2017 (12) TMI 1639

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....e interest received by the assessee from co-operative banks is deductible u/s 80P(2)(d) of the Act. 2. The assessee is a co-operative housing society. It earned interest on deposits kept with Co-operative banks and claimed the interest income as exempt u/s 80P(2)(d) of the Act. Sec. 80P(2)(d) provides that the interest income or dividend derived by a co-operative society from its investments with any other co-operative society is deductible u/s 80P of the Act. The assessee took the view that the co-operative banks are basically co-operative societies and interest received from them qualifies for deduction u/s 80P(2)(d) of the Act. Accordingly it claimed deduction. 3. The AO took the view that the income of co-operative banks is not deduct....

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....Ld A.R submitted that the fact that the cooperative banks are basically co-operative societies only cannot be denied. He submitted that the Hon'ble High Court of Himachal Pradesh has taken the view in the case of CIT Vs. Kangra Co-operative bank Ltd (2009)(309 ITR 106) that co- operative banks are cooperative societies and hence the interest income from investments made in any co-operative society would be entitled for deduction u/s 80P(2)(d) of the Act. He submitted identical claim made in respect of interest income earned from co-operative banks has been allowed by the SMC bench in the case of Murude Sahakari Parsanstha Maryadid (ITA No.1058/Mum/2017 dated 21-08-2017) and by the division bench in the case of Lands End Co-operative Housing....

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....the High Court has observed as under:- "....Furthermore, the investments have been made in H.P. State Cooperative Bank which is also a co-operative society and therefore even under sec. 80P(2)(d) of the Act, interest income from investments made in any co-operative society would also be entitled for deduction." 10. Thus, I notice that there are divergent views on this matter. The Hon'ble Karnataka High Court has expressed the view that the deduction u/s 80P(2)(d) would not be available in respect of interest income received from co-operative bank, whereas the Hon'ble Himachal Pradesh High Court has held that the said deduction would be available. The Hon'ble Supreme Court has held in the case of Vegetable Products Ltd (88 ITR 192) that ....