TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1302
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....Income derived from Cooperative Banks : 1. The Id C.I.T. (Appeals) erred in upholding the Intimation Order u/s 143(1) dated 30/09/2022 disallowing a sum of Rs. 12,05,880/- being Interest Income derived from Cooperative Banks without appreciating that Cooperative Banks registered under Maharashtra Cooperative Societies Act, 1960 are Cooperative Society and as such Interest Income derived by the Appellant is eligible for deduction U/s 80P(2)(d) of the Act. and therefore disallowance ought to be deleted. 2. The Id C.I.T. (A) erred in not granting the relief U/s 80P(2)(d) despite the fact that the Society is eligible for Deduction under Chapter VIA r.w.s. 80AC of the Act insofar as the Return of Income was filed within the due date prescr....
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....ing a cooperative society, the gross total income includes any income referred to un 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 following namely:- ..... (d). In respect of any income by way of interest or dividend derived by the cooperative society from its investments with any other cooperative society, the whole of such income. 5.3. Whereas the entity mentioned in the Section 80P(2)(d) is Cooperative Society, but the appellant has claimed deduction for the interest earned from a Cooperative Bank. From the documents submit....
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....he Totagars Co-operative Sale Society Sirsi in ITA No. 100066/2016 dated 16.06.2017. The relevant part of the judgment is being reproduced below: "13. What Section 80P(2)(d) of the Act, which was though not specifically argued and canvassed before the Hon'ble Supreme Court, envisages is that such interest or dividend earned by an assessee co-operative society should be out of the investments with any other co-operative society. The words 'Co-operative Banks' are missing in clause (d) of subsection (2) of Section 80P of the Act. Even: though a co- operative bank may have the corporate body or skeleton of a cooperative society but its business is entirely different and that is the banking business, which is governed and regu....
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....edit society. 5.6. In view of the above, this Ground of appeal is dismissed." 3. We have heard rival submissions of the parties and perused the relevant materials on record. We find that the Hon'ble Supreme Court in the case of Kerala State Co-Operative Agricultural & Rural Development Bank Ltd. [2023] 154 taxmann.com 305 (SC) held that if the co-operative bank is carrying out the business of banking as defined u/s 5(b) of the Act Banking regulation Act then only such co-operative bank shall be barred for deduction u/s 80P(2)(d) of the Act in view of prohibition u/s 80P(2)(4) of the Act, otherwise the cooperative bank not falling u/s 5(b) of the Act Banking regulation Act shall be considered as co-operative society eligible for deducti....
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....s would not be eligible for claiming deduction under section 80P(2) of the Act. Finally, the issue reached the Hon'ble Apex Court where it was held that banking is defined under section 5(b) of the Banking Regulation Act, 1949 to mean accepting, for the purpose of lending or investment, deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise. Therefore, a banking company must transact banking business with the public. If a co-operative society would not transact the business of banking as defined in Section 5(b), it would not be a cooperative bank within the meaning of section 56 of Banking Regulation Act and would be entitled to the benefit of deduction under Section 80P(....