Janata Grahak Madhyawarti Vs PCIT-4 (ITAT Pune)
Facts of the Case: The assessee, a co-operative society involved in the business of wholesale supply of consumer goods, filed its return declaring income of ₹5,50,400. The return was processed under section 143(1) of the Income Tax Act. The Assessing Officer later disallowed a deduction of ₹34,58,980 claimed under section 80P(2)(d), on the ground that the income was from interest on fixed deposits and savings accounts with a co-operative bank.
Legal Issue: Whether the assessee is eligible for deduction under section 80P(2)(d) in respect of interest income earned from a co-operative bank.
Assessee’s Argument: The interest income was earned from a co-operative bank and therefore qualifies for deduction under section 80P(2)(d), which allows for deduction of income by way of interest or dividends from investments with co-operative societies.
Revenue’s Argument: The co-operative bank is not the same as a co-operative society. Therefore, the interest income earned from deposits with a co-operative bank is not eligible for deduction under section 80P(2)(d).
Tribunal’s Observations:
- The Tribunal relied on the Hon’ble Supreme Court ruling in Totgars Co-operative Sale Society Ltd., which dealt with section 80P(2)(a)(i), not 80P(2)(d).
- It also referred to its own coordinate benches’ rulings where deduction under section 80P(2)(d) was allowed in similar cases where interest was earned from co-operative banks.
- The Tribunal emphasized that co-operative banks are a species of co-operative societies and hence fall within the scope of section 80P(2)(d).
Ruling: The ITAT held that interest income earned from deposits with a co-operative bank is eligible for deduction under section 80P(2)(d). The disallowance by the Assessing Officer was therefore unjustified and was deleted.
The case was represented by CA Kishor Phadke (Assisted by CA Saurabh Jadhav)
FULL TEXT OF THE ORDER OF ITAT PUNE
