11 Nov 2023 3:15 AM GMT
The Madras High Court recently clarified that interest income received from a Cooperative bank is also entitled to deduction under Section 80P(2)(d) of the Income Tax Act 1961.
Justice Krishnan Ramasamy observed that as per the Act, a Co-operative society is defined as a co-operative society registered under the Co-operative Societies Act 1912. Thus, even a cooperative bank would come within the meaning of a Co-Operative society and be entitled to deduction.
The court was hearing petitions filed by Thorapadi Urban Co-op Credit Society Limited and Virupachipuram Urban Co-op Credit Society Limited challenging a notice issued under Section 148A(b) of the Income Tax Act 1961 for re-opening assessment made under the Income Tax Act.
The petitioner Society had argued that they had made investments with the Co-operative Bank for which they received interest which was entitled to deduction under Section 80P(2)(d).
The Income Tax Officer however had sent the impugned notices saying that the provision was only available for income and interest received from Co-operative Society and not from Co-operative Bank. It was argued that since the RBI had granted permission to carry on the business of banking to the entity, it would lose its status as a Co-operative society as it would provide services not only to the members of the society but to the general public.
The court looked into the Certificate of Incorporation produced by the petitioners which showed that the Co-operative Bank was registered under the Tamil Nadu Co-operative Societies Act. Thus, looking into the definition of Co-Operative society as provided under the law, the court was satisfied that the Co-Operative Bank would also come within the meaning of Co-operative society and thus was entitled for deduction.
Counsel for the Petitioner: Mr.Suhrith Parthasarathy,Amritha Sathyajith.
Counsel for the Respondent: Mr.B.Ramaswamy Senior Standing Counsel for I.T.
Citation:
Case Title: Thorapadi Urban Co-op Credit Society Limited v Income Tax Officer
Case No: W.P.Nos.11172 of 2023
Click here to read/download the judgment