Salestax Employees Co- Operative Credit Society Ltd. Vs ACIT (ITAT Ahmedabad)
ITAT Ahmedabad held that interest income earned from deposits with Cooperative Banks shall be allowed as deduction u/s 80P(2)(d) of the Income Tax Act.
Facts- The case of the assessee was selected by Revenue for framing limited scrutiny assessment under CASS. Statutory notices u/s. 143(2) and u/s. 142(1) were issued by the AO. During the course of assessment proceedings, the A.O. observed from the perusal of income and expenditure account as well as reply filed by the assessee during the course of assessment proceedings that the assessee has earned interest income on FDR of Rs. 86,730/- and Saving Bank Interest of Rs. 32,755/. The assessee has claimed with respect to aforesaid interest income, deduction u/s. 80P of the Act. The A.O. observed that interest on bank deposits does not qualify for deduction u/s. 80P of the Act.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Hon’ble Jurisdictional High Court in the case of Surat Vankar Sahakari Sangh Ltd. v. ACIT and State Bank of India v. CIT has decided this issue in favour of the tax-payer by holding that interest income received by Credit Co-operative Society from deposits made with Cooperative Bank registered under the Co-operative Societies Act or under the State Act shall be allowed as deduction u/s 80P(2)(d).
