSS Credit Co-operative Society Limited Vs ITO (ITAT Bangalore)
In a landmark decision, the Income Tax Appellate Tribunal (ITAT) Bangalore has ruled in favor of GSSS Credit Co-operative Society Limited, allowing interest income from co-operative banks to qualify for deduction under Section 80P(2)(d) of the Income Tax Act. This ruling addresses a contentious issue regarding the eligibility of interest income for tax deductions, impacting numerous co-operative societies across the country.
Background of the Case
GSSS Credit Co-operative Society Limited appealed against the order of the National Faceless Appeal Centre (NFAC), New Delhi, which denied the deduction under Section 80P(2)(d) for interest income earned from co-operative banks for the assessment years 2017-18, 2018-19, and 2020-21. The key issue was whether such interest income should be considered for deduction under Section 80P(2)(d).
Provisions of Section 80P(2)(d)
Section 80P(2)(d) of the Income Tax Act allows deductions in respect of any income by way of interest or dividends derived by a co-operative society from its investments with any other co-operative society. The primary contention revolves around the interpretation of the term “co-operative society” and whether co-operative banks fall under this definition.
Arguments and Tribunal’s Observations
The assessee argued that the interest income earned from investments made in co-operative banks should be eligible for deduction under Section 80P(2)(d). They referenced several precedents, including the ITAT’s decision in the case of Bee Co-op Credit Society Ltd. vs. ITO, which supported the view that co-operative banks are indeed considered co-operative societies for the purposes of Section 80P(2)(d).
