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Cooperative Banks are also registered Cooperative Societies and Sec 80P deduction is available: ITAT Ahmedabad

Manila Sahayak Gruh Udyogsaha (ITA No.7/Ahd/2023)

Facts:

1. The assessee is a Co-operative Society engaged in the business of cottage industry working for the development and welfare of women in the business of manufacturing and selling of Khakhra, Papad, Spices in the name of the Mahila Sahayak Gruh Udhyog Sahakari Mandali Limited.

2. The assessee filed its return of income on 30.10.2018 declaring total income of Rs.18,26,660/- for the Assessment Year 2018-19. The return of the assessee was processed under Section 143(1) of the Income Tax Act, 1961 at Rs.91,86,940/- The case was selected for limited scrutiny assessment on the issue of deduction from total income under Chapter VI-A.

3. The assessee claimed deduction under Section 80P particularly that of interest from Co- operative Bank and income from cottage industries.

4. Interest received from Co- operative Banks was disallowed to the extent of Rs.28,04,714/- which was claimed under Section 80P(2)(d) of the Act.

ITAT Ahmedabad held as under:

1. Interest received from the Co-operative Banks are allowable under Section 80P(2)(d) of the Act as per the decision of Hon’ble Gujarat High Court in the case of Surat Vankar Sahakari Sangh Limited (72 Taxmann 169). The Hon’ble High Court observed that the provision of Section 80P(2)(d) of the Act does not make any distinction in regard to source of the investment because this Section envisages deduction in respect of any income derived by the co-operative society from any investment with a co-operative society.

2. The Co-operative Banks are also registered Co-operative Societies and, therefore, the Assessing Officer as well as the CIT(A) was not right in disallowing the deduction under Section 80P(2)(d) of the Act.

3. Appeal of the assessee is thus allowed.

The copy of the order is as under:

1682668429-7 Ahd 2023 Manila Sahayak Gruh Udyogsaha