TaxTMI 
TaxTMI 
2021 (2) TMI 417
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.... the Part V of Banking Regulation Act, 1949, it is to be considered as a co-operative bank, and therefore under the purview of a co-operative bank, the assessee is not eligible for deduction u/s. 80P(2)(d) of the Income Tax Act, 1961?" 3. "Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) is justified in allowing the deduction u/s. 80P(2)(d) of the Income Tax Act, 1961 as per the ground of appeal of the assessee, without appreciating the fact that in the instant assessment year, the assessee has failed to substantiate the source of bank from which it has earned interest income. Further in assessee's own case, it is noticed that assessee earned interest from Cooperative banks." 4. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in the disallowance of the deduction u/s. 80P(2)(a)(i) of Rs. 3,49,62,187/- without appreciating the action of the AO." 5. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the assessee fulfils the condition laid down u/s. 56(c) (ccv) of part V of Banking Regulation Act,1949 and cove....
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....k of Rs. 93,26,570/-. The assessee also received the dividend income in sum of Rs. 4,53,660/- from MDC Co-op bank. The Assessee claimed the exemption in sum of Rs. 3,49,62,187/-- u/s 80P(2)(a)(i) and a sum of Rs. 97,80,230 u/s 80P(2)(d). As such the total exemption was claimed to the tune of Rs. 4,47,42,417/- u/s 80P of the I.T.Act, 1961. The show-cause notice was issued for the justification and after the reply, the claim u/s 80P of the Act,1961 was declined. Feeling aggrieved, the assessee filed appeal before the Ld.CIT(A) who allowed the claim of the assessee., therefore, the revenue has filed the present appeal before us. ISSUE NO. 1 to 3:- 4. Mainly all these grounds are in connection with the disallowance of claim u/s 80P(2)(d) of the Act. At the very outset, the Ld. Representative for assessee has argued that the issue has duly been covered by the decision of the Hon'ble ITAT in assessee's own case bearing ITA No. 7634/M/2016 titled as ITO-21(2)(2) vs MTNL (Mumbai employees Co-op Society), therefore, the claim of the assessee has rightly been allowed by the CIT(A). However, on the other hand Ld. DR has argued that the claim of the assessee has wrongly been allowed by t....
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.... on the interest and dividend income earned from investment with any other cooperative society will not be an allowable deduction if such -investment has-been made with a cooperative In this regard reliance is placed on the following decisions: i) [2018] 94 taxmann.com 15 (Mumbai - Trib.) KaliandasUdyogBhavan Premises Co-op Society Ltd. v. Income-tax Officer-21(2)(1J, Mumbai for AY 2014-15 dated 25.04.2018. The facts of that case are considered in brief as under- * The assessee was a co-operative society. During relevant year assessee earned interest on deposits kept with co-operative banks. m The assessee filed its return claiming deduction under section 80P(2)(d) on interest so earned. * The Assessing Officer opined that interest income by the assessee-credit society was not earned from the activity of providing banking facilities to its members and was outside the 'purview of 'Principle of Mutuality'. He thus rejected assessee's claim for deduction. The Assessing Officer had taken support of the judgment of the Hon'ble Supreme Court in the case of Bangalore Club v. CTT[2013] 29 taxmann.com 29/212 Taxman 566/350ITR 509 and i....
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....tion SOP would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, but their view that the same shall also jeopardise the claim of deduction of a co-operative society under section 80P(2)(d) in respect of the interest income on their investments parked with a co-operative bank cannot be accepted, * As long as it is proved that the interest income is being derived by a cooperative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. section 80P(2)(d) would be duly available. The term 'co-operative society1 had been defined under section 2(19) of the Act. * It is opined that though the co-operative bank pursuant to the insertion of sub-section (4) of section SOP would no more be entitled for claim of deduction under section SOP, but however, as a co-operative bank continues to be a cooperative society registered under the Co-operative Societies Act, 1912 or under any other law for the time being enforced in any State for the registration of cooperative so....
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....erative banks is not different from the interest earned from Scheduled bank and hence clause (d) of Section 80P(2) of the Act would not apply to interest earned from deposits kept with co-operative bank. 6. On the contrary, the Ld A.R submitted that the fact that the cooperative banks are basically co-operative societies only cannot be denied. H$ 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 could be entitled for deduction u/s 8QP(2)(d) of the Act. He submitted identical claim made in respect of interest income earned from cooperative banks has been allowed by the SMC bench in the case of MurudeSahakariParsansthaMaryadid (ITA No.l058/Mum/ 2017 dated 21-08-2017) and by the division bench in the case of Lands End Co-operative Housing Society Ltd (ITA No.3566/ Mum/2014 dated 15-01-2016). 7. I heard the parties and 'perused the record. I notice that the Hon'ble Karnataka High Court has initially taken the following view in the ....
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.... is required to be adopted in this case. Accordingly I hold that the interest income earned by the assessee from Co-operative banks, which are basically co-operative societies carrying on banking business, is deductible u/s 80P(2)(d) of the Act. On this reasoning, I uphold the decision taken by Ld CIT(A) in both the years on this issue". 5.3.2 In view of the above discussion and following the decision of the ITAT, Mumbai in appellant's own case for A.Y. 2013-14, it is held that the appellant would be entitled for claim of deduction under Sec. 80P(2)(d) of the Act in respect of interest and dividend income earned by it, on the investments held with the co-operative bank i.e. MDC Co-operative Bank Ltd. Accordingly, the AO is directed to allow the deduction u/s 80P(2)(d) of the Act amounting to Rs. 97,80,230/- and recompute the total income. The ground no.2 taken by the appellant is allowed. 5. On appraisal of the above mentioned finding, we find that the the issue has been decided in favour of the assessee by the CIT(A) on the basis of the decision of the Hon'ble ITAT in assessee's own case bearing ITA No. 7352/Mum/2016 for the A.Y.2013-14. The facts are no distinguis....
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.... 4.3.1 For coming to the above conclusion, reliance is placed on the following decisions . . ij Order of CIT(Appeals)-33 Mumbai in appellant's own case for AY2013-14 dated 17.04.2018 wherein the addition made by the AO on account of . disallowance of deduction u/s 80P(2jfaj(i) has been deleted. ii) Hon'ble Karnataka High Court in the case of Shri Vardhaman Urban Co- operative Credit Society Ltd. vs. CommiSvSioner of income Tax (ITA no. ' 100038 of 2014 dated 21-09-2015), has held that all the Co-operative Credit Societies are eligible for deduction u/s SOP(2)(aJ(iJ unless they are declared as bank by the Reserve Bank of India. iii) Quepem Urban Co-operative Credit Society Ltd. Vs ACIT dated 17-04-2015 (2015J 58 taxmann.com 113 (Bombay), wherein it is held that the assessee cannot be considered as a co-operative Bank for the purposes of section 80P(4) of the Act, unless following three conditions are satisfied- a) the principal business or primary objective should be business of banking b) b) its paid up share capital and reserves should not be less than rupee one lac c) c) its bye-laws do not permit admission ....
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....,046/-. The Ld. Assessing Officer further observed that the assessee claimed deduction of Rs. 4,45,67,962/- u/s 80P(2)(a)(i) and Rs. 61,75,706/- u/s 80P(2)(d) of the Act. As such the assessee claimed total deduction of Rs. 5,07,43,668/- u/s 80P of the Act, which was denied by the Ld. Assessing Officer. On appeal, before the Ld. Commissioner of Income Tax (Appeal), the view taken in the assessment order was affirmed by Ld. Commissioner of Income Tax (Appeal) so far as deduction u/s 80P(2)(d) to the tune of Rs. 61,75,706/-, which is under challenge before this Tribunal. However, we find that on identical issue in the case of Income Tax Officer vs M/s Presidency Co-operative Housing Society Ltd. (ITA No.4058/Mum/2017) order dated 06/03/2018 ((supra)), another decision in Income Tax Officer vs M/s The Central Telegraph Office Co-operative Credit Society Ltd. (ITA No.4553/Mum/2016), Lands End Co-operative Housing Society Ltd. (2016) 46 CCH 52 (Mum. Trib.) following the decision in CIT vs Darbhanga Mansion CHS Ltd. (ITA No.1474/Mum/2012) decided identical issue in favour of the assessee by holding that the deduction in respect of income cooperative society by way of interest from its inv....