M.P. Matsya Mahasangh Sahakari Vs National Faceless Assessment Centre / DCIT/ACIT (ITAT Indore)
The present matter concerns five appeals filed by the assessee before the Income Tax Appellate Tribunal (Indore Bench) for Assessment Years 2014–15, 2015–16, 2017–18, 2018–19, and 2020–21. The assessee is a co-operative society engaged in managing dams of the State Government and undertaking fisheries-related activities through its members. During the relevant assessment years, the assessee earned substantial interest income from deposits made with co-operative banks and claimed deduction of such income under Section 80P(2)(d) of the Income-tax Act, 1961.
The Assessing Officer (AO) disallowed the deduction claimed under Section 80P(2)(d) on the ground that the provision allows deduction only in respect of interest earned by a co-operative society from another co-operative society, and not from a co-operative bank. This view was primarily based on the decision of the Supreme Court in Totagars Co-operative Sale Society Ltd. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s decision. Additionally, for Assessment Year 2020–21, a disallowance under Section 14A read with Rule 8D amounting to Rs. 20,47,000 was also confirmed by the CIT(A).
The central issue before the Tribunal was whether interest income earned by a co-operative society from deposits with co-operative banks qualifies for deduction under Section 80P(2)(d). There was no dispute regarding the factual position that the assessee is a co-operative society and that the interest income was earned from co-operative banks. The dispute was purely legal in nature.
