RUSTOMJEE ASPIREE PREMISES CO-OP SOC. LTD ,MUMBAI vs. ITO, WARD 26(2)(5), MUMBAI

PER OM PRAKASH KANT, AM

This appeal has been preferred by the assessee against order passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising sole ground of appeal as under:

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“8. Thus, it is clear that in view of above discussion now the 8. Thus, it is clear that in view of above discussion now the 8. Thus, it is clear that in view of above discussion now the ruling of later decision of Karnataka High Court i.e. PCIT Vs ruling of later decision of Karnataka High Court i.e. PCIT Vs ruling of later decision of Karnataka High Court i.e. PCIT Vs Totagars Cooperative Sale Society(395 IT 611) Totagars Cooperative Sale Society(395 IT 611) Totagars Cooperative Sale Society(395 IT 611) dated 16.06.2017 and that of Gujarat High Court in case of 16.06.2017 and that of Gujarat High Court in case of 16.06.2017 and that of Gujarat High Court in case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. v. Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. v. Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. v. Assistant Commissioner of Income Assistant Commissioner of Income-tax 140 taxmann.com tax 140 taxmann.com 602 (Gujarat) will be applicable in this cases specially 602 (Gujarat) will be applicable in this cases specially 602 (Gujarat) will be applicable in this cases specially keeping in view the fact that keeping in view the fact that the present case where was the present case where was specifically held by the Assessing officer in Para No. 7.18 specifically held by the Assessing officer in Para No. 7.18 specifically held by the Assessing officer in Para No. 7.18 that the interest received by the assessee on surplus fund that the interest received by the assessee on surplus fund that the interest received by the assessee on surplus fund is to be assessed under head income from other sources. I is to be assessed under head income from other sources. I is to be assessed under head income from other sources. I therefore hold that the interest of Rs. 24,71, 186/ therefore hold that the interest of Rs. 24,71, 186/ therefore hold that the interest of Rs. 24,71, 186/- earned by the appellant from Saraswat Cooperative Bank as by the appellant from Saraswat Cooperative Bank as by the appellant from Saraswat Cooperative Bank as interest on saving bank and fixed deposit accounts is not interest on saving bank and fixed deposit accounts is not interest on saving bank and fixed deposit accounts is not eligible for deduction us 80P(2)(d) of the Act. The grounds of eligible for deduction us 80P(2)(d) of the Act. The grounds of eligible for deduction us 80P(2)(d) of the Act. The grounds of appeal are dismissed. appeal are dismissed.” 2.1 We find that section 80P(2)(d) of the Act provide We find that section 80P(2)(d) of the Act provide We find that section 80P(2)(d) of the Act provide that deduction in respect of income earned by way of interest or dividend derived in respect of income earned by way of interest or dividend derived in respect of income earned by way of interest or dividend derived by co-operative society from its investment with any other co operative society from its investment with any other co operative society from its investment with any other co-

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operative society. The assessee has claimed that the co-operative operative society. The assessee has claimed that the co operative society. The assessee has claimed that the co bank is primarily a co co-operative society and therefore, the interest therefore, the interest earned on the investment made with the said co earned on the investment made with the said co- -operative bank namely Saswat Co-operative Society bank is eligible for deduction. operative Society bank is eligible for deduction. operative Society bank is eligible for deduction. We find that the identical issue of the deduction u/s 80P(2)(d) came We find that the identical issue of the deduction u/s 80P(2)(d) came We find that the identical issue of the deduction u/s 80P(2)(d) came up before the Co-ordinate Bench of ordinate Bench of the Tribunal in the case of the Tribunal in the case of Premium Tower Co-operative Housing Society Ltd. v. CIT in ITA No. operative Housing Society Ltd. v. CIT in ITA No. operative Housing Society Ltd. v. CIT in ITA No. 1583/Mum/2023. The Tribunal 1583/Mum/2023. The Tribunal (supra), following the decision of following the decision of the Hon’ble Karnataka High Court in the case of Totagares Co Hon’ble Karnataka High Court in the case of Totagares Co Hon’ble Karnataka High Court in the case of Totagares Co- op. Sale Society (2017) 392 ITR 74 (K op. Sale Society (2017) 392 ITR 74 (Karnataka) and judgment of and judgment of the Hon’ble Kerala High Court in the case of PCIT v. Hon’ble Kerala High Court in the case of PCIT v. Hon’ble Kerala High Court in the case of PCIT v. Percoorkada Services Company Bank Ltd. Percoorkada Services Company Bank Ltd.. (2022) 442 ITR 141 . (2022) 442 ITR 141 (Kerala) held that co held that co-operative bank being primarily a co imarily a co-operative society, the assessee is eligible for deduction in he assessee is eligible for deduction interest income earned terest income earned from co-operative bank. operative bank. The relevant finding of the Tribunal os The relevant finding of the Tribunal os reproduced as under: reproduced as under:

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derived by the co-operative society from its investments with any other operative society from its investments with any other operative society from its investments with any other co-operative society, the whole of such income; operative society, the whole of such income;

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cooperative bank has been defined in part 5 of the Banking Regulation cooperative bank has been defined in part 5 of the Banking Regulation cooperative bank has been defined in part 5 of the Banking Regulation Act 1949. Section 56(ccv) provides that primary cooperative bank Act 1949. Section 56(cc v) provides that primary cooperative bank means cooperative societies other than a primary agriculture society. means cooperative societies other than a primary agriculture society. means cooperative societies other than a primary agriculture society. This view had come up for the Hon’ble Karnataka High Court in the This view had come up for the Hon’ble Karnataka High Court in the This view had come up for the Hon’ble Karnataka High Court in the case of PCIT vs. Totagars Co-operative Sale Society (2017) 392 ITR 74 case of PCIT vs. Totagars Co operative Sale Society (2017) 392 ITR 74 (Kar.) dated 5th Jan. 2017, wherein the Hon’ble High Court had ated 5th Jan. 2017, wherein the Hon’ble High Court had ated 5th Jan. 2017, wherein the Hon’ble High Court had observed as under:-

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before the ITAT, was a limited one, namely whether for the before the ITAT, was a limited one, namely whether for the before the ITAT, was a limited one, namely whether for the purpose of Section 80P(2)(d) of the Act, a Co purpose of Section 80P(2)(d) of the Act, a Co- operative Bank operative Bank should be considered as a Co should be considered as a Co-operative Society or not? For, if a tive Society or not? For, if a Co-operative Bank is considered to be a Co operative Bank is considered to be a Co-operative Society, then operative Society, then any interest earned by the Co any interest earned by the Co-operative Society from a Co operative Society from a Co- operative Bank would necessarily be deductable under Section operative Bank would necessarily be deductable under Section operative Bank would necessarily be deductable under Section 80P(1) of the Act. 8. The issue whethe 80P(1) of the Act. 8. The issue whether a Co-operative Bank is operative Bank is considered to be a Co considered to be a Co-operative Society is no longer res integra. operative Society is no longer res integra. For the said issue has been decided by the ITAT itself in different For the said issue has been decided by the ITAT itself in different For the said issue has been decided by the ITAT itself in different cases. Moreover the word “Co cases. Moreover the word “Co- operative Society” are the words of operative Society” are the words of a large extent, and denotes a g a large extent, and denotes a genus, whereas the word “Co enus, whereas the word “Co- operative Bank” is a word of limited extent, which merely operative Bank” is a word of limited extent, which merely operative Bank” is a word of limited extent, which merely demarcates and identifies a particular species of the genus Co- demarcates and identifies a particular species of the genus Co demarcates and identifies a particular species of the genus Co operative Societies. Co operative Societies. Co-Operative Society can be of different Operative Society can be of different nature, and can be involved in different acti nature, and can be involved in different activities; the Co vities; the Co-operative Society Bank is merely a variety of the Co Society Bank is merely a variety of the Co-operative Societies. operative Societies. Thus the Co- operative Bank which is a species of the genus operative Bank which is a species of the genus operative Bank which is a species of the genus would necessarily be covered by the word “Co would necessarily be covered by the word “Co-operative Society”. operative Society”. 9. Furthermore, even according to Section 9. Furthermore, even according to Section 56(i) (ccv) of the Banking 56(i) (ccv) of the Banking Regulations Act, 1949, defines a primary Co Regulations Act, 1949, defines a primary Co-Operative Society Operative Society bank as the meaning of Co bank as the meaning of Co- Operative Society. Therefore, a Co Operative Society. Therefore, a Co- operative Society Bank would be included in the words ‘Co- operative Society Bank would be included in the words ‘Co operative Society Bank would be included in the words ‘Co operative Society’. 10. Admittedly, the interes operative Society’. 10. Admittedly, the interest which the assessee t which the assessee respondent had earned was from a Co respondent had earned was from a Co-operative Society Bank. operative Society Bank. Therefore, according to Sec. 80P(2)(d) of the I. T. Act, the said Therefore, according to Sec. 80P(2)(d) of the I. T. Act, the said Therefore, according to Sec. 80P(2)(d) of the I. T. Act, the said amount of interest earned from a Co amount of interest earned from a Co- operative Society Bank operative Society Bank would be deductable from the gross income of the Co-operative would be deductable from the gross income of the would be deductable from the gross income of the Society in order to assess its total income. Therefore, the Society in order to assess its total income. Therefore, the Society in order to assess its total income. Therefore, the Assessing Officer was not justified in denying the said deduction Assessing Officer was not justified in denying the said deduction Assessing Officer was not justified in denying the said deduction

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to the assessee respondent. 11. The learned counsel has relied on to the assessee respondent. 11. The learned counsel has relied on to the assessee respondent. 11. The learned counsel has relied on the case of The Totgars Co the case of The Totgars Co-operative Sale Society Ltd. Vs. Income td. Vs. Income Tax Officer, (supra). However, the said case dealt with the Tax Officer, (supra). However, the said case dealt with the Tax Officer, (supra). However, the said case dealt with the interpretation, and the deduction, which would be applicable interpretation, and the deduction, which would be applicable interpretation, and the deduction, which would be applicable under Section 80P(2)(a)(i) of the I. T. Act. For, in the present case under Section 80P(2)(a)(i) of the I. T. Act. For, in the present case under Section 80P(2)(a)(i) of the I. T. Act. For, in the present case the interpretation that is required is of Section the interpretation that is required is of Section 80P(2)(d) of the I. T. 80P(2)(d) of the I. T. Act and not Section 80P(2)(a)(i) of the I. T. Act. Therefore, the said Act and not Section 80P(2)(a)(i) of the I. T. Act. Therefore, the said Act and not Section 80P(2)(a)(i) of the I. T. Act. Therefore, the said judgment is inapplicable to the present case. Thus, neither of the judgment is inapplicable to the present case. Thus, neither of the judgment is inapplicable to the present case. Thus, neither of the two substantial questions of law canvassed by the learned two substantial questions of law canvassed by the learned two substantial questions of law canvassed by the learned counsel for the Revenue even arise in counsel for the Revenue even arise in the present case. the present case.”

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whether the interest income derived from activities as provided in whether the interest income derived from activities as provided in whether the interest income derived from activities as provided in section 80P (2)(a) which is otherwise the business income for which ction 80P (2)(a) which is otherwise the business income for which ction 80P (2)(a) which is otherwise the business income for which deduction is allowable, if there is any interest income which is earned deduction is allowable, if there is any interest income which is earned deduction is allowable, if there is any interest income which is earned on deposits or investment made with cooperative societies, the same on deposits or investment made with cooperative societies, the same on deposits or investment made with cooperative societies, the same must fall in the category activity or the business, but still is eligible for must fall in the category activity or the business , but still is eligible for deduction under the specific provision of section 80P(2)(d). Thus, the deduction under the specific provision of section 80P(2)(d). Thus, the deduction under the specific provision of section 80P(2)(d). Thus, the interest derived by the assessee from cooperative bank is eligible for interest derived by the assessee from cooperative bank is eligible for interest derived by the assessee from cooperative bank is eligible for deduction u/s 80P(2)(d) because as noted above, cooperative are also deduction u/s 80P(2)(d) because as noted above, cooperative are also deduction u/s 80P(2)(d) because as noted above, cooperative are also cooperative societies for this purpose. This has been held so by the ties for this purpose. This has been held so by the ties for this purpose. This has been held so by the Hon’ble Karnataka High Court and latest judgment of Hon’ble Kerala Hon’ble Karnataka High Court and latest judgment of Hon’ble Kerala Hon’ble Karnataka High Court and latest judgment of Hon’ble Kerala High Court.

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2.2 Similarly, the Tribunal in the case of Similarly, the Tribunal in the case of Palm Court M Premises Palm Court M Premises Cooperative Society Limited Cooperative Society Limited in ITA No.561/Mum/2022 561/Mum/2022 rendered the same finding that investment made in co-operative rendered the same finding that investment made in co rendered the same finding that investment made in co Bank would be exempt in the hands of the housing society. The Bank would be exempt in the hands of the housing society. Bank would be exempt in the hands of the housing society. relevant observation are reproduced as under: relevant observation are reproduced as under:

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intending to deduct tax at source under 194A that the said cooperative intending to deduct tax at source under 194A that the said cooperative intending to deduct tax at source under 194A that the said cooperative banks are not speci of genus of co-operative society excluding them banks are not speci of genus of co operative society excluding them from exemption or deduction under the provisions of Chapter VIA by from exemption or deduction under the provisions of Chapter VIA by from exemption or deduction under the provisions of Chapter VIA by virtue of section 80P of the Act. Following the interpretation of the virtue of section 80P of the Act. Fol lowing the interpretation of the Hon’ble Karnataka High Court in the above said decision, the Ld.PCIT Hon’ble Karnataka High Court in the above said decision, the Ld.PCIT Hon’ble Karnataka High Court in the above said decision, the Ld.PCIT held that the assessee was not entitled to deduction under 80P(2)(d) held that the assessee was not entitled to deduction under 80P(2)(d) held that the assessee was not entitled to deduction under 80P(2)(d) thereby directing the Assessing 5 ITA No. 561/MUM/2021 Officer to thereby directing the Assessing 5 ITA No. 561/MUM/2021 Officer to thereby directing the Assessing 5 ITA No. 561/MUM/2021 Officer to frame assessment de novo. We would like to place our reliance on the 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: decisions relied upon by the Ld.AR in the cases mentioned below:- decisions relied upon by the Ld.AR in the cases mentioned below:

These decisions of the co-ordinate benches have reiterated the principle These decisions of the co ordinate benches have reiterated the principle that the interest income derived by a co-operative society by way of that the interest income derived by a co perative society by way of investment made with a co-operative bank would be entitled to claim 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 deduction under section 80P(2)(d) of the Act. For this proposition, we 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 would like to place our reliance on the decision of M/s Petit Towers Co- 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 iety Ltd vs ITO (supra) wherein the co-ordinate bench ordinate bench has observed as under:- has observed as under:

“8. We have given a thoughtful consideration to the contentions “8. We have given a thoughtful consideration to the contentions “8. We have given a thoughtful consideration to the contentions advanced by the ld. Authorized representatives for both the parties advanced by the ld. Authorized representatives for both the parties advanced by the ld. Authorized representatives for both the parties

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in context of the aforesaid issue under consideration. As stated by in context of the aforesaid issue under consi deration. As stated by the ld. A.R, and rightly so, the issue that interest received by a co- the ld. A.R, and rightly so, the issue that interest received by a co the ld. A.R, and rightly so, the issue that interest received by a co operative society on its deposits with co-operative banks would be operative society on its deposits with co operative banks would be eligible for deduction u/s 80P(2)(d) of the Act is covered in eligible for deduction u/s 80P(2)(d) of the Act is covered in eligible for deduction u/s 80P(2)(d) of the Act is covered in assessee’s favour by orders of the various coordinate benches of the assessee’s favour by orders of the various coordinate benches of the Tribunal in the following cases : Tribunal in the following cases :

(i). M/s Solitaire CHS Ltd. Vs. Pr.CIT (i). M/s Solitaire CHS Ltd. Vs. Pr.CIT-26, Mumbai, ITA No. 26, Mumbai, ITA No. 3155/Mum/2019, dated 29.11.2019 (ii). Land and Cooperative 3155/Mum/2019, dated 29.11.2019 (ii). Land and Cooperative 3155/Mum/2019, dated 29.11.2019 (ii). Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum.) (iii). M/s C. Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum.) (iii). M/s C. Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum.) (iii). M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Green Cooperative Housing and Society Ltd. Vs. ITO Green Cooperative Housing and Society Ltd. Vs. ITO Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017. (iv). A No. 1343/Mum/2017, dated 31.03.2017. (iv). A No. 1343/Mum/2017, dated 31.03.2017. (iv). Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO- Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO Range 20(2)(2), Mumbai (ITA NO. 6139/Mum/2014, dated Range 20(2)(2), Mumbai (ITA NO. 6139/Mum/2014, dated Range 20(2)(2), Mumbai (ITA NO. 6139/Mum/2014, dated 27.09.2017. (v). Kaliandas Udyog Bhavan Pemises Co-op. Society 27.09.2017. (v). Kaliandas Udyog Bhavan Pemises Co 27.09.2017. (v). Kaliandas Udyog Bhavan Pemises Co Ltd. Vs. ITO, 21(2)(1), Mumbai. 6 Ltd. Vs. ITO, 21(2)(1), Mumbai. 6 ITA No. 561/MUM/2021 ITA No. 561/MUM/2021

In the aforesaid orders, it has been held by the Tribunal that though In the aforesaid orders, it has been held by the Tribunal that though In the aforesaid orders, it has been held by the Tribunal that though the cooperative banks pursuant to the insertion of sub the cooperative banks pursuant to the insertion of sub-section (4) to the cooperative banks pursuant to the insertion of sub Sec. 80P of the Act would no more be entitled for claim of deduction u/s Sec. 80P of the Act would no more be entitled for claim of deduction u/s Sec. 80P of the Act would no more be entitled for claim of deduction u/s 80P of the Act, but as a co-operative bank continues to be a co 80P of the Act, but operative bank continues to be a co- operative society registered under the Co-operative Societies Act, 1912 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 (2 of 1912) or under any other law for the time being in force in any (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 i State for the registration of co operative societies, therefore, the interest income derived by a cooperative society from its investments held with income derived by a cooperative society from its investments held with income derived by a cooperative society from its investments held with a co-operative bank would be entitled for claim of deduction u/s operative bank would be entitled for claim of deduction u/s operative bank would be entitled for claim of deduction u/s 80P(2)(d) of the Act. We find that the aforesaid issue had exhaustively 80P(2)(d) of the Act. We find that the aforesaid issue had exhaustively 80P(2)(d) of the Act. We find that the aforesaid issue had exhaustively been looked into by the ITAT, „G‟ bench, Mumbai in the case of M/s been looked into by the ITAT, „G Mumbai in the case of M/s Solitaire CHS Ltd, Vs. Pr.CIT-26, Mumbai ITA No.3155/Mum/2019, Solitaire CHS Ltd, Vs. Pr.CIT 26, Mumbai ITA No.3155/Mum/2019, dated 29.11.2019, wherein the Tribunal had observed as under : dated 29.11.2019, wherein the Tribunal had observed as under : dated 29.11.2019, wherein the Tribunal had observed as under :

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“6. We have heard the authorised representatives for both the “6. We have heard the authorised representatives for both the “6. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied available on record, as well as the judicial pronouncements relied available on record, as well as the judicial pronouncements relied upon by them. Our indulgence in the present appeal has been upon by them. Our indulgence in the present appeal has been upon by them. Our indulgence in the present appeal has been sought, for adjudicating, as to whether the claim of the assessee for sought, for adjudicating, as to whether the claim of the assessee for sought, for adjudicating, as to whether the claim of the assessee for deduction under section 80P(2)(d) in respect of interest income deduction under section 80P(2 )(d) in respect of interest income earned from the investments/deposits made with the co-operative earned from the investments/deposits made with the co earned from the investments/deposits made with the co banks is in order, or not. In our considered view, the issue involved banks is in order, or not. In our considered view, the issue involved banks is in order, or not. In our considered view, the issue involved in the present appeal revolves around the adjudication of the scope in the present appeal revolves around the adjudication of the scope 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 and gamut of sub ction (4) of Sec. 80P as had been made available on the statute, vide the Finance Act 2006, with effect from on the statute, vide the Finance Act 2006, with effect from 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 01.04.2007. On a perusal of the order passed by the Pr. CIT under 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 Sec. 263 of the Act, we find, that he was of the view that pursuant to 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 section (4) of Sec. 80P, the assessee would no more section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of be entitled for claim of deduction under Sec. 80P(2)(d) in respect of 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 the interest income that was earned on the amounts which were the interest income that was earned on the amounts which were parked as investments/deposits with co-operative banks, other tha parked as investments/deposits with co operative banks, other than a Primary Agricultural Credit Society or a Primary Co-operative a Primary Agricultural Credit Society or a Primary Co a Primary Agricultural Credit Society or a Primary Co Agricultural and Rural Development Bank. Observing, that the co- Agricultural and Rural Development Bank. Observing, that the co Agricultural and Rural Development Bank. Observing, that the co operative banks from where the assessee was in receipt of interest operative banks from where the assessee was in receipt of interest operative banks from where the assessee was in receipt of interest income were not co-operative societies, the Pr. CIT was of income were not co operative societies, the Pr. CIT was of the view that the interest income earned on such investments/deposits would that the interest income earned on such investments/deposits would that the interest income earned on such investments/deposits would not be eligible for deduction under Sec. 80P(2)(d) of the Act. not be eligible for deduction under Sec. 80P(2)(d) of the Act. not be eligible for deduction under Sec. 80P(2)(d) of the Act.

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before us. “80P(2)(d) (1). Where in the case of an assessee being a before us. “80P(2)(d) (1). Where in the case of an assessee being a co-operative society, the gross total income includes any income operative society, the gross total income includes any income operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance referred to in sub section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified with and subject to the provisions of this section, the sums specified with and subject to the provisions of this section, the sums specified in subsection (2), in computing the total income of the assessee. (2). in subsection (2), i n computing the total income of the assessee. (2). The sums referred to in sub-section (1) shall be the following, namely The sums referred to in sub section (1) shall be the following, namely :- (a)............................................................................................ (a)............................................................................................ (a)............................................................................................ (b)............................................................................................ (b)................................ ............................................................ (c)............................................................................................ (c)............................................................................................ (c)............................................................................................ (d) (d) (d) in in in respect of any income by way of interest or dividends derived by the respect of any income by way of interest or dividends derived by the respect of any income by way of interest or dividends derived by the co-operative society fr operative society from its investments with any other co om its investments with any other co-operative society, the whole of such income;” 7 ITA No. 561/MUM/2021 On a society, the whole of such income;” 7 ITA No. 561/MUM/2021 On a society, the whole of such income;” 7 ITA No. 561/MUM/2021 On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest perusal of Sec. 80P(2)(d), it can safely be gathered that interest perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its income derived by an assessee co operative society from its investments held with any other co-operative society shall be investments held w operative society shall be deducted in computing its total income. We may herein observe, that deducted in computing its total income. We may herein observe, that deducted in computing its total income. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that what is relevant for claim of deduction under Sec. 80P(2)(d) is that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments the interest income should have been derived from the investments the interest income should have been derived from the investments made by the assessee co he assessee co-operative society with any other co operative society with any other co- operative society. We are in agreement with the view taken by the operative society. We are in agreement with the view taken by the operative society. We are in agreement with the view taken by the Pr. CIT, that with the insertion of sub-section (4) of Sec. 80P, vide the Pr. CIT, that with the insertion of sub section (4) of Sec. 80P, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Finance Act, 2006, with effect from 01.04.2007, the provisions of Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative Sec. 80P would no more be applicable in relation to any co Sec. 80P would no more be applicable in relation to any co bank, other than a primary agricultural credit society or a primary bank, other than a primary agricultural credit society or a primary bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. However, at operative agricultural and rural development bank. However, at operative agricultural and rural development bank. However, at the same time, we are unable to subscribe to his view that the the same time, we are unable to subscribe to his vie the same time, we are unable to subscribe to his vie aforesaid amendment would jeopardise the claim of deduction of a aforesaid amendment would jeopardise the claim of deduction of a aforesaid amendment would jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of its interest operative society under Sec. 80P(2)(d) in respect of its interest operative society under Sec. 80P(2)(d) in respect of its interest income on investments/deposits parked with a co-operative bank. In income on investments/deposits parked with a co operative bank. In

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our considered view, as long as it is proved that the interest income our considered view, as long as it is proved that the interest income is being derived by a co-operative society from its investments made is being derived by a co operative society from its investments made with any other co-operative society, the claim of deduction under the with any other co operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly e term „cooperative society‟ had been available. We find that the term „cooperative society available. We find that th defined under Sec. 2(19) of the Act, as under:- “(19) “Co defined under Sec. 2(19) of the Act, as under: “(19) “Co-operative society” society” society” means a cooperative society registered under the means means a cooperative society registered a cooperative society registered under under the the Cooperative Societies Act, 1912 (2 of 1912), or under any other law Cooperative Societies Act, 1912 (2 of 1912), or under any other law 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 for the time being in fo rce in any state for the registration of co- operative societies;” We are of the considered view, that though the operative societies;” We are of the considered view, that though the operative societies;” We are of the considered view, that though the co-operative banks pursuant to the insertion of subsection (4) to Sec. operative banks pursuant to the insertion of subsection (4) to Sec. operative banks pursuant to the insertion of subsection (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P 80P would no more be entitled for claim of deduction under Sec. 80P 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a co he Act, but as a co-operative bank continues to be a co operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 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 1912), or under any other law for the time being in force in any State 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 for the registration of co refore, the interest income derived by a co-operative society from its investments held income derived by a co operative society from its investments held with a co-operative bank would be entitled for claim of deduction operative bank would be entitled for claim of deduction operative bank would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. under Sec.80P(2)(d) of the Act.

(i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum) (ii) M/s C. Green Cooperative Housing and Society CCH 52 (Mum) (ii) M/s C. Green Cooperative Housing and Society CCH 52 (Mum) (ii) M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated

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31.03.2017 (iii) Marvwanjee Cama Park Cooperative Housing Society 31.03.2017 (iii) Marvwanjee Cama Park Co operative Housing Society Ltd. Vs. ITO-Range Range-20(2)(2), Mumbai (ITA No. 6139/Mum/2014, 20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. (iv). Kaliandas Udyog Bhavan Pemises Co-op. dated 27.09.2017. (iv). Kaliandas Udyog Bhavan Pemises Co dated 27.09.2017. (iv). Kaliandas Udyog Bhavan Pemises Co Society Ltd. Vs. ITO, 21(2)(1), Mumbai. We further find that the Society Ltd. Vs. ITO, 21(2)(1), Mumbai. We further find that the 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 Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 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 392 ITR 74 (Karn) and Hon ble High Court of Gujarat in the case of State Bank Of India Vs. 8 ITA No. 561/MUM/2021 CIT (2016) 389 State Bank Of India Vs. 8 ITA No. 561/MUM/2021 CIT (2016) 389 State Bank Of India Vs. 8 ITA No. 561/MUM/2021 CIT (2016) 389 ITR 578 (Guj), had held, that the interest income earned by the ITR 578 (Guj), had held, that the inte rest income earned by the assessee on its investments with a co-operative bank would be assessee on its investments with a co operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006, further, we find that the CBDT Circular No. 14, dated 28.12.2006, further, we find that the CBDT Circular No. 14, dated 28.12.2006, also makes it clear beyond any scope of doubt that the purpose also makes it clear beyond any scope of doubt that the purpose behind enactment of sub-section (4) of Sec. 80P was that the co behind enactment of sub section (4) of Sec. 80P was that the co- operative banks which were functioning at par with other banks operative banks which were functioning at par with other banks operative banks which were functioning at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of would no more be entitled for claim of deduction under Sec. 80P(4) of would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. Insofar the reliance placed by the Pr. CIT on the judgment of the Act. Insofar the relian ce placed by the Pr. CIT on the judgment of the Hon‟ble Supreme Court in the case of Totgars Co ble Supreme Court in the case of Totgars Co-operative Sale operative Sale Society Ltd. vs. ITO (2010) 322 ITR 283 (SC) is concerned, we are of Society Ltd. vs. ITO (2010) 322 ITR 283 (SC) is concerned, we are of Society Ltd. vs. ITO (2010) 322 ITR 283 (SC) is concerned, we are of the considered view that the same being distinguishable on facts the considered view that the same being distinguishable on facts the considered view that the same being distinguishable on facts had wrongly been relied upon by him. The adjudication by the been relied upon by him. The adjudication by the been relied upon by him. The adjudication by the Hon‟ble Apex Court in the aforesaid case was in context of Sec. ble Apex Court in the aforesaid case was in context of Sec. ble Apex Court in the aforesaid case was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a co-operative society 80P(2)(a)(i), and not on the entitlement of a co operative society towards deduction under Sec. 80P(2)(d) on the interest income on the towards deduction under Sec. 80P(2)(d) on the interest income on the towards deduction under Sec. 80P(2)(d) on the interest income on the investments/deposits parked with a co ments/deposits parked with a co-operative bank. Although, in operative bank. Although, in all fairness, we may herein observe that the Hon'ble High Court of all fairness, we may herein observe that the Hon'ble High Court of all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars co-operative Sale Karnataka in the case of Pr. CIT Vs. Totagars co operative Sale Society (2017) 395 ITR 611 (Karn), had concluded that a co-operative Society (2017) 395 ITR 611 (Karn), had concluded that a co Society (2017) 395 ITR 611 (Karn), had concluded that a co society would not be entitled to claim of deduction under Sec. society would not be entitled to claim of deduction under Sec. society would not be entitled to claim of deduction under Sec.

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80P(2)(d). At the same time, we find, that the Hon'ble High Court of 80P(2)(d). At the same time, we find, that the Hon'ble High Court of 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. Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Vs. Totagars Cooperative Sale Society (2017) 392 ITR 7 Vs. Totagars Cooperative Sale Society (2017) 392 ITR 7 Hon‟ble High Court of Gujarat in the case of State Bank Of India Vs. ble High Court of Gujarat in the case of State Bank Of India Vs. 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 CIT (2016) 389 ITR 578 (Guj), had observed, that the interest income CIT (2016) 389 ITR 578 (Guj), had observed, that the interest income earned by a co-operative society on its investments held with a operative society on its investments held with a operative society on its investments held with a cooperative bank would be eligible for claim of deduction under cooperative bank would be eligible for cl aim of deduction under Sec.80P(2)(d) of the Act. We find that as held by the Hon'ble High Sec.80P(2)(d) of the Act. We find that as held by the Hon'ble High 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. Court of Bombay in the case of K. Subramanian and Anr. Vs. 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 Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), where there is Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court’s, 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 then a view which is in favour of the assessee is to be preferred as 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 against that taken against him. Accordingly, taking support from the against that taken against him. Accordingly, taking support from the aforesaid judicial pronouncement of the Hon‟ble High Court of aforesaid judicial pronouncement of the Hon ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble jurisdiction, we respectful ly follow the view taken by the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income High Court of Karnataka in the case of Pr. Commissioner of Income High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 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 74 (Karn) and Hon ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), wherein it was Bank Of India Vs. C IT (2016) 389 ITR 578 (Guj), wherein it was observed that the interest income earned by a cooperative society on observed that the interest income earned by a cooperative society on observed that the interest income earned by a cooperative society on its investments held with a cooperative bank would be eligible for its investments held with a cooperative bank would be eligible for its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. claim of deduction under Sec.80P(2)(d) of the Act.

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dislodging the same. In fact, as observed by us hereinabove, the dislodging the same. In fact, as observed by us hereinabove, the dislodging the same. In fact, as observed by us hereinabove, the aforesaid view taken by the A.O at the time of framing of the aforesaid view taken by the A.O at the time of framing of the aforesaid view taken by the A.O at the time of framing of the assessment was clearly supported by the order of the jurisdictional assessment was clearly supported by the order of the jurisdictional Tribunal in the case of Land and Cooperative Housing Society Ltd. Tribunal in the case of Land and Cooperative Housing Society Ltd. Tribunal in the case of Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum). Accordingly, finding no Vs. ITO (2017) 46 CCH 52 (Mum). Accordingly, finding no Vs. ITO (2017) 46 CCH 52 (Mum). Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers justification on the part of the Pr. CIT, who in exercise of his powers justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263, had dislodged the view that was taken by the A.O had dislodged the view that was taken by the A.O had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction as regards the eligibility of the assessee towards claim of deduction 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 under Sec. 80P(2)(d), we “set aside” his order and restore the order under Sec. 80P(2)(d), we “set aside” his order and restore the order passed by the A.O under Sec. 143(3), date 14.09.2016.” passed by the A.O under Sec. 143(3), date 14.09.2016.” passed by the A.O under Sec. 143(3), date 14.09.2016.”

9 As the facts and the issue involved in the present case before us ts and the issue involved in the present case before us ts and the issue involved in the present case before us remains the same as were there before the Tribunal in the case of M/s remains the same as were there before the Tribunal in the case of M/s remains the same as were there before the Tribunal in the case of M/s Solitaire CHS Ltd. (supra), wherein the order passed by the Pr. CIT u/s Solitaire CHS Ltd. (supra), wherein the order passed by the Pr. CIT u/s Solitaire CHS Ltd. (supra), wherein the order passed by the Pr. CIT u/s 263 of the Act was quashed, we, thus, respectfully follow 263 of the Act was quashed, we, thus, respectfully follow the same. 263 of the Act was quashed, we, thus, respectfully follow Backed by our aforesaid deliberations, we are unable to uphold the Backed by our aforesaid deliberations, we are unable to uphold the Backed by our aforesaid deliberations, we are unable to uphold the view taken by the Pr. CIT that the failure on the part of the A.O to be view taken by the Pr. CIT that the failure on the part of the A.O to be view taken by the Pr. CIT that the failure on the part of the A.O to be disallow the assessee’s claim for deduction u/s 80P(2)(d) had rendered disallow the assessee’s claim for deduction u/s 80P(2)(d) had rendered disallow the assessee’s claim for deduction u/s 80P(2)(d) had rendered the assessment order passed by him u/s 143(3) of the Act, dated the assessment order passed by him u /s 143(3) of the Act, dated 31.08.2017 as erroneous in so far it was prejudicial to the interest of 31.08.2017 as erroneous in so far it was prejudicial to the interest of 31.08.2017 as erroneous in so far it was prejudicial to the interest of the revenue. 9. Accordingly, on the basis of our aforesaid observations, the revenue. 9. Accordingly, on the basis of our aforesaid observations, the revenue. 9. Accordingly, on the basis of our aforesaid observations, we herein not finding favor with the view taken by the Pr. CIT that the we herein not finding favor with the view taken by the Pr. CIT that the we herein not finding favor with the view taken by the Pr. CIT that the order passed by the A.O u/s 143(3), dated 31.08.2017 was erroneous d by the A.O u/s 143(3), dated 31.08.2017 was erroneous d by the A.O u/s 143(3), dated 31.08.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the in so far it was prejudicial to the interest of the revenue within the in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act set-aside the same and restore the order meaning of Sec. 263 of the Act set aside the same and restore the order passed by the A.O u/s 143(3) of the Act, dated 31.08.2017 passed by the A.O u/s 143(3) of the Act, dated 31.08.2017.” passed by the A.O u/s 143(3) of the Act, dated 31.08.2017

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2.3 In view of the binding precedents, we set aside the finding of the In view of the binding precedents, we set aside the finding of the In view of the binding precedents, we set aside the finding of the Ld. CIT(A) and the Assessing Officer on the issue in dispute and Ld. CIT(A) and the Assessing Officer on the issue in dispute and Ld. CIT(A) and the Assessing Officer on the issue in dispute and delete the disallowance made by the Assessing Officer. The ground delete the disallowance made by the Assessing Officer. delete the disallowance made by the Assessing Officer. of the assessee is accordingly allowed. of the assessee is accordingly allowed.

Order pronounced in the open Court on nounced in the open Court on 10/07/2023. /07/2023. Sd/ Sd/- Sd/- (KAVITHA RAJAGOPAL KAVITHA RAJAGOPAL) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 10/07/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai