The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the co-operative society receives/earns the interest on deposits with the co-operative bank is eligible for claim of deduction under Section 80(2)(d) of the Income Tax Act, 1961. The assessee is a cooperative housing society registered under the Maharashtra Society Act 1960. The assessee has filed the return of income disclosing a total income of Rs. Nil after claiming deduction under Section 80P(2)(d) of the Income Tax Act of Rs. 17,79,348/- and the return of income was processed under Section 143(1) of the Income Tax Act.
The Assessing Officer (AO) has not allowed the deduction under Section 80(P)(2)(d) of the Income Tax Act as the cooperative bank is an urban cooperative commercial bank and does not fall under the purview of the cooperative society referred to as Section 80(P)(2)(d) of the Income Tax Act and therefore interest income from cooperative banks has to be taxed under income from other sources and assessed the total income of Rs.17,79,350/- and passed the order under Section 143(3) of the Income Tax Act.
The Authorized Representative submitted that the claim has to be allowed as the cooperative bank is treated as a cooperative society for eligibility of deduction under Section 80P(2)(d) of the Income Tax Act. The Single-member bench comprising of Pavan Kumar Gadale (Judicial member) held that “the co-operative society receives/earns interest on deposits with the co-operative bank was eligible for claim of deduction under Section 80(2)(d) of the Income Tax Act”.
Following the recent decision of the Supreme Court in the case of Amore Commercial Premises Co-op Society Ltd vs. CPC Karnataka the order of the Commissioner of Income Tax (Appeal) [CIT(A)] was set aside and the Assessing Officer was directed to allow the claim of deduction under Section 80P(2)(d) of the Income Tax Act on the interest income received /earned from the co-operative banks. Thus, the appeal of the assessee was allowed.