Sterling Court E Wing Cooperative Housing Society Limited Vs ITO (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai ruled in favor of Sterling Court E Wing Cooperative Housing Society Limited, allowing the deduction under Section 80P(2)(d) of the Income Tax Act, 1961. The appeals were filed for four different assessment years, challenging the disallowance of deductions on interest income earned from cooperative banks. The Tribunal overturned the decisions of the lower authorities and directed the Assessing Officer (AO) to grant the deductions.
The primary issue in these appeals was whether interest earned by the cooperative housing society from deposits with cooperative banks qualifies for deduction under Section 80P(2)(d). The Central Processing Centre (CPC) had disallowed the deduction while processing the returns, stating that interest from cooperative banks does not qualify for the exemption. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this disallowance, leading the assessee to approach the ITAT. The department argued that cooperative banks are distinct from cooperative societies and, therefore, do not fall within the ambit of Section 80P(2)(d).
The ITAT examined the legal provisions and judicial precedents, particularly the definition of a cooperative society under Section 2(19) of the Income Tax Act and the Maharashtra Cooperative Societies Act, 1960. The Tribunal noted that cooperative banks are registered cooperative societies engaged in banking activities and, therefore, qualify under the definition of “cooperative society.” It also referred to Section 80P(2)(d), which allows deductions on interest income derived from investments with other cooperative societies, reinforcing that cooperative banks should not be excluded from this benefit.
