Rajkot tribunal rules co-operative societies can claim Section 80P(2)(d) deduction on bank interest

The Income Tax Appellate Tribunal (ITAT) Rajkot held that co-operative societies are entitled to claim deductions under Section 80P(2)(d) of the Income Tax Act on interest income derived from deposits held with banks. The ruling resolves disputes where tax officers previously disallowed such deductions by restricting the benefit strictly to investments made with other co-operative societies. Section 80P(2)(d) provides tax relief on income earned from investments placed with other co-operative societies, leading tax authorities to argue that commercial banks do not qualify as co-operative entities.

The judicial interpretation clarifies that interest earned from cooperative banks or scheduled banks maintained by co-operative societies qualifies for the deduction under the statutory framework. Tax practitioners and accountants handling co-operative society accounts should review past assessments and current return filings to incorporate Section 80P(2)(d) claims on bank interest earnings. Professionals must keep track of jurisdictional tribunal rulings to defend similar deductions during scrutiny assessments.

Bottom line: leveraging this precedent reduces the tax liability of co-operative societies significantly on their interest income.