Narayandas Ramdas Sevak Sahakari Patsanstha Maryadit Vs ITO (ITAT Pune)
The Pune Bench of the Income Tax Appellate Tribunal allowed the assessee’s appeals for Assessment Years 2018-19 and 2020-21 against separate orders of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre. The assessee, a co-operative society engaged in accepting deposits and granting credit to its members, had claimed deduction under Section 80P of the Income-tax Act in respect of interest and dividend income earned from investments. In Assessment Year 2018-19, the Assessing Officer, while completing assessment under Section 143(3) read with Sections 143(3A) and 143(3B), disallowed deduction on interest income of ₹3,60,122 and dividend income of ₹2,10,000. The CIT(A) allowed deduction on interest earned from co-operative societies, co-operative banks and members under Sections 80P(2)(d) and 80P(2)(a)(i), but upheld the disallowance of deduction on dividend income. Similar issues arose for Assessment Year 2020-21 involving interest of ₹10,86,523 and dividend of ₹4,14,002.
The Tribunal noted that the only surviving issue was the allowability of deduction under Section 80P(2)(d) in respect of dividend received from investments in co-operative banks. It observed that the issue was covered in favour of the assessee by earlier decisions of the Pune Bench, including Yashwant Nagari Sahakari Patsanstha Maryadit v. ITO and Kolhapur Z P K S P S M v. ITO, wherein it had been held that dividend income earned from co-operative banks qualifies for deduction under Section 80P(2)(d). Referring to the reasoning adopted in Kolhapur Z P K S P S M v. ITO, the Tribunal noted that Section 80P(2)(d) allows deduction of interest and dividend earned by a co-operative society from investments with another co-operative society and that co-operative banks are basically co-operative societies. Respectfully following the coordinate bench decisions, the Tribunal held that the assessee was entitled to deduction under Section 80P(2)(d) on dividend income received from co-operative banks. As the CIT(A) had already decided the issue relating to deduction under Section 80P(2)(a)(i) on interest income from co-operative banks in favour of the assessee, no further adjudication was required on that aspect. Accordingly, the Tribunal allowed the appeals for both assessment years.
