Ashapura Co-op. Credit Society Ltd. Vs DCIT (ITAT Ahmedabad)
Deduction u/s 80P(2)(d) Allowed on Co-op Bank Deposits – Interest from RRB Not Eligible but Proportionate Deduction u/s 57 Directed: ITAT Ahmedabad
Ahmedabad Tribunal partly allowed appeal by holding that interest earned from deposits with co-operative banks qualifies for deduction u/s 80P(2)(d), while interest from Regional Rural Banks (RRB) does not, but proportionate expenditure against such RRB interest is deductible u/s 57(iii).
Assessee, a co-operative credit society, filed return declaring income of Rs. 140 after claiming deduction u/s 80P of Rs. 21.69 lakhs. AO denied deduction on interest income of Rs. 16.88 lakhs from co-op & nationalised banks by relying on Totgars Co-op. Sale Society Ltd. (SC), holding it taxable u/s 56. Alternate claim of deduction of Rs. 12.38 lakhs u/s 57 was also rejected. CIT(A) upheld AO’s view citing Karnataka High Court in Totgars (395 ITR 611) & Finance Act amendments distinguishing co-op banks from co-op societies.
Before Tribunal, Assessee argued that co-op banks are registered as co-operative societies & therefore fall within expression “any other co-operative society” in section 80P(2)(d). Reliance was placed on Gujarat High Court decisions including SBI v. CIT (389 ITR 578), Sabarkantha District Co-op. Milk Producers Union Ltd., Surat Vankar Sahakari Sangh Ltd. & latest ruling in PCIT v. Ashwinkumar Arban Co-op Society Ltd. (24.09.2024), which allowed such deduction. It was contended that Totgars (SC) dealt only with nationalised bank interest under 80P(2)(a)(i), not 80P(2)(d).
