Dheeraj Gaurav Heights-1 Co- Operative Housing Society Limited Vs ITO (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT) Mumbai ruled in favor of Dheeraj Gaurav Heights-1 Co-operative Housing Society Limited, allowing the deduction under Section 80P(2)(d) of the Income Tax Act. The case involved an appeal against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] denying the deduction on interest income received from cooperative banks. The appeal stemmed from an adjustment made under Section 143(1)(a) by the Centralized Processing Center (CPC), which disallowed the deduction, a decision later upheld by CIT(A).
The appellant, a registered cooperative society, contended that the deduction was allowable under Section 80P(2)(d) based on precedents set by various judicial forums, including ITAT Mumbai. The society relied on multiple decisions where similar deductions had been granted. However, CIT(A) referred to the Supreme Court’s ruling in Totagars Co-Operative Society Ltd. vs. ITO [2010] 322 ITR 283 (SC), which held that interest income from surplus funds deposited in cooperative banks was not eligible for deduction. Aggrieved by this decision, the appellant approached ITAT Mumbai.
During the proceedings, the appellant cited several ITAT Mumbai rulings, including Blue Rose Industrial Premises Co-op Society v. CIT(A), ITAT No. 4059 of 2023, where it was held that interest income from cooperative banks qualifies for deduction under Section 80P(2)(d). The tribunal noted the conflicting rulings of the Karnataka High Court on this issue and referred to the Supreme Court’s decision in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192, which established that in cases of conflicting interpretations, the view favoring the taxpayer should be adopted.
