2023 (2) TMI 124 - AT - Income Tax

Deduction u/s 80P(2)(d) - interest received by the Appellant from Co-operative Bank - entitled for deduction under section 57 of the Act for the expenses incurred by it against interest received from Cooperative Bank - HELD THAT:- Assessee would not be entitled to deduction under section 80P(2)(d) of the Act in respect of interest received from another Co-operative Bank. Assessee would also not be entitled to deduction under section 80P(2)(a)(i) - See M/s. Krishnarajapet Taluk Agri Pro Co-op Marketing Society Ltd. [2022 (2) TMI 489 - ITAT BANGALORE]

Deduction u/s 57 for the expenses incurred by it against interest received from Cooperative Bank - However the claim of the assessee that the interest was received by it by reason of the investment of its funds with a view to comply with the mandatory requirements of section 57 of the Co-operative Societies Act, 1959 and with a view to maintain the cash reserve ratio needs to be examined by the AO and if the contention is found to be correct then the question whether it can be regarded as profits of business has to be examined by the AO. In so far as deduction u/s 57 of the Act is concerned, if the claim of the assessee for deduction u/s 80P(2)(a)(i) of the Act is rejected then in terms of paragraph 16 of the Tribunal’s order referred to above, the assessee will be entitled to deduction on account of expenses - issues are accordingly restored to the file of the AO to decide the same afresh in accordance with law - Appeal of the assessee is treated as partly allowed for statistical purposes.