Cooperative societies entitled to deduction of interest on deposits with cooperative banks: ITAT Mumbai

Loading

Cooperative societies entitled to deduction of interest on deposits with cooperative banks: ITAT Mumbai

Palm Court M Premises Co- operative Society Limited (ITA 561/Mum/2021)
Facts:
1. The assessee is a co-operative housing society registered under the Co-operative Housing Societies’ Act and has earned interest income of Rs.12,90,210/- which was claimed as deduction U/S 80P(2)(d) of the Income Tax Act, since the interest has been earned by making investment in cooperative banks.
2. The Ld.PCIT revised the assessment order, on the ground that interest income received by the assessee by way of investment in co-operative banks is not eligible for deduction under section 80P(2)(d), since the co-operative banks cannot be classified under ‘Co-operative Societies’ and that the interest earned from co-operative banks are not eligible for deduction under the provisions of section 80P(2)(d).
Note: With the insertion of Sec 80P(4), vide the Finance Act, 2006, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank.
ITAT Mumbai held as below:
1. With the insertion of Sec. 80P(4), Sec. 80P would not be applicable in relation to any co-operative bank. However, at the same time, we are unable to subscribe to his view that the aforesaid amendment would jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of its interest income on investments/deposits parked with a co-operative bank.
2. In our considered view, as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision
Menu