Vihan Vibhag Credit Co-operative Society Ltd. Vs ITO (ITAT Surat)
The Income Tax Appellate Tribunal, Surat allowed the appeal of a co-operative credit society and held that interest income earned from investments made with a co-operative bank is eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961.
The appeal arose from an order of the Commissioner of Income Tax (Appeals), NFAC, which had upheld the Assessing Officer’s disallowance of deduction under Section 80P(2)(d) for Assessment Year 2017-18. The assessee, a registered co-operative society engaged in providing credit facilities exclusively to its member farmers, had filed its return declaring nil income after claiming deduction under Section 80P. The Assessing Officer observed that the assessee earned interest income from investments made with a district co-operative bank and disallowed the deduction of ₹23,79,773, holding that a co-operative bank could not be treated as a co-operative society for the purposes of Section 80P(2)(d), relying on judicial precedents and Section 80P(4).
The Commissioner (Appeals) confirmed the disallowance, holding that the interest earned from a co-operative bank was not eligible for deduction, and relied upon decisions including those in Totagars Co-operative Sales Society and Federal Bank Ltd. The assessee carried the matter in appeal before the Tribunal.
