Case Law Details
Kalika Parameswari Co-operative Society Ltd Vs ITO (ITAT Bangalore)
Introduction: The case of Kalika Parameswari Co-operative Society Ltd vs. ITO, heard at the ITAT Bangalore, pertains to the allowance of deduction under Section 80P(2)(a)(i) of the Income Tax Act for interest income derived from mandatory cooperative bank investments under the State Societies Act. This article delves into the details of the case, analyzing the arguments presented by both the assessee and the tax authorities, as well as the final decision rendered by the tribunal.
Detailed Analysis: The appeals filed by Kalika Parameswari Co-operative Society Ltd against the orders of the CIT(A) were directed towards the disallowance of deduction under Section 80P of the Income Tax Act for the Assessment Years 2016-17, 2017-18, and 2018-19. The primary contention revolved around the treatment of interest income earned from investments with the Central District Co-operative Bank.
The Assessing Officer (AO) and the CIT(A) had upheld that interest income received from cooperative banks is to be assessed as “Income from Other Sources” under Section 56 of the Act, thereby denying the deduction under Section 80P. However, the appellant argued that such interest income should be eligible for deduction under Section 80P(2)(a)(i) as the investments were made in compliance with the Karnataka Co-operative Societies Act, 1959.
The tribunal noted the precedents set by the jurisdictional High Court and previous tribunal decisions, emphasizing that interest income from cooperative banks does not qualify for deduction under Section 80P(2)(a)(i) or Section 80P(2)(d) of the Act. However, it also considered the contention raised by the assessee regarding compliance with the state cooperative societies’ regulations.
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