Bhagyalaxmi Co.Op. Credit Society Limited Vs DCIT (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench has allowed a cooperative society, Bhagyalaxmi Co.Op. Credit Society Limited, to claim a deduction of Rs. 17,30,372 under Section 80P(2)(d) of the Income-tax Act, 1961, for interest received from an Urban Co-operative Bank. The appeal, filed by the assessee for Assessment Year 2018-19, challenged the disallowance made by the Assessing Officer (AO) and confirmed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi.
Bhagyalaxmi Co.Op. Credit Society Limited, a registered co-operative society with the primary objective of a co-operative bank, had filed its return of income declaring a nil total income. The case was selected for limited scrutiny due to substantial loans, advances, and investments compared to its capital, and a significantly low total income including exempt income. The scrutiny also focused on the assessee’s claim for deduction under Chapter VI-A.
During the assessment proceedings, the AO noted that the assessee had received interest income of Rs. 17,30,372 from Mehsana Urban Co-operative Bank, which was claimed as a deduction under Section 80P(2)(d). The AO disallowed this claim, contending that Urban Co-operative Banks fall outside the scope of Co-operative Societies, thereby making the interest earned from them ineligible for deduction under Section 80P(2)(d). The CIT(A) upheld the AO’s disallowance.
