Deduction not allowed to cooperative societies for interest received from banks: ITAT
Deduction not allowed to cooperative societies for interest received from banks: ITAT
Krishnarajapet Taluk Agri Pro Co-op Marketing Society Ltd.
(ITA 514/BANG/2021)
Short overview of the case:
Facts:
1. The assessee is an agricultural produce co-operative marketing society Ltd registered under the Karnataka Co-operative societies Act, 1959.
2. CIT held that the AO’s order allowing deduction u/s.80P(2)(d) of the Act on a sum of Rs.3,91,931/- which was interest received on investments with MDCC Bank, was erroneous and prejudicial to the interest of the revenue.
3. According to the CIT, in view of the provisions of section 80P(4) of the Act excluding co- operative banks from the purview of section 80P of the Act and in view of the fact that provisions of 80P(2)(d) of the Act is applicable only in respect of interest on deposits received from co-operative societies, the deduction ought not to have been allowed by the AO.
ITAT Bangalore held as under:
1. 80P(2)(d) of the Act specifically exempts interest earned from funds invested in co-operative societies. Therefore the interest earned from investments made by it with any co-operative society, a co-operative society is entitled to deduction of the whole of such income under section 80P(2)(d).
2. However, interest earned from investments made in any bank, not being a co-operative society, is not deductible under section 80P(2)(d) of the Act.
3. 80P(4) of the Act excluding co- operative banks from the purview of Sec 80P.
