TaxTMI 
TaxTMI 
2024 (1) TMI 480
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..... 2704/Mum/2023 3. In this case, the Assessee by filing its return of income, has claimed the deduction of Rs. 3,63,255/- u/s. 80P of the Act, therefore, the AO show caused the Assessee as to why the claim of deduction of Rs. 3,63,255/- u/s. 80P of the Act should not be disallowed in view of the provision of section 80P(4) of the Act. The Assessee by filing its reply dated 15.11.2019 mainly claimed that the Assessee is not a Co- operative Bank carrying banking business and, therefore, not hit by the newly inserted provision of section 80P(4) of the Act. 4. The ld. Assessing Officer ('A.O.' for short) considered the claim of the Assessee, however, found the same as not acceptable and ultimately disallowed the deduction of Rs. 3,63,255/- as claimed u/s. 80P of the Act, by concluding as under: 9. The sub-section (4) of section 8OP was inserted by Finance Act, 2006 w.e.f 01.04.2007. It provides that provision of said section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. It also defines the expressions "Co-operative Bank", "Primary Agricultural Credit....
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.... same. Thus, it is clear in the case of the assessee that it fulfills the condition laid down u/s 56(c)(ccv) part V of the Banking Regulation Act, 1949. (Cu) "Primary co-operative bank" means a co-operative society, other than primary agricultural credit society whose: (1) The primary object or principal business of which is the transaction of banking business; (as in the case of assessee) (2) The paid up share capital and reserves of which are not less than 1 lakh rupees and (share capital exceeds 1 lakh) (3) The byelaws of which do not permit admission of any other co- operative society as a member: 13. In view of the above discussion it is clear that the credit society assessee falls under the category of Primary Co-operative Bank. The assessee fulfills all the 3 conditions of a Primary Co-operative Bank and therefore, the provisions of sec. 80P(4) are applicable in this case. 14. Similar precedence laid down in Renuka Co-Operative Credit Society Ltd. vs. ITO Wd. 2(2) in ITA No. 346/PNJ/20 13 dated 14/08/2014 and ITO, Ward 1(3), Belgaum vs. Shri Dudundeshwar Urban Co-operative Credit Society Ltd. 53 taxann.Com 165(Panji-Trib.....
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....ith any other Co-operative Society, then such amount of interest or dividend earned shall be deductible in computing the total income of the Assessee. 7.1 The provisions of section 80P(2)(d) of the Act reflects "Co-operative Society" but not the "Co-Operative Bank" therefore question emerge "whether income earned by way of interest or dividend from the investments made with any other Co- operative Bank is allowable as deduction under section 80P(2)(d) of the Act, or not". 7.2 The Hon'ble Co-ordinate Benches of the Tribunal in various cases including in Belgaum Coal and Coke Consumer Co-operative Association Ltd. Vs. ITO in ITA No. 102/PAN/2018 decided on 06.04.2022, Nawbharat Darpan Co-operative Credit Society Ltd. Vs. CIT in ITA No. 5288 and 5289/Mum/2018 decided on 25.11.2021, Borivali Jan Kalyan Sahkari Patpedhi Ltd. Vs. ITO in ITA No. 5230/Mum/2019 decided on 30.03.2021 and in the case of Pathare Prabhu Co-operative Housing Society Ltd. Vs. ITO in ITA No. 1346 & 1347/(MUM) of 2023 decided on 27.07.2023 (2023) 153 taxmann.com 714 (Mum. Trib.) dealt with identical issue "as to whether the interest/dividend income earned from Co-operative Bank is allowable as deduction under....
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.... District Central Co- operative Bank or the State Co-operative Bank. Accordingly, the assessee kept the deposits in Co-operative Banks registered under the Maharashtra Co-operative Societies Act and earned Interest, which was claimed as a deduction under section 80P(2)(d) of the Act. The AO denied the deduction under section 80P(2Xd) of the Act on the basis that the Co- operative Bank is covered under the provisions of section 80P(4) of the Act. We find that the Hon'ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 123 taxmann.com 161/279 Taxman 75/431 ITR 1 while analysing the provisions of section 80P(4) of the Act held that section 80P(4) is a proviso to the main provision contained in section 80P(1) and (2) and excludes only Co-operative Banks, which are Co-operative Societies and also possesses a licence from RBI to do banking business. The Hon'ble Supreme Court further held that the limited object of section 80P(4) is to exclude Co-operative Banks that function at par with other commercial banks i.e. which lend money to members of the public. Thus, we are of the considered view that section 80P(4) of the Act is of relevance only in a case where th....
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....erative 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 may herein observe that the term 'co-operative society had been defined under sec. 2(19) of the Act, as under:- '(19) "Co-operative society" means a cooperative 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;' We are of the considered view, that though the co-operative bank pursuant to the insertion of Sub-section (4) of sec. 80P would no more be entitled for claim of deduction under sec. 80P of the Act, but however, 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 enforced 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 th....