2024 (2) TMI 243 - AT - Income Tax

Deduction u/s 80P(2)(d) - interest income on fixed deposit made with the Cooperative Bank - assessee is a Cooperative Society claimed deduction u/s 80P(2)(d) inter-alia on the interest received from Bhopal Cooperative Central Bank as well as from Malwa Narmada Gramin Bank(MNGB) - CIT(A) allowed the claim of the assesse u/s 80P(2)(d) in respect of the interest received from Bhopal Co-operative Central Bank but confirmed the disallowance in respect of interest received from Malwa Narmada Gramin Bank for want of any information/details to show that the said bank is a Co-operative Society - HELD THAT - As relying on Indore Pragatishil Sahakari Sakh Sanstha Maryadit 2024 (2) TMI 190 - ITAT INDORE no error or illegality in the impugned order of the CIT(A) in allowing deduction u/s 80P(2)(d) of the Act on the interest received by the assessee from the deposit made in Bhopal Co-operative Central Bank. The revenue is devoid of any merits. Interest income received from MNGB - claim of the assesse was not allowed by CIT(A) for want of necessary details - assessee has stated that the assesse shall produce the necessary details before the AO to show that the said Co-operative Bank is a Co-operative Society and therefore, the interest received from the said bank is eligible for deduction u/s 80P(2)(d) - HELD THAT - We are of the considered view that this issue required a proper verification and examination at the level of the AO. Accordingly the issue of deduction u/s 80P(2)(d) of the Act in respect of the interest received from MNGB is remanded to the record of the AO for fresh adjudication after verification and examination of the necessary record on the point whether the said Bank is Co-operative Society or not. In case the said bank is found to be a Co-operative Society registered under Co-operative Societies Act then the claim of the assesse u/s 80P(2)(d) of the Act is directed to be allowed. Appeal of the revenue is dismissed and CO of the assesse is allowed for statistical purposes.

Summary

Issues Involved:
1. Deduction claim u/s 80P(2)(d) for interest earned on FDR.
2. Deduction claim u/s 80P(2)(d) for dividend income.

Summary:

Issue 1: Deduction Claim u/s 80P(2)(d) for Interest Earned on FDR
The core issue revolves around whether the interest income received by a Cooperative Society from fixed deposits with a Cooperative Bank qualifies for deduction under Section 80P(2)(d) of the Income Tax Act. The Assessing Officer (AO) disallowed the deduction on the ground that the interest was received from a Cooperative Bank and not a Cooperative Society. However, the Commissioner of Income Tax (Appeals) [CIT(A)] allowed the deduction for interest received from Bhopal Cooperative Central Bank but disallowed it for interest from Malwa Narmada Gramin Bank (MNGB) due to lack of evidence proving MNGB as a Cooperative Society.

The Tribunal referred to the decision of the Pune Bench in the case of Rena Sahakari Sakhar Karkhana vs. Pr. CIT, which held that Cooperative Banks are essentially Cooperative Societies and interest income from such banks qualifies for deduction under Section 80P(2)(d). The Tribunal also cited the Indore Bench's decision in Indore Pragatishil Sahakari Sakh Sanstha Maryadit vs. ITO, which supported the view that interest income from Cooperative Banks is eligible for deduction under Section 80P(2)(d).

The Tribunal concluded that the CIT(A) correctly allowed the deduction for interest received from Bhopal Cooperative Central Bank, as it qualifies as a Cooperative Society. Thus, the revenue's appeal on this ground was dismissed.

Issue 2: Deduction Claim u/s 80P(2)(d) for Dividend Income
The Tribunal dismissed the revenue's appeal regarding the deduction for dividend income, stating that the conclusion on the first issue also applies to this matter. Therefore, the CIT(A)'s decision to allow the deduction for dividend income was upheld.

Cross Objection (CO) by the Assessee:
The assessee's CO pertained to the disallowance of the deduction for interest received from MNGB. The CIT(A) had disallowed this deduction due to insufficient details proving MNGB as a Cooperative Society. The assessee requested a remand to provide necessary details. The Tribunal agreed, remanding the issue to the AO for fresh adjudication after verifying whether MNGB is a Cooperative Society. If proven, the deduction under Section 80P(2)(d) should be allowed.

Conclusion:
The Tribunal dismissed the revenue's appeal and allowed the assessee's CO for statistical purposes, directing the AO to re-examine the eligibility of the interest income from MNGB for deduction under Section 80P(2)(d).