2015 (9) TMI 1751 - AT - Income Tax

Deduction u/s. 80P(2)(d) - interest on investments with the Co-operative bank - AO believed that interest income earned on the investments in any other Co-operative society is deductible but not from a Co-operative bank and the said income is also not allowable as deduction u/s. 80P(2)(a)(i) - HELD THAT - CIT(A) correctly held since deduction u/s. 80P(2)(d) will be admissible only on the interest earned from Co-operative Societies irrespective of whether they are Co-operative banks or not the AO is directed to verify the same and allow the deduction on interest earned from other Co-operative societies including Co-operative banks. The interest earned on investment with other banks will not be eligible for deduction u/s. 80P(2)(d). AO is directed accordingly. Appeal filed by the Revenue is dismissed.

Summary

Issues:
1. Disallowance of deduction u/s. 80P(2)(d) of the Act.
2. Allowance of claim u/s. 80P(2)(a)(i) of the Act.

Analysis:
1. The appeal pertains to the Assessment year 2009-10 where the Revenue challenged the order of the Ld. CIT(A) regarding the deletion of an addition of Rs. 33,19,403 on account of disallowance of deduction u/s. 80P(2)(d) of the Act. The assessee, a Credit Co-operative society, claimed deduction u/s. 80P(2)(d) in relation to interest on investments with a Co-operative bank. The Assessing Officer contended that interest income from investments in other Co-operative societies is deductible, but not from a Co-operative bank. The AO also rejected the claim u/s. 80P(2)(a)(i) of the Act. The Ld. CIT(A) directed the AO to verify the nature of investments and allow the deduction on interest earned from other Co-operative societies, including Co-operative banks, but not on investments with other banks. The Tribunal found no error in the Ld. CIT(A)'s decision and dismissed the Revenue's appeal.

2. The second grievance of the Revenue was regarding the allowance of the claim u/s. 80P(2)(a)(i) of the Act. The Ld. CIT(A) had allowed this claim after considering the facts and submissions. The Revenue contended that the assessment order should be relied upon, while the assessee's counsel cited judicial decisions supporting their claim. The Tribunal, after careful review of the lower authorities' orders and the judicial decisions presented, upheld the Ld. CIT(A)'s findings, leading to the dismissal of the Revenue's appeal. The judgment was pronounced on 10th September 2015 by the Appellate Tribunal ITAT MUMBAI, with the appeal related to the assessment year 2009-10.