Thane Zilla Vidyasevak Sahakari Patpedhi Ltd. Vs CIT (Appeals) (ITAT Mumbai)
Summary: This appeal was filed by Thane Zilla Vidyasevak Sahakari Patpedhi Ltd. (the assessee), a co-operative society registered under the Maharashtra Co-operative Societies Act 1960, against the order of the Commissioner of Income-tax (Appeals) [CIT(A)] for the Assessment Year (A.Y.) 2018-19.
The Issue and Lower Authorities’ Findings
The assessee, which filed a return declaring Nil income, earned total interest income of Rs. 1,06,40,175/- on its deposits. Out of this, Rs. 94,12,725/- was received from investments/deposits made with a co-operative bank, specifically the Thane District Central Co-Operative Bank.
The Assessing Officer (AO) held that interest on investments/deposits made with a co-operative bank is not eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961, and added the entire amount of Rs. 94,12,725/- to the assessee’s income. The CIT(A) upheld this decision, agreeing that the interest was not eligible for the deduction.
Assessee’s Contention and ITAT’s Analysis
The assessee appealed to the ITAT, arguing that the interest received from co-operative societies (co-operative banks in this case) is eligible for the deduction under Section 80P(2)(d).
Section 80P(2)(d) allows a deduction for “any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society.”
