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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI AMARJIT SINGH
आदेश / O R D E R Per Amarjit Singh (AM): This appeal filed by the assesse is directed against the order passed by the ld. CIT(A) NFAC, dated 10.04.2023 for A.Y. 2014- 15. The assessee has raised the following grounds before me: “1. The ld C.I.T. (Appeals) erred in upholding the Order u/s 143 (3) dated 23/12/2016 disallowing a sum of Rs. 4,44,280/- being Interest Income derived from Co-operative Banks without appreciating the fact that Co-operative Banks registered under Maharashtra Cooperative Societies Act, 1960 is a Co-operative 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 learned ITO 22(1)(5) has clearly accepted as can be seen from the order passed u/s 143(3) of the IT Act, 1961 that amount P a g e | 2 Gold Coin Apartments Cooperative Housing Society Vs. ITO 22(1)(5) disallowed is interest income from Co-operative Banks as summed up in Point no 5(vi) on page 5 of the order u/s 143(3) of the Act 3. The Appellant craves leave to add, amend, alter, vary and/or rescind or withdraw any or all the above grounds of Appeal.”
2. The fact in brief is that return of income declaring total income at Rs.444,281/- was filed on 29.11.2015. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 29.07.2016. During the course of assessment proceedings the assessing officer noticed that assessee has earned interest income of Rs.444,281 on the deposit kept with the cooperative bank and claimed deduction u/s 80P(2)(d) of the Act. On query, the assessee explained that assessee is a cooperative housing society and it has earned interest income from the Shamrao Vittal Co-operative Bank Ltd and the Maharashtra State Co-operative Bank which are registered under Maharashtra Cooperative Society Act 1961 as a cooperative society therefore, the assessee is entitled for deduction u/s 80P(2)(d) in respect of interest income earned from the cooperative bank. The assessing officer has not agreed with the submission of the assessee society. The assessing officer stated that vide Finance Act 2006, deduction of income for Income cooperative banks as per the provision of Sec. 80P of the Act has been withdrawn by way of insertion of Sec.80P(4) of the Act w.e.f 1.04.2007. The assessing officer was of the view that a cooperative bank is a commercial bank and does not fall under the purview of a cooperative society as referred in Sec. 80P(2)(d) of the Act. Therefore, claim of deduction u/s 80P(2)(d) on the interest income of Rs.444,281/- earned from the cooperative bank was disallowed and added to the total income of the assessee.
P a g e | 3 Gold Coin Apartments Cooperative Housing Society Vs. ITO 22(1)(5) 3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee.
Heard both the sides and perused the material on record. The assessee is a cooperative society formed with the object of maintaining and protecting the building occupied by its members. The AO has disallowed the claim of deduction stating that Co.op Banks are not cooperative societies. The observation of the AO is not correct as after amendment in the Finance Act 2006, the Cooperative banks still continued to be a cooperative society but not entitled for claiming deduction u/s 80P(4) of the Act. However, the interest income derived by a cooperative Society from its investment with the cooperative bank is entitled for claim of deduction u/s 80P(2)(d) of the Act. On similar issues and identical facts the coordinate benches of the ITAT have held that interest derived by a cooperative society from its investment with a cooperative Bank is entitled for claim of deduction u/s 80P(2)(d) of the Act. Some of the decision of the ITAT wherein the claim of deduction u/s 80P(2)(d) was allowed on the interest income earned from deposit with cooperative bank are as under: (i) Mittal Park Cooperative Housing Society Ltd. Vs. Asst. Director of Income Tax, Mum, W(125) (95) CPC, Bengaluru, (Ld. ADIT). (ii) Mittal Park Cooperative Housing Society Vs. ITO, Ward 25 (3)(1), Mumbai (iii) Kaliandas Udyog Bhavan Premises Coop Society Ltd. Vs. ITO 21(1)(2). (iv) Aqua Cooperative Housing Society Limited Vs ITO 21(1)(2) (v) Sea Green Cooperative Housing Society Ltd. Vs. ITO 21(3)(2) (vi) lands’ End Cooperative Housing Society Ltd. Vs. ITO 16(1)(3) (vii) The Nutan Laxmi Chs Ltd. Mumbai Vs. ITO 19(2)(4) (viii) M/s Palmera Cooperative Housing Society Ltd. Vs. ACIT, 19(2)
In the case of Kaliandas Udyog Bhavan Premises Coop. Society Ltd. Vs. ITO vide dated 25.04.2018 it is held that though the cooperative bank pursuant to the insertion of subsection (4) of Sec. 80P is no more be entitled for claim of P a g e | 4 ITA No.1875/Mum/2023 Gold Coin Apartments Cooperative Housing Society Vs. ITO 22(1)(5) deduction u/s 80P of the Act, but however, as a cooperative bank continued to be a cooperative society registered under the Cooperative Society Act, therefore, the interest income earned by a cooperative society from its investment held that cooperative bank would be entitled for claim of deduction u/s 80P(2)(d). In view of the above facts and findings therefore, we direct the AO to allow the claim of deduction to the assesse in respect of interest earned from investment made with the cooperative bank, Therefore, the appeal of the assesse is allowed.