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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
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:
1. The Ld. CIT(A) NFAC erred in confirming the action of the Ld. AO in disallowing the deduction u/s 80P(2)(d) of Rs.24,71,186/-.
Rustomjee Aspiree Premises Co-op. Soc. Ltd. 2 Rustomjee Aspiree Premises Co ITA No.
We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In the case, dispute and perused the relevant material on record. In the case dispute and perused the relevant material on record. In the case the assessee co-operative soc operative society claimed deduction u/s 80P(2)(d) of iety claimed deduction u/s 80P(2)(d) of the Income-tax Act, 1961 (in short ‘the Act’) in respect of interest tax Act, 1961 (in short ‘the Act’) in respect of interest tax Act, 1961 (in short ‘the Act’) in respect of interest income of Rs.24,71,186/ income of Rs.24,71,186/- from its deposits with Saswat co from its deposits with Saswat co- operative Bank. The Assessing Officer in the scrutiny assessment . The Assessing Officer in the scrutiny assessment . The Assessing Officer in the scrutiny assessment u/s 143(3) of the Act da u/s 143(3) of the Act dated 30.08.2019 held that interest income ted 30.08.2019 held that interest income earned from deposits with co earned from deposits with co-operative bank was not eligible for operative bank was not eligible for deduction u/s 80P(2)(d) of the Act and accordingly he disallowed deduction u/s 80P(2)(d) of the Act and accordingly he disall deduction u/s 80P(2)(d) of the Act and accordingly he disall the claim of the assessee, f the claim of the assessee, following the various decision cited in the ollowing the various decision cited in the assessment order. The Ld. CIT(A) also upheld the disallowance of er. The Ld. CIT(A) also upheld the disallowance of er. The Ld. CIT(A) also upheld the disallowance of the deduction observing as under: the deduction observing as under:
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- Rustomjee Aspiree Premises Co-op. Soc. Ltd. 3 Rustomjee Aspiree Premises Co 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:
Section 80P provides that in case of assessee being a cooperative 5. Section 80P provides that in case of assessee being a cooperative 5. Section 80P provides that in case of assessee being a cooperative society, the gross total income which includes any income referred to society, the gross total income which includes any income referred to society, the gross total income which includes any income referred to sub-section 2 shall be deducted in accordance with subject to provision section 2 shall be deducted in accordance with subject to provision section 2 shall be deducted in accordance with subject to provision of this section. Sub- -section 2 of section 80P Clause (a) states that, “in Clause (a) states that, “in the case of cooperative society engaged in cooperative business of the case of cooperative society engaged in cooperative business of the case of cooperative society engaged in cooperative business of banking and providing credit facilities to its members or , the whole of banking and providing credit facilities to its members or , the whole of banking and providing credit facilities to its members or , the whole of amount of profit and gains of the business attributable to anyone or amount of profit and gains of the business attributable to anyone or amount of profit and gains of the business attributable to anyone or more or such activity.” Clause (d) of Sub ity.” Clause (d) of Sub-section 2 of Section 80P reads section 2 of Section 80P reads as under:- (d) In respect of any income by way of interest or dividends (d) In respect of any income by way of interest or dividends (d) In respect of any income by way of interest or dividends Rustomjee Aspiree Premises Co-op. Soc. Ltd. 4 Rustomjee Aspiree Premises Co 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;
Sub section 4 of section 80P carves out of exception that the ection 4 of section 80P carves out of exception that the ection 4 of section 80P carves out of exception that the provision of this section will not apply in relation to any cooperative provision of this section will not apply in relation to any cooperative provision of this section will not apply in relation to any cooperative bank. Further explanation provides that the definition of cooperative bank. Further explanation provides that the definition of cooperative bank. Further explanation provides that the definition of cooperative bank and primary cooperative bank. The said provision rea bank and primary cooperative bank. The said provision reads as bank and primary cooperative bank. The said provision rea under:- (4) The provisions of this section shall not apply in relation to (4) The provisions of this section shall not apply in relation to (4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society operative bank other than a primary agricultural credit society operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. operative agricultural and rural development bank. operative agricultural and rural development bank. Explanation. For the purposes of this sub-section- (a) co Explanation. For the purposes of this (a) co-operative bank” and “primary agricultural credit society” shall have the bank” and “primary agricultural credit society” shall have the bank” and “primary agricultural credit society” shall have the meanings respectively assigned to them in Part V of the Banking meanings respectively assigned to them in Part V of the Banking meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949) (b) “primary co-operative agricultural Regulation Act, 1949 (10 of 1949) (b) “primary co operative agricultural and rural development bank” means a society having its area of and rural development bank ” means a society having its area of operation confined to a taluk and the principal object of which is to operation confined to a taluk and the principal object of which is to operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development term credit for agricultural and rural development term credit for agricultural and rural development activities.]
7. Thus, assessee being a cooperative society cannot be reckoned as 7. Thus, assessee being a cooperative society cannot be reckoned as 7. Thus, assessee being a cooperative society cannot be reckoned as cooperative bank carrying out banking business. The Hon’ble cooperative bank carrying out banking business. The Hon’ble cooperative bank carrying out banking business. The Hon’ble Jurisdictional High court in the case of Quepem Urban Co Jurisdictional High court in the case of Quepem Urban Co-operative Jurisdictional High court in the case of Quepem Urban Co Credit Society Ltd. vs. ACIT reported in (2015) 377 ITR 272 (Bom), after Credit Society Ltd. vs. ACIT reported in (2015) 377 ITR 272 (Bom), after Credit Society Ltd. vs. ACIT reported in (2015) 377 ITR 272 (Bom), after analyzing the relevant provision of Section 80P including Sub analyzing the relevant provision of Section 80P includi ng Sub-section (4) had categorically held that cooperative banks are to be treated as (4) had categorically held that cooperative banks are to be treated as (4) had categorically held that cooperative banks are to be treated as cooperative society. In so far as deduction of interest earned on cooperative society. In so far as deduction of interest earned on cooperative society. In so far as deduction of interest earned on investment made in cooperative bank, Clause (d) of section 80P(2) investment made in cooperative bank, Clause (d) of section 80P(2) investment made in cooperative bank, Clause (d) of section 80P(2) provides that any income by way of interest on dividend derived from provides that any income by way of int erest on dividend derived from cooperative societies from its investment with any other cooperative cooperative societies from its investment with any other cooperative cooperative societies from its investment with any other cooperative societies, the whole of such income is deductable u/s 80P. The societies, the whole of such income is deductable u/s 80P. The societies, the whole of such income is deductable u/s 80P. The Rustomjee Aspiree Premises Co-op. Soc. Ltd. 5 Rustomjee Aspiree Premises Co ITA No.
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:-
1. Whether the learned Tribunal was justified in deleting the 1. Whether the learned Tribunal was justified in deleting the 1. Whether the learned Tribunal was justified in deleting the additions made by the Assessing Authority being the disallowed additions made by the Assessing Authority being the disallowed additions made by the Assessing Authority being the disallowed deduction claimed u/S 80P(2)(d) of the Income Tax Act and in the deduction claimed u/S 80P(2)(d) of the Income Tax Act a deduction claimed u/S 80P(2)(d) of the Income Tax Act a light of the decision of the Supreme Court with regard to the same light of the decision of the Supreme Court with regard to the same light of the decision of the Supreme Court with regard to the same exact assessee as the present one, namely, The Totgars Co- exact assessee as the present one, namely, The Totgars Co exact assessee as the present one, namely, The Totgars Co operative Sale Society Ltd., Vs. Income Tax Officer in Civil Appeal operative Sale Society Ltd., Vs. Income Tax Officer in Civil Appeal operative Sale Society Ltd., Vs. Income Tax Officer in Civil Appeal Nos. 1622 to 1629/2010 decided by the Apex Court on Nos. 1622 to 1629/2010 decided by the Apex Court on Nos. 1622 to 1629/2010 decided by the Apex Court on 08.02.2010 or not? 2. Whether, in the facts and circumstances of 8.02.2010 or not? 2. Whether, in the facts and circumstances of 8.02.2010 or not? 2. Whether, in the facts and circumstances of the case, the Tribunal is justified in not following the decision the case, the Tribunal is justified in not following the decision the case, the Tribunal is justified in not following the decision rendered by the Hon’ble Supreme Court in Civil Appeal No. 1622 rendered by the Hon’ble Supreme Court in Civil Appeal No. 1622 rendered by the Hon’ble Supreme Court in Civil Appeal No. 1622 of 2010, wherein the Apex Court has to be held that the words of 2010, wherein the Apex Court has to be held that the words of 2010, wherein the Apex Court has to be held that the words used in Section 80P “the whole of the amount of profits and gains sed in Section 80P “the whole of the amount of profits and gains sed in Section 80P “the whole of the amount of profits and gains of business” emphasise that the income in respect of which of business” emphasise that the income in respect of which of business” emphasise that the income in respect of which deduction is sought must constitute the operational income and deduction is sought must constitute the operational income and deduction is sought must constitute the operational income and not the other income which accrues to the society and as such not the other income which accrues to the society and as such not the other income which accrues to the society and as such interest t t earned earned earned on on on funds funds funds which which which are are are not not not required required required for for for business purposes falls under the category of “other income” purposes falls under the category of “other income” purposes falls under the category of “other income” taxable under the Income Tax Act? 6. According to the learned taxable under the Income Tax Act? 6. According to the learned taxable under the Income Tax Act? 6. According to the learned counsel, the present appeal should be admitted on these two counsel, the present appeal should be admitted on these two counsel, the present appeal should be admitted on these two substantial questions of law substantial questions of law. 7. However, the contention being . 7. However, the contention being taken by the learned counsel is untenable. For the issue that was taken by the learned counsel is untenable. For the issue that was taken by the learned counsel is untenable. For the issue that was Rustomjee Aspiree Premises Co-op. Soc. Ltd. 6 Rustomjee Aspiree Premises Co ITA No.
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’.
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 Rustomjee Aspiree Premises Co-op. Soc. Ltd. 7 Rustomjee Aspiree Premises Co 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.”
8. This view has further been reiterated by the judgment of Hon’ble 8. This view has further been reiterated by the judgment of Hon’ble 8. This view has further been reiterated by the judgment of Hon’ble Kerala High Court in the case of PCIT vs. Percoorkada Service Co. Kerala High Court in the case of PCIT vs. Percoorkada Service Co. Kerala High Court in the case of PCIT vs. Percoorkada Service Co. Bank Ltd. (2022) 442 ITR 141 (Kerala) dated 01.11.2021, wherein one Bank Ltd. (2022) 442 ITR 141 (Kerala) dated 01.11.2021, wherein one Bank Ltd. (2022) 442 ITR 141 (Kerala) dated 01.11.2021, wherein one of the question before the Hon’ble High Court was, whether the interest of the question before the Hon’bl e High Court was, whether the interest income earned from deposits with the banks is eligible for deduction income earned from deposits with the banks is eligible for deduction income earned from deposits with the banks is eligible for deduction u/s 80P(2). The Hon’ble Kerala High Court has also considered the u/s 80P(2). The Hon’ble Kerala High Court has also considered the u/s 80P(2). The Hon’ble Kerala High Court has also considered the judgment of Hon’ble Supreme Court in the case of Totagars Cooperative judgment of Hon’ble Supreme Court in the case of Totagars Cooperative judgment of Hon’ble Supreme Court in the case of Totagars Cooperative Societies Ltd. 322 ITR 323, wherein the Hon’ble High Court has held d. 322 ITR 323, wherein the Hon’ble High Court has held d. 322 ITR 323, wherein the Hon’ble High Court has held that interest income earned from district cooperative bank or state that interest income earned from district cooperative bank or state that interest income earned from district cooperative bank or state cooperative bank, come within the ambit of section 80P (2)(d), therefore cooperative bank, come within the ambit of section 80P (2)(d), therefore cooperative bank, come within the ambit of section 80P (2)(d), therefore the income constitutes income from other sources and it is the income constitutes income from other sources and it is eligible for the income constitutes income from other sources and it is deduction covered u/s 80P(2)(d). Otherwise section 80P(2)(d) specifies deduction covered u/s 80P(2)(d). Otherwise section 80P(2)(d) specifies deduction covered u/s 80P(2)(d). Otherwise section 80P(2)(d) specifies any income by way of interest or dividend which is otherwise taxable any income by way of interest or dividend which is otherwise taxable any income by way of interest or dividend which is otherwise taxable under the head income from other sources, deduction is allowable if the under the head income from other sources, deduction is allowable if the under the head income from other sources, deduction is allowable if the same is derived from investment made with any other cooperative same is derived from investment made with any other cooperative societies.
9. In contravention, section 80P (2)(a) provides income from carrying out 9. In contravention, section 80P (2)(a) provides income from carrying out 9. In contravention, section 80P (2)(a) provides income from carrying out various activities which is in the nature of business. Irrespective various activities which is in the nature of business. Irrespective various activities which is in the nature of business. Irrespective Rustomjee Aspiree Premises Co-op. Soc. Ltd. 8 Rustomjee Aspiree Premises Co 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.
10. Lastly, in so far as judgment of Hon’ble Karnataka High Court in 10. Lastly, in so far as judgment of Hon’ble Karnataka High Court in 10. Lastly, in so far as judgment of Hon’ble Karnataka High Court in the case of Totagars Cooperative Sale Society (395 ITR 611), which has the case of Totagars Cooperative Sale Society (395 ITR 611), which has been referred and relied upon by the Ld. CIT(A), the Hon’ble High Court been referred and relied upon by the Ld. CIT(A), the Hon’ble High Court been referred and relied upon by the Ld. CIT(A), the Hon’ble High Court has held against and observed that income by way of interest earned has held against and observed that income by way of interest earned by deposit or investment of idle or surplus funds does not change its by deposit or investment of idle or surplus funds does not change its by deposit or investment of idle or surplus funds does not change its character irrespective of the fact whether such income of interest is character irrespective of the fact whether such income of interest is earned from a schedule bank or cooperative bank. Therefore, section earned from a schedule bank or cooperative bank. Therefore, section earned from a schedule bank or cooperative bank. Therefore, section 80P(2)(d) would not apply on the facts of that case. However, as noted 80P(2)(d) would not apply on the facts of that case. However, as noted 80P(2)(d) would not apply on the facts of that case. However, as noted above in one of the judgment, the Hon’ble Karnataka High Court has above in one of the judgment, the Hon’ble Karnataka High Court has above in one of the judgment, the Hon’ble Karnataka High Court has held the same issue in favour of the assessee. ame issue in favour of the assessee.
Therefore, following the judgment of Hon’ble Karnataka High Court 11. Therefore, following the judgment of Hon’ble Karnataka High Court 11. Therefore, following the judgment of Hon’ble Karnataka High Court in the case of Totagars Cooperative Sale Society (2017) 392 ITR 74 in the case of Totagars Cooperative Sale Society (2017) 392 ITR 74 in the case of Totagars Cooperative Sale Society (2017) 392 ITR 74 (Kar.) dated 5th 2017 and judgment of Hon’ble Kerala High Court in (Kar.) dated 5th 2017 and judgment of Hon’ble Kerala High Court in (Kar.) dated 5th 2017 and judgment of Hon’ble Kerala High Court in the case of PCIT vs. Percoorkada Service Co. Bank Ltd. (supra), we IT vs. Percoorkada Service Co. Bank Ltd. (supra), we IT vs. Percoorkada Service Co. Bank Ltd. (supra), we hold that assessee is eligible for deduction of interest income earned hold that assessee is eligible for deduction of interest income earned hold that assessee is eligible for deduction of interest income earned from from from cooperative cooperative cooperative bank bank bank.
Rustomjee Aspiree Premises Co-op. Soc. Ltd. 9 Rustomjee Aspiree Premises Co ITA No. 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 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:
We have heard the rival submissions and perused the materials on 8. We have heard the rival submissions and perused the materials on 8. We have heard the rival submissions and perused the materials on record. It is evident that the assessee is a co ord. It is evident that the assessee is a co-operative housing society operative housing society registered under the Co-operative Housing Societies’ Act and that the registered under the Co operative Housing Societies’ Act and that the assessee has earned interest income of Rs.12,90,210/ assessee has earned interest income of Rs.12,90,210/- which was assessee has earned interest income of Rs.12,90,210/ claimed as deduction under section 80P(2)(d). It is observed that the claimed as deduction under section 80P(2)(d). It is observed that the assessee has invested the surplus funds with co-operative banks and assessee has invested the surplus funds with co operative banks and non co-operative banks for which the assessee has received interest operative banks for which the assessee has received interest operative banks for which the assessee has received interest income income of of Rs.10,39,909/- Rs.10,39,909/ from from non non cooperative cooperative banks banks and and Rs.12,90,210/- from co from co-operative banks, respectively. The Ld.PCIT ctively. The Ld.PCIT revised the assessment order passed under section 143(3) of the I.T. revised the assessment order passed under section 143(3) of the I.T. revised the assessment order passed under section 143(3) of the I.T. Act dated 15/12/2017 on the ground that interest income received by Act dated 15/12/2017 on the ground that interest income received by Act dated 15/12/2017 on the ground that interest income received by the assessee by way of investment in co-operative banks is not eligible the assessee by way of investment in co operative banks is not eligible for deduction under section 80P(2)(d) on the ground that the co for deduction under sectio n 80P(2)(d) on the ground that the co- operative banks will not be classified under ‘Co-operative Societies’ operative banks will not be classified under ‘Co operative Societies’ and that the interest earned from co-operative banks are not eligible for and that the interest earned from co operative banks are not eligible for deduction under the provisions of section 80P(2)(d). The Ld.PCIT placed deduction under the provisions of section 80P(2)(d). The Ld.PCIT placed deduction under the provisions of section 80P(2)(d). The Ld.PCIT placed his reliance on the decision of PCIT vs Totagars Co s reliance on the decision of PCIT vs Totagars Co-operative Sale operative Sale Society (supra) wherein the Hon’ble High Court held that the Society (supra) wherein the Hon’ble High Court held that the Society (supra) wherein the Hon’ble High Court held that the amendment to section 194A(3)(v) of the Act excludes cooperative banks amendment to section 194A(3)(v) of the Act excludes cooperative banks amendment to section 194A(3)(v) of the Act excludes cooperative banks from the definition of co-operative society by Finance Act, from the definition of co operative society by Finance Act, 2015 thereby Rustomjee Aspiree Premises Co-op. Soc. Ltd. 10 Rustomjee Aspiree Premises Co 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:
M/s Petit Powers Co-op. Housing Society Ltd vs ITO (ITA 1. M/s Petit Powers Co op. Housing Society Ltd vs ITO (ITA No.549/MUM/2021) 2. M/s Solitaire CHS Ltd Society Office, Solitaire No.549/MUM/2021) 2. M/s Solitaire CHS Ltd Society Office, Solitaire No.549/MUM/2021) 2. M/s Solitaire CHS Ltd Society Office, Solitaire CHS Ltd vs PCIT (ITA No.3155/Mum/2019) 3. Jai Hind Co CIT (ITA No.3155/Mum/2019) 3. Jai Hind Co CIT (ITA No.3155/Mum/2019) 3. Jai Hind Co-operative Housing Society Ltd vs ACIT-25(2) (ITA No.1762 & 1763/Mum/2020) Housing Society Ltd vs ACIT 25(2) (ITA No.1762 & 1763/Mum/2020) 4. M/s Vadasinor Pragati Samaj Co-operative Credit Society Ltd vs 4. M/s Vadasinor Pragati Samaj Co operative Credit Society Ltd vs PCIT-18 (ITA No.2539/Mum/2019) 5. M/s Doshi Palace Co 18 (ITA No.2539/Mum/2019) 5. M/s Doshi Palace Co-operative 18 (ITA No.2539/Mum/2019) 5. M/s Doshi Palace Co Hsg Soc. Ltd vs ACIT td vs ACIT-19(1) (ITA No.2510/MUM/2019) 6. The Salsette 19(1) (ITA No.2510/MUM/2019) 6. The Salsette Catholic Co-operative Housing Ltd vs ACIT Circle operative Housing Ltd vs ACIT Circle-23(3) (ITA No.3870 & 23(3) (ITA No.3870 & 3871/Mum/2019 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 Rustomjee Aspiree Premises Co-op. Soc. Ltd. 11 Rustomjee Aspiree Premises Co 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, 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 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 :
Rustomjee Aspiree Premises Co-op. Soc. Ltd. 12 Rustomjee Aspiree Premises Co ITA No.
“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.
After necessary deliberations, we are unable to persuade 7. After necessary deliberations, we are unable to persuade 7. After necessary deliberations, we are unable to persuade ourselves to be in agreement with the view taken by the Pr. CIT. ourselves to be in agreement with the view taken by the ourselves to be in agreement with the view taken by the Before proceeding any further, we may herein reproduce the relevant Before proceeding any further, we may herein reproduce the relevant Before proceeding any further, we may herein reproduce the relevant extract of the aforesaid statutory provision, viz. Sec. 80P(2)(d), as the extract of the aforesaid statutory provision, viz. Sec. 80P(2)(d), as the 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 same would have a strong bearing on the adjudication of the issue same would have a strong bearing on the adjudication of the issue Rustomjee Aspiree Premises Co-op. Soc. Ltd. 13 Rustomjee Aspiree Premises Co ITA No.
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 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 Rustomjee Aspiree Premises Co-op. Soc. Ltd. 14 Rustomjee Aspiree Premises Co ITA No. 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.
8. We shall now advert to the judicial pronouncements that have 8. We shall now advert to the judicial pronouncements that have 8. We shall now advert to the judicial pronouncements that have been relied upon by the ld. A.R. We find that the issue that a co relied upon by the ld. A.R. We find that the issue that a co relied upon by the ld. A.R. We find that the issue that a co- operative society would be entitled for claim of deduction under Sec. operative society would be entitled for claim of deduction under Sec. operative society would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income derived from its investments held 80P(2)(d) on the interest income derived from its investments held 80P(2)(d) on the interest income derived from its investments held with a co-operative bank is covered in favour of the asses operative bank is covered in favour of the assessee in the operative bank is covered in favour of the asses following cases:
(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 Rustomjee Aspiree Premises Co-op. Soc. Ltd. 15 Rustomjee Aspiree Premises Co ITA No.
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 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.
Rustomjee Aspiree Premises Co-op. Soc. Ltd. 16 Rustomjee Aspiree Premises Co ITA No.
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.
9. Be that as it may, in our considered view, as the A.O while 9. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and therein framing the assessment had taken a possible view, and therein framing the assessment had taken a possible view, and therein concluded that the assessee would be entitled for claim of deduction concluded that the assessee would be entitled for claim of deduction concluded that the assessee would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income earned on its under Sec. 80P(2)(d) on the interest income earned on its under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with cooperative banks, therefore, the Pr. CIT investments/deposits with co operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 for was in error in exercising his revisional jurisdiction u/s 263 for was in error in exercising his revisional jurisdiction u/s 263 for Rustomjee Aspiree Premises Co-op. Soc. Ltd. 17 Rustomjee Aspiree Premises Co 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.
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 Rustomjee Aspiree Premises Co-op. Soc. Ltd. 18 Rustomjee Aspiree Premises Co ITA No.
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.
In the result the appeal filed by the assessee is allowed. In the result the appeal filed by the assessee is allowed. In the result the appeal filed by the assessee is allowed.