ITAT Allows Income Tax Deduction On Interest Income From Investment In Co-Operative Bank

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has allowed the deduction under Section 80P(2)(d) of the Income Tax Act on the interest income from investments in cooperative banks.The bench of Mahavir Singh (Vice President) and Manjunatha.G. (Accountant Member) has observed that the Erode District Central Co-operative Bank is also governed by the Tamil Nadu Co-operative Societies Act, and once it is governed by the Co-operative Societies Act, the assessee is eligible for a claim of deduction under Section 80P(2)(d) of the Income Tax Act.The respondent or assessee is a primary agricultural credit society registered under the Tamil Nadu Co-operative Societies Act, 1983, carrying on the business of banking or providing credit facilities to its members. It has kept its funds, made deposits or investments, maintained a savings bank account with Erode District Central Co-operative Bank, and earned interest income to the extent of Rs. 5,14,418. As per the AO and CIT (A), the Erode District Central Co-operative Bank, which operates transactions for the public and is governed by Reserve Bank of India regulations, is clearly hit by the provisions of Section 80P(4).The assessee raised the issue in respect of the order of CIT (A) confirming the action of the AO in disallowing the claim of deduction under Section 80P(2)(d) interest income from investment in a cooperative bank.The tribunal relied on the decision of the Supreme Court in the case of Kerala State Co-operative Agricultural and Rural Development Bank Ltd., in which it was held that if the Central Co-operative Bank is a co-operative society that is registered under the Kerala State Co-operative Societies Act, then it is not a bank per se governed by RBI.Counsel For Appellant: S. SridharCounsel For Respondent: P. Sajit KumarCase Title: M/s. Kangayam Primary Agricultural Co-operative Credit Society Versus ITO Case No.: ITA No.: 869/CHNY/2023Click Here To Read The Order

ITAT Allows Income Tax Deduction On Interest Income From Investment In Co-Operative Bank

Mariya Paliwala

Tags