TaxTMI 
TaxTMI 
2018 (9) TMI 287
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....eclaring NIL income. It is stated that it is the case of Cooperative Group Housing Building Society registered under Cooperative Societies Act, Delhi. It was submitted that Society was formed with the object of providing flats to its Members. Presently, the assessee is looking-after maintenance of flats. The society is in the receipt of maintenance charges. The charges received from the Members is deposited in the bank account. The society exists for its Members on concept of mutual benefit of no profit and loss basis. It was submitted by the assessee that the Society has no income and it had suffered loss of Rs. 18,02,925/- as per its income and expenditure account. The assessee-society has claimed exemption on the ground that it exists for mutual benefit of the Members. The A.O. however, observed that assessee has earned the following income by way of interest. (i) Interest on FDR from Canara Bank Rs. 83,687/- (ii) Interest on FDR from Saraswat Cooperative Bank Ltd., Rs.6,63,611/- Total Rs.7,47,298/- 4.1. The assessee has claimed even interest income as exempt on the ground of mutuality. The interest income received by the assessee-society, in the view of the A.....
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....rmed for the benefit of their own Members. The only difference is the nature of business i.e., banking activities. The A.O. failed to appreciate the legal provision. Further, as per Section 2(19) of the Act, the Cooperative Society means, a Cooperative Society registered under the Cooperative Societies Act or under any law for the time being in force. The provisions of I.T. Act either in Section 2(19) or in Section 80P do not make any discrimination between the Cooperative Society carrying on banking business and other Cooperative Societies. Cooperative Banks are primarily Cooperative Societies by constitution and Bank by nature of the business. Cooperative Society Banks are merely a variety of Cooperative Society. Thus, the Cooperative Banks would necessarily be covered under the scope of Cooperative Societies and deduction under section 80P(2)(d) be allowed. The assessee-society relied upon the decision of Hon'ble Karnataka High Court in the case of Pr. CIT vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 in which it was held that "thus the Cooperative Bank which is a species of the genus would necessarily be covered by the word "Cooperative Society". The assessee-society ....
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....titled to consider the claim and to adjudicate the same even if claim made without filing the revised return." The Assessee, therefore, submitted that deduction of Rs. 50,000/- may also be allowed separately. 6. The Ld. CIT(A) however, did not allow the claim of assessee-society and noted that principle of mutuality is not applicable to Section 80P(2)(d) of the I.T. Act. Ld. CIT(A) noted that Saraswat Cooperative Bank Ltd., was connected into a Bank and it apparently is no more a Society. Therefore, it was held that assessee-society is not eligible for deduction under section 80P(2)(d) of the I.T. Act. Further, assessee-society is not entitled for deduction on account of interest received from Canara Bank. The Ld. CIT(A) also held that interest income received is income from other sources. 7. The Ld. CIT(A) as regards deduction of Rs. 50,000/- under section 80P(2)(c)(ii) noted that for claiming the above deduction claimant should be a Cooperative Society and it is an undisputed fact that assessee-society is a Cooperative Society, therefore, claim of assessee is allowable. Ld. CIT(A), however, noted that no such claim was made by the assessee- society at the time of filing the ret....
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....ciety Bank. Therefore, according to Sec. 80P(2)(d) of the IT. Act, the said amount of interest earned from a Cooperative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its total income. Therefore, the Assessing Officer was not justified in denying the said deduction to the assessee respondent. 8.1. In the above decision, Hon'ble Karnataka High Court has clearly provided that the Co-operative Society Banks are merely a variety of Co-operative Societies and are covered under the term 'Cooperative Society'. This further clarifies the provision as laid down in section 80P(2)(d) that 'any interest income earned from the investments made in Co- operative Bank shall be allowed as deduction on account of interest income received from Cooperative Societies'. The Ld. CIT(A) in his decision has relied upon the judgment of Apex Court in the case of M/s. The Totgars' Cooperative Sale Society Limited vs., income Tax Officer. Karnataka, [2010] 322 ITR 283 (SC) which deals with the interpretation of the deduction under section 80P(2)(a)(i) of the I.T. Act, 1961. However, Ld. CIT(A) has erred in applying the provisions, on the decision by ....
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....me." The assessee-society has received interest from Saraswat Cooperative Bank Ltd., on making investment in FDR. The Hon'ble Karnataka High Court in the case of The Pr. CIT vs. Totagars Cooperative Sale Society (supra) held that "the Cooperative Bank which is a species of genesis would necessarily be covered by the word "Cooperative Society". The ITAT, Mumbai Bench in the case of ITO-21(1)(1), Mumbai vs., M/s. Abhaylaxmi Co-op. Credit Society Ltd. & Vice-Versa (supra) held as under : "Claim for exemption u/s 80P(2)(d) with respect to interest on deposits with other co-operative banks - Held that:- In view of the clear phraseology of Sec. 80P(2)(d) of the Act and the judgment of the Hon'ble Karnataka High Court in the case of M/s. The Totgars' Cooperative Sale Society Limited (2017)-(1)-TMI-1100-Karnataka-High Court, the amount of interest earned by the assessee from deposits with other Co-operative Banks is eligible for exemption. Accordingly, on this aspect also, order of CIT(A) is set-aside and the Assessing Officer is directed to allow the claim of the assessee." 10.1. The ITAT, Delhi Bench in the case of ACIT, Circle 38(1), New Delhi vs. Jawala Cooperative Urban Thrift ....
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....e interest earned on by the assessee-society from its investment with the other Cooperative Society would be entitled for deduction under section 80P(2)(d) of the I.T. Act. The issue is covered in favour of the assessee-society by the Judgment of the Hon'ble Karnataka High Court in the case of M/s. Totagars Cooperative Sale Society (supra) and other decisions of various Benches of the Tribunal referred to above. In this view of the matter, we set aside the Orders of the authorities below and delete the addition of Rs. 6,63,611/-. 12. The assessee-society made further claim of deduction under section 80P(2)(c)(ii) for a sum of Rs. 50,000/-. The above provision provides "deduction in respect of income of Cooperative Societies". In the case of Cooperative Society engaged in activities other than those specified in clause (a) or (b) (either independently or in addition to or any of the activities so specified) so much of its profits and gains attributable to such activities as (does not exceed) - (ii) in any other case Rs. 50,000/-." The assessee-society did not make claim of deduction of Rs. 50,000/- in the return of income. The Ld. CIT(A) noted that assessee-society is entitled to c....