TaxTMI 
TaxTMI 
2022 (12) TMI 741
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....rative bank ignoring that whether the deposits and investment of surplus funds of assessee not immediately required for its purposes made with Scheduled Bank or Nationalized Banks or with co--operative Banks does not make a difference as far as the character of the income earned by assessee is concerned and thus it does not partake the character of its operational income from its activity as cooperative housing society but such interest income falls in the category of Other Income which needs to be taxed u/s. 56 of Income Tax Act and therefore the provision of 80P not applicable on it" 2. Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction us 80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring the harmonious interpretation coming out from conjoined reading of various relevant sections i.e. 80P(2)(d), 194A(3)(v) and 80P(4). 3 "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was correct in allowing deduction us.80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring the amendment....
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....or add a new ground which may be necessary." 3. From a perusal of the aforesaid grounds, it is noted that the issue raised by revenue is only against the action of the Ld. CIT(A) deleting the addition of Rs.2,04,21,374/- which was disallowed by the AO u/s 80P(2)(d) of the Income Tax Act, 1961 (hereinafter "the Act"). 4. Brief facts the AO noted was that the assessee is Co-operative Society constituted by members (office tenement owners) for maintaining the Mittal Court Building. The assesse society returned income declaring in its return of income taxable income of Rs.3,34,640/-. The AO noted that the assessee had invested funds as FDR with the Saraswat Co-op. Bank Ltd, Abhudaya Co-op Bank Ltd. National Co-op Bank Ltd. and the Shamrao Vithal Co-op Bank Ltd. The AO noted that the assessee had received interest income from the deposit made with the aforesaid Co-op. Bank to the tune of Rs.2,04,21,374/- on which it claimed deduction u/s 80P(2)(d) of the Act. So the AO issued notice and asked for justification for the claim of deduction u/s 80P(2)(d) of the Act. Pursuant to the same, the assessee submitted detailed explanation before the AO. However, the AO being not satisfied wit....
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....th the reply of the assessee and disallowance were made for the reason that deduction is not available to deposits placed with co--operative banks by virtue of section 80P(4) of the Act. Finally, AO made addition towards disallowance of interest u/s 80P of the Act of Rs.2,66,13,755/--. 5.2 In the appellate proceeding, the appellant made a detailed submission in which it is submitted by the appellant that section 80P(2)(d) specifically provides for deduction pursuant to deposits placed with other co--operative banks so that interest was earned by way of placing deposits with other cooperative banks, which were registered co--operative societies and also submitted copies of their registration certificates of cooperative banks. The appellant further submitted that Hon'ble Mumbai bench had an occasion to deal with identical facts of the case which was decided in favour of the assessee. It is submitted that the entire issue remain covered by the decision of Mumbai tribunal in the matter of Kaliandas Udyog Bhavan Premises Co--op Society Ltd (94 taxmann.com 15) wherein the decisions of Bangalore Club v. CIT, State Bank of India (SBI) v. CIT, Totgars Co--operative Sale Society....
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....u/s 80P(2)(d) of the Act to the tune of Rs.2,04,21,374/-on the interest received from deposit at four Co. operative banks which was disallowed by AO. On appeal, the Ld. CIT(A)/NFAC allowed the claim of the assessee by relying on the decision of this Tribunal. The Ld. DR assailing the action of the Ld. CIT(A)/NFAC relied on the decision of the Hon'ble Karnataka High Court in the case of PCIT Vs. Totagar's Co-operative Sales Society (395 ITR 611 (Kar) which according to her was in revenue's favour. Per contra, the Ld. AR of the assessee brought to our notice that the Hon'ble Karnataka High Court has passed another order which is in favour of the assessee in PCIT Vs. Totagar's Co-operative Sales Society (392 ITR 74). Therefore, according to him, when there is no decision of the Hon'ble Jurisdictional High Court on this issue, then by applying the principle laid down by the Hon'ble Supreme Court in the case of CIT Vs. Vegetables Products Ltd. 88 ITR 192, the decision in favour of assessee may be adopted by the Tribunal. And therefore according to Ld. AR since there is a decision in favour of the assessee by the Hon'ble Karnataka High Court in the case of PCIT Vs. Totagar's Co-operative....
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....ng Officer to frame assessment de novo. We would like to place our reliance on the decisions relied upon by the Ld.AR in the cases mentioned below:- 1. M/s Petit Powers Co-op. Housing Society Ltd vs ITO (ITA No.549/MUM/2021) 2. M/s Solitaire CHS Ltd Society Office, Solitaire CHS Ltd vs PCIT (ITA No.3155/Mum/2019) 3. Jai Hind Co-operative Housing Society Ltd vs ACIT-25(2) (ITA No.1762 & 1763/Mum/2020) 4. M/s Vadasinor Pragati Samaj Co-operative Credit Society Ltd vs PCIT-18 (ITA No.2539/Mum/2019) 5. M/s Doshi Palace Co-operative Hsg Soc. Ltd vs ACIT-19(1) (ITA No.2510/MUM/2019) 6. The Salsette Catholic Co-operative Housing Ltd vs ACIT Circle-23(3) (ITA No.3870 & 3871/Mum/2019 These decisions of the co-ordinate benches have reiterated the principle that the interest income derived by a co-operative society by way of investment made with a co-operative bank would be entitled to claim of deduction under section 80P(2)(d) of the Act. For this proposition, we would like to place our reliance on the decision of M/s Petit Towers Co-op. Housing Society Ltd vs ITO (supra) wherein the co-ordinate bench has observed as under:- ....
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....posits made with the co-operative banks is in order, or not. In our considered view, the issue involved in the present appeal revolves around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 01.04.2007. On a perusal of the order passed by the Pr. CIT under Sec. 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with co-operative banks, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. Observing, that the co-operative banks from where the assessee was in receipt of interest income were not co-operative societies, the Pr. CIT was of the view that the interest income earned on such investments/deposits would not be eligible for deduction under Sec. 80P(2)(d) of the Act. 7. After necessary deliberations, we are unable to persuade ourselves to be in agreement with....
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.... by a co-operative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We find that the term "cooperative society‟ had been defined under Sec. 2(19) of the Act, as under:- "(19) "Co-operative society" means a cooperative society registered under the Cooperative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of co-operative societies;" We are of the considered view, that though the co-operative banks pursuant to the insertion of subsection (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. ....
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....rative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same time, we find, that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon'ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had observed, that the interest income earned by a co-operative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. We find that as held by the Hon'ble High Court of Bombay in the case of K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court's, then a view which is in favour of the assessee is to be preferred as against that taken against him. Accordingly, taking support from the aforesaid judicial pronouncement of the Hon'ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017....