TaxTMI 
TaxTMI 
2025 (1) TMI 1585
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....d the disallowance of deduction u/s. 80P of commission receipts of Rs.53,52,723/- after deducting the salary expenses of Rs.3,00,202/- from the total commission receipts of Rs.56,52,925/-. Being the same income is received from the MSEB on account of running cash counter for MSEB bill payments and the same is treated as Income from Other sources. 4. The Appellant crave leave to add, delete, amend, alter, vary and/or withdraw all or any one of the above grounds of appeal." 3. Briefly stated, the facts of the case are that the assessee is a Cooperative Society engaged in carrying out banking business providing credit facility to its members. It is registered under the Maharashtra State Co-operative Society Act, 1960. It filed its return of income on 31.10.2017 for AY 2017-18 declaring income at Rs.Nil. The return was processed u/s 143(1) of the Income Tax Act, 1961 (the "Act"). Subsequently, the case was selected for scrutiny through CASS. Statutory notice(s) u/s 143(2)/142(1) of the Act were issued calling for various details. During the assessment proceedings, the Ld. Assessing Officer ("AO") found that the assessee has earned interest of Rs....
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....quite obvious that the appellant, who is merely a 'Co-Operative Credit Society', and does not possess a licence from the Reserve Bank of India, cannot conduct the banking activities at par with that of a 'Cooperative Bank'. The Hon'ble Supreme Court's observations made in the case of 'Mavilayi (supra) has also applied the ratio decidendi of its judgment rendered in Citizen Co-operative Society Limited V. Assistant Commissioner of Income-Tax, Circle -9(1), Hyderabad (397 ITR 1). Therefore, in view of the law laid down by the Hon'ble Supreme Court in the case of Citizen Co-operative Society Limited V. Assistant Commissioner of IncomeTax, Circle -9(1), Hyderabad (397 ITR 1) that the Cooperative Societies, who are providing the credit facilities to their members their operations would be confined to their members only. As such, it is amply clear that the appellant under the Appeal, a Co-operative Credit Society, while earning the 'Commission Income' from 'MSEB', has conducted purely the commercial activities, which under no stretch of imagination can be said to be attributable to any activity falling under the category of those specified ....
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....EB, comprising of the following decisions : 1. Anand Urban Co-Operative Credit Society Ltd. Vs. Income Tax Officer, (2024) 206 ITD 36 (Pune). 2. Bhagyalaxmi Nagri Sahakari Patsanstha Meryadit vs. ITO, 14.03.2022. 3. Haveli Taluka Veej Kamgar Sahakari Pathsanstha Maryadit, Assessment Order passed for the A.Y. 2014-15. 4. Commissioner of Income Tax vs. Ahmednagar District Central Cooperative Bank Ltd., [2003] 264 ITR 38 (BOM). 5. Commissioner of Income Tax vs. Amravati District Central Co- operative Bank Ltd., 24th February, 2015. 6. Ruby Hall Clinic Karmachari Sahakari PatSanstha Maryadit Vs. The Income Tax Officer, Ward - 7(1), ITA No. No.31/PUN/2024. 7. Mazi Sainik Nagari Sahakari Patsanstha Vs. The Income Tax Officer, Ward-7 (3), ITA No: 1151/PUN/2023. 8. Baner Nagari Sahakari PatSanstha Maryadit Vs. The CIT (A), National Faceless Appeal, ITA No: 1322/PUN/2023. 7. The Ld. DR relied on the orders of the Ld. AO/CIT(A). 8. We have heard the Ld. Representatives of the parties and perused the material on record as well as various judicial precedents relied upon by the Ld. AR. The facts are not in dispute. The assessee is a credit Cooperative Society....
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....e of Vaveru Co-operative Rural Bank Ltd. v CIT [(2017) 396 ITR 371 took a view that such interest income is attributable to the activities of the society and, therefore, eligible for exemption u/s 80P(2)(a)(i) of the Act. Similar view has been taken by the Hon'ble Calcutta High Court in the case of PCIT vs. Gunja Samabay Krishi Unnayan Samity Ltd., 147 taxmann.com 518 (Calcutta) and the Hon'ble Madras High Court in the case of Chennai Central Cooperative Bank Ltd. vs. ITO, 148 taxmann.com 17 (Madras). The Coordinate Bench of Pune Benches in the case of M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit Vs. ITO (ITA Nos.559/560/PUN/2018, dated 11-12-2018) taken view in favour of the assessee following the judgment of Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). Following the decision of the Coordinate Bench of the Tribunal, we are of the considered opinion that the interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, we direct the Assessing Officer to allo....
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.... Sahakari Pat Sanstha Ltd. vs. ITO, 120 taxmann.com 10 wherein the Tribunal after making reference to the decisions of the Hon'ble Supreme Court in the case of Totgars Cooperative Sales Society Ltd. (supra) and having noticed the divergent views of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. vs. ITO, 55 taxmann.com 447 and the Hon'ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. vs. CIT, 50 taxmann.com 278, decision of the Hon'ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. (supra) had not been preferred to view of the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. (supra). The relevant observation of the Pune Bench of the Tribunal in the case (supra) is as under :- "9. The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT (ITA No.713/PUN/2016, dated 9-4-2019) decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2....
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....investments made with co-operative banks." 9.2 In the case of ITO Vs. Shiv Pratap Nagari Cooperative Credit Society Limited in ITA No. 1338/PUN/2024, dated 17.10.2024 the Pune Tribunal allowed the claim of the assessee u/s 80P(2)(d) on the impugned issue by observing and holding as under : "8. The Co-ordinate Bench of the Pune Tribunal in the case of ITO Vs. Goreshwar Gramin Bigar Sheti Sahakari Pat Sanstha Maryadit in ITA No. 1191/PUN/2023, dated 04.06.2024 decided the impugned issue in favour of the assessee by holding as under : "4. Suffice to say, the Revenue's sole substantive grievance canvassed in the instant appeal is only for reviving the learned Assessing Officer's action disallowing the assessee's sec.80P deduction claim representing interest income from co-operative society(ies)/bank(s)/nationalized bank(s) involving varying sums; as the case may be. It is in this factual backdrop that we first of all note that the tribunal in The Rena Sahakari Sakhar Karkhana Ltd. vs. PCIT's case has already rejected the Revenue's stand regarding interest income derived from co-operative bank(s)/institution(s) in ITA.No.1249/PUN./2018 dated 07.01.2022 reading as under : "3.&n....
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....sidered view, that as there were justifiable reasons leading to delay on the part of the assessee in filing of the present appeal before us, therefore, the same merits to be condoned. 5. On merits, it was submitted by the ld. A.R, that as the A.O while framing the assessment had after making necessary verifications taken a plausible view, therefore, the Pr. CIT had exceeded his jurisdiction by seeking to review the order passed by him in the garb of the revisional powers vested with him under Sec.263 of the Act. It was submitted by the ld. A.R, that the issue as regards the eligibility of the assessee for claim of deduction under Sec.80P(2)(d) on interest income derived from investments/deposits lying with co-operative banks was squarely covered by the various orders of the coordinate benches of the Tribunal viz., (i). M/s Solitaire CHS Ltd. vs. Pr. CIT, ITA No. 3155/Mum/2019; dated 29.11.2019 ( ITAT "G" Bench, Mumbai); Kaliandas Udyog Bhavan Premises Co-op Society Ltd. Vs. ITO-21(2)(1), Mumbai, ITA No. 6547/Mum/2017 (ITAT Mumbai); and (iii). Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT, Circle-3, Aurangabad, ITA No, 308/Pun/2018 (ITAT Pune). On the basis of his aforesaid co....
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....from where the assessee was in receipt of interest income were not cooperative 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. 8. After necessary deliberations, we are unable to persuade ourselves to concur with the view taken by the Pr. CIT. Before proceeding any further, we may herein cull out the relevant extract of the aforesaid statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. Where in the case of an assessee being a cooperative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in subsection (2), in computing the total income of the assessee. (2). The sums referred to in sub-section (1) shall be the f ollowing, namely:- (a)................................................................................. (b)................................................................................. ....
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....f 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 cooperative 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. 9. In so far the judicial pronouncements that have been relied upon by the ld. A.R are concerned, we find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income derived from its investments held with a cooperative bank is covered in favour of the assessee in the following cases: (i). M/s Solitaire CHS Ltd. vs. Pr. CIT, ITA No. 3155/Mum/2019; dated 29.11.2019 ( ITAT "G" Bench, Mumbai); (ii). Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT, Circle-3, Aurangabad, ITA No, 308/Pun/2018 (ITAT Pune) (iiii). Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai We further 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....
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....bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 10. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and allowed the assessee's claim for deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 of the Act for dislodging the same. Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263 of the Act, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we set-aside his order and restore the order passed by the A.O under Sec. 143(3), dated 07.03.2016." 5. So far as the assessee's interest income from nationalized bank(s) and "treasury" is concerned, it goes without saying that the learned NFAC has already directed exclusion thereof which has nowhere been disputed in the instant appeal. We hardly need to adopt the same in the Revenue's instant appeal in very terms. Ordered accordingly. ....
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....e of Mehsana District Central Co-operative Bank Ltd. v. ITO [2001] 251 ITR 522, the Supreme Court has held that the income derived by the co-operative bank by way of rent from the customer for enjoying safe deposit vault as a facility, would squarely come under Section 6(1)(a) of the Banking Regulation Act and that such income derived by the assessee-bank from hiring out safe deposit vaults was income from the business of banking and, therefore, deductible under Section 80P(2)(a)(i) of the Income-tax Act. Now, in the present case, MSEB and MPCS are the public undertakings. Both these public undertakings were the customers of the assessee-banks. They were having current account with the assessee-bank. The assessee-bank undertook on behalf of these two customers the work of collecting electricity dues from the consumers of electricity who were charged bills by the two public undertakings. This was a facility given by the assessee-bank to the aforestated two public undertakings who were their customers. Banking, today, covers a large number of activities. With globalisation, banking is not restricted to receiving deposits for the purposes of lending. Banks offer various facilities to ....
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....istrict Central Cooperative Bank Ltd. [2001] 251 ITR 522." 10.2 Similarly, the subsequent decision of the Hon'ble Bombay High Court in the case of Amravati District Central Co-operative Bank Ltd. (supra) considered the question; "ii] Whether on the fact and in the circumstances of the case the learned ITAT was justified in holding that the assessee is entitled to deduction u/s 80P(2)(a) of an 3 ITL 73.09.odt amount Rs. 43,75,229/- being commission on electricity bill even though such as activity was in addition to the carrying on the business of banking?" and held as under : "6] With the assistance of the respective Counsel, we have perused the judgment of the Hon'ble Apex Court in case Commissioner of 4 ITL 73.09.odt Income Tax vs Nawanshahar Central Co-op. Bank Ltd, reported at (2012) 349 ITR 689 (SC). In this case, the Hon'ble Apex Court has considered the income from underwriting commission for eligibility under Section 80P. It has relied upon the earlier judgment in case of Commissioner of Income Tax, Jalandhar vs Nawanshahar Central Cooperative Bank Limited and dismissed the challenge as raised by the Department. Thus, the Hon'ble Apex Court has found that the....
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....vations: "10. We have carefully considered the rival submissions, orders of the authorities below and case law cited. The short question before us is to determine eligibility of deduction under section 80P of the Act in respect of income earned from certain allied activities viz. (i) Locker Rent; (ii) Ambulance Rent; (iii) Commission on Collection of MSEB bills; and (iv) Health Club by cooperative credit society carrying on banking business. The alternate ground agitated by the assessee is towards ad-hoc estimation of expenses in relation to such income @ 10% of the gross receipt as against actual and proportionate expenses attributable for the purpose of carrying on such allied activities. This has resulted in higher incidence of taxation owing to denial of deduction under section 80P on such income. We find that eligibility of the assessee for deduction under section 80P of the Act in respect of locker rent income is covered by the decision of the Hon'ble Supreme Court in the case of Mehsana District Central Co-op. Bank Ltd. (supra). Therefore, we set-aside the direction of the CIT(A) in this regard and hold that the assessee is eligible for deduction under section 80P of the ....
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....ording the opportunity to the assessee in this regard also offends the provisions of the Act as well as principles of natural justice. In the light of the aforesaid, we hold that the assessee is entitled to deduction under section 80P(2)(c)(ii) of the Act in respect of business activities such as running of Ambulance, Health Club fee etc. which are not eligible for deduction under section 80P(2)(a) or 80P(2)(b) of the Act. In the light of the aforesaid observations, the assessee gets part relief in terms of above." The issues raised in the present appeal by the assessee are identical to the issues already decided by the Tribunal. No material has been placed on record by the Revenue to controvert the findings of Co-ordinate Bench. In such circumstances, we do not find any reason to take any contrary view. Thus, in the facts and circumstances of the preset case and order of Co-ordinate Bench of the Tribunal, we allow the grounds raised by the assessee in appeal, except ground no. 6. 10.5 In the case of Vijkamgar Co-operative Credit Society Ltd. (supra), the Tribunal held as under : "4. The next issue is with regard to addition of Rs. 1,74,516/- on account of inc....