Shiv Ki Jai Co-operative Housing Society Vs ITO (ITAT Pune)
The Pune ITAT allowed the assessee’s appeal and directed the Assessing Officer to allow deduction under Section 80P(2)(d) of the Income-tax Act on interest earned from deposits with co-operative banks. The assessee, a co-operative housing society, had claimed the deduction in its return for AY 2021-22, but the claim was denied while processing the return under Section 143(1), and the denial was upheld by the CIT(A). The Tribunal considered its earlier decision in ITO Ward-5, Sangli Vs. Shree Ganesh Nagari Sahakari Pat Sanstha Maryadit, which had followed several coordinate bench decisions and referred to the Bombay High Court decision in Annasaheb Patil Mathadi Kamgar Sahkari Pathpedhi Ltd. and the Supreme Court’s order affirming that position. Following those judicial precedents, the Tribunal set aside the CIT(A)’s order on the disputed issue and directed the Assessing Officer to grant deduction under Section 80P(2)(d) in respect of interest on deposits with co-operative banks. Accordingly, the assessee’s appeal was allowed.
The Pune ITAT allowed the appeal of a co-operative housing society and held that interest earned on deposits with co-operative banks is eligible for deduction u/s 80P(2)(d). The CPC, while processing the return u/s 143(1), had denied the deduction and the CIT(A) upheld the adjustment by holding that interest received from co-operative banks did not qualify for deduction u/s 80P(2)(d).
The Tribunal noted that the issue was no longer res integra in view of its earlier decision in ITO v. Shree Ganesh Nagari Sahakari Pat Sanstha Maryadit, wherein, after considering the decisions of the Bombay High Court and the Supreme Court, it was held that interest and dividend income earned from investments with co-operative banks, which are themselves co-operative societies, qualifies for deduction u/s 80P(2)(d). The Tribunal also referred to the Supreme Court’s decision affirming that a co-operative credit society cannot be equated with a co-operative bank merely because it provides credit facilities to its members.
Following the binding judicial precedents, the ITAT held that the assessee was entitled to deduction u/s 80P(2)(d) in respect of interest earned on deposits with co-operative banks. Accordingly, the Tribunal set aside the order of the CIT(A) and directed the AO to allow the deduction u/s 80P(2)(d). The assessee’s appeal was allowed.
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