Case Laws| Income Tax: Co-operative banks are co-operative societies, and, therefore, interest income earned by a co-operative society from fixed deposits with such co-operative bank would be entitled for claim of deduction under section 80P(2)(d)
[2024] 159 taxmann.com 350 (Surat-Trib.)
IN THE ITAT SURAT BENCH (SMC)
Assistant Commissioner of Income-tax, Circle-1(1)(1)
v.
Shree Aradhna Urban Co-Op Credit Society Ltd.
PAWAN SINGH, JUDICIAL MEMBER
IT APPEAL NO. 630 (SRT.) OF 2023
[ASSESSMENT YEAR 2014-15]
NOVEMBER 28, 2023
Section 80P of the Income-tax Act, 1961 – Deductions – Income of co-operative societies (Interest from co-operative banks) – Assessment year 2018-19 – Whether co-operative banks are primarily co-operative societies, and, therefore, interest income earned by a co-operative society from fixed deposits with such co-operative bank would be entitled for claim of deduction under section80P(2)(d) Held, yes [Para 4] [In favour of assessee]
The judgment passed in favour of the assessee regarding the eligibility of interest earned by a cooperative society on deposits with a cooperative bank for deduction under section 80P appears to be reasonable and consistent with the legislative intent behind the provision. Section 80P of the Income Tax Act aims to provide deductions to cooperative societies to promote their growth and sustainability. The provision allows for deductions on profits and gains derived by such societies, including interest earned on deposits with cooperative banks. Cooperative societies play a vital role in the economic development of the country, particularly in rural areas, by mobilizing savings and providing credit facilities to their members. Allowing deductions on interest earned on deposits encourages these societies to continue their operations and fulfil their socio-economic objectives. Furthermore, since cooperative banks are integral to the functioning of cooperative societies and serve as their primary financial intermediaries, the interest earned on deposits with these banks can be considered as part of the income derived from the cooperative activities of the society.
Overall, the judgment in favour of the assessee aligns with the spirit of Section 80P and supports the continued growth and sustainability of cooperative societies, thereby contributing positively to the overall economy- JSPCO
