Raythara Sahakari Sangha Ltd. Vs ITO (ITAT Bangalore)
In a significant ruling, the Income Tax Appellate Tribunal (ITAT) Bangalore addressed the case of Raythara Sahakari Sangha Ltd. vs. ITO, dealing with the eligibility of interest income on investments from cooperative banks for deduction under Section 80P(2)(d) of the Income Tax Act, 1961. This decision, pronounced on December 14, 2023, sheds light on the application of tax deductions for cooperative societies and aligns with precedent judgments from various high courts.
Case Background
The appeal was filed by Raythara Sahakari Sangha Ltd., a cooperative society, against the disallowance of deduction under Section 80P(2) by the Income Tax Officer (ITO), Ward-3, Udupi. The society had filed its return for the assessment year 2017-18, declaring a gross total income of INR 73,37,467 and a returned income of INR 5,39,390 after claiming deductions under Section 80P(2)(a)(i). However, the ITO determined the income at INR 1,71,37,467, rejecting the deduction claims.
Legal Issue
The central issue was whether the interest on investments derived from scheduled banks and cooperative banks is eligible for deduction under Section 80P(2)(d) of the Income Tax Act. This section provides deductions for interest or dividends earned by a cooperative society from investments in other cooperative societies.
