Itat mumbai allows tax deduction on co operative bank interest for housing society

The income tax appellate tribunal in mumbai has permitted a deduction under section 80p(2)(d) on interest totaling ₹5.74 lakh earned by a housing society. This interest income was generated from deposits placed with co-operative banks during the relevant financial period. The ruling supports co-operative entities seeking tax relief on inter-co-operative investments and interest receipts. Section 80p(2)(d) of the income tax act provides deductions to co-operative societies on income derived from investments with other co-operative societies or co-operative banks.

In practice, tax authorities frequently dispute whether co-operative banks qualify as co-operative societies for the purpose of this specific deduction. The old administrative stance denied these claims, whereas judicial interpretations continue to uphold the eligibility of interest earned from co-operative banking institutions. Tax consultants representing housing societies and co-operative entities should review pending scrutiny assessments to claim similar deductions for their clients.

Accountants must ensure accurate reporting of interest earned from co-operative banks under the correct deduction heads during income tax return filings. Bottom line: Housing societies can safely claim section 80p(2)(d) benefits on co-operative bank interest by citing this favorable appellate precedent.