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Facts
The assessee, a Co-operative Housing Society, claimed a deduction of Rs. 2,76,03,114/- under Section 80P(2)(d) of the Income Tax Act for interest income earned from fixed deposits and savings accounts held with various Co-operative Banks. The Assessing Officer and the CIT(A) disallowed this deduction, asserting that Co-operative Banks are commercial banks and do not qualify as 'co-operative societies' for the purpose of the said section.
Held
The Tribunal condoned the delay in filing the appeal and, relying on its consistent findings in the assessee's own case for preceding assessment years, held that interest income earned from deposits in Co-operative Banks is eligible for deduction under Section 80P(2)(d) of the Act.
Key Issues
Whether interest income earned by a Co-operative Housing Society from deposits in Co-operative Banks is eligible for deduction under Section 80P(2)(d) of the Income Tax Act, and whether Co-operative Banks qualify as 'co-operative societies' for this purpose.
Sections Cited
250, 80P(2)(d), 143(3), 142(1)
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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI NARENDRA KUMAR BILLAIYASHRI SANDEEP SINGH KARHAIL
Date of Hearing – 24/06/2025 Date of Order - 26/06/2025
O R D E R PER SANDEEP SINGH KARHAIL, J.M.
The assessee has filed the present appeal against the impugned order dated 11/03/2023, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“learned CIT(A)”], for the assessment year 2015-16.
The present appeal is delayed by 572 days. Along with the appeal, the assessee has filed an application seeking condonation of delay in filing the present appeal, duly supported by the affidavit of its Secretary. In the application, the assessee submitted that during the appellate proceedings before the learned CIT(A), the assessee filed detailed written submissions on 16.01.2021 and 17.04.2021. It is further submitted that along with the aforesaid written submissions, the assessee also filed the orders passed in its own case on the identical issue. However, while passing the impugned order, the learned CIT(A) disregarded the orders for the preceding assessment year, which were in favour of the assessee, and dismissed the appeal filed by the assessee. The assessee submitted that it was advised that non-consideration of orders of previous years constitutes a mistake apparent from the record and the same is rectifiable. Accordingly, the assessee filed a rectification application before the learned CIT(A) on 09.03.2024, which is still pending consideration. Thus, the assessee submitted that since it was pursuing an alternate remedy before the learned CIT(A), the present appeal could not be filed within the prescribed limitation period. Having considered the submissions of the assessee, we are of the considered view that there was sufficient cause which prevented the assessee from filing the present appeal within the prescribed limitation period. Accordingly, we condone the delay in filing the present appeal and proceed to decide the same on the merits.
In this appeal, the assessee has raised the following grounds: - “In the facts and circumstances of the case and in law, the Learned National Faceless Appeal Centre (NFAC) CIT(Appeals) has erred in confirming disallowance of deduction claimed of Rs.2,76,03,114/- under section 80P(2)(d) of the Act.”
4. The solitary grievance of the assessee is against the denial of deduction claimed under section 80P(2)(d) of the Act on interest earned on fixed deposits and deposits in savings bank accounts maintained with Co-operative Banks. The brief facts of the case are that the assessee is a Co-operative Housing Society. For the year under consideration, the assessee filed its return of income on 11.09.2015, declaring a total income of Rs. 98,70,740/-. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(3) and section 142(1) were issued and served on the assessee. During the assessment proceedings, it was observed that the assessee has claimed deduction of Rs. 2,76,03,114/- under section 80P(2)(d) of the Act on interest earned from deposits in Co-operative Banks. Accordingly, the assessee was asked to show cause as to why the aforesaid interest income should not be disallowed and added back to the total income of the assessee. In response, the assessee submitted that the interest income has been earned from fixed deposits and deposits in savings bank account maintained with Co-operative banks, which are registered under the Maharashtra Co-operative Societies Act, 1960, and therefore, it should be treated as interest derived by a co-operative society from its investment with any other co-operative society under section 80P(2)(d) of the Act. The Assessing Officer (“AO”) vide order dated 30.11.2017 passed under section 143(3) of the Act disagreed with the submissions of the assessee and held that section 80P(2)(d) of the Act refers to interest and dividend earned from investment in any other co-operative society only and this deduction cannot be extended to the interest income earned by the co-operative society from the investment in any other Co-operative Bank. The AO further held that Co- operative Bank is a commercial bank and does not fall under the purview of “co-operative society” as referred to in section 80P(2)(d) of the Act.
Accordingly, the AO disallowed the deduction claimed by the assessee under section 80P(2)(d) of the Act.
Learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee on this issue and upheld the disallowance made by the AO under section 80P(2)(d) of the Act. Being aggrieved, the assessee is in appeal before us.
We have considered the submissions of both sides and perused the material on record. In the present case, the assessee is a Co-operative Housing Society collecting money from its members for the maintenance of the society and spending the same on the maintenance of the society. As per the assessee, the surplus money out of the money collected from its members is kept from time to time in fixed deposits and deposits in saving bank accounts maintained with Co-operative Banks and interest is earned thereon, the details of which are as follows: - Bank Name Interest received (Rs.) Citizen Credit Co-op Bank Ltd. - FDR's 1,08,26,518/- Samrao Vithal Co-op. Bank - FDR's 94,27,617/- Shamrao Vithal Co-op. Bank - D'Monte Park 3,46,077/- (FD Interest) Shamrao Vithal Co-op. Bank - D'Monte Park 21,446/- (SB Interest) Saraswat Co-op. Bank Ltd - FDR's 65,49,288/- Citizen Credit Co-op. Bank - SB Accounts 3,87,407/- Shamrao Vithal Co-op. Bank – SB Accounts 44,761/- Total 2,76,03,114/-
Accordingly, the interest income of Rs.2,76,03,114/- earned by the assessee from its deposits maintained with Co-operative Banks was claimed as a deduction by the assessee under section 80P(2)(d) of the Act. We find that similar issue came up for consideration before the Co-ordinate Bench of the Tribunal in assessee’s own case in preceding assessment years and it has been consistently held that the assessee is entitled to claim deduction under section 80P(2)(d) of the Act in respect of interest income received from deposits maintained with Co-operative Banks.
We find that the Co-ordinate Bench of the Tribunal in assessee’s own case in ACIT vs. The Salsette Catholic Co-operative Housing Ltd., in ITAs No.3870 and 3871/Mum/2019, for the assessment years 2013-14 and 2014- 15, vide order dated 13.05.2021, while deciding the similar issue in favour of the assessee, observed as follows:- “11. Considered rival submissions and perused the material available on record including the case laws relied upon by the parties. We find that the issue in respect of deduction claimed in respect of interest income earned from Co- operative Banks under section 80P(2)(d) of the Act is squarely covered by the decisions relied upon by the learned Counsel for the assessee as aforesaid wherein identical issue, except variation in figures, has been decided by the Tribunal in (i) Amit Tata Employees Co-operative Housing Society Ltd. v/s ACIT, ITA no.292/Mum./2018, A.Y. 2014-15, order dated 26.07.2019; (ii) Poonam Chambers Premises Co-Op. Society Ltd. v/s ACIT, ITA no. 4463/Mum./2017, A.Y. 2014-15, dated 23.08.2018; (iii) Merwanjee Cama Park Co-operative Housing Society Ltd. v/s ITO, Mum./2014, A.Y. 2010-11, order dated 27.09.2019; and (iv) ITO v/s Eternity Co-operative Housing Society Ltd., ITA no. 6159/Mum./2017, A.Y. 2013-14, order dated 15.05.2018. Consistent with the view taken in the aforesaid Co-ordinate Bench decisions in which the decision of the Hon'ble Karnataka High Court in Totagars Co-operative Society (supra), was distinguished by the Co-ordinate Bench. Therefore, we hold that the assessee is a Co-operative Society is entitled for claiming deduction under section 80P(2)(d) of the Act in respect of the interest income earned from either from Co-operative Bank or from Co-operative Society whatsoever that may be. Consequently, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the Revenue.”
Similar findings were rendered by the Co-ordinate Bench of the Tribunal in assessee’s own case in ITAs No.5893 and 5894/Mum/2024, for the assessment years 2016-17 and 2017-18, vide order dated 06.01.2025.
During the hearing, the learned DR could not bring any material on record to deviate from the findings as rendered by the Co-ordinate Bench of the Tribunal in assessee’s own case in preceding assessment years. Accordingly, respectfully following the decisions of the Co-ordinate Benches of the Tribunal cited supra, we are of the considered view that the assessee is entitled to claim deduction under section 80P(2)(d) of the Act in respect of interest income earned from fixed deposits and deposits in saving bank accounts maintained with Co-operative Banks. As a result, the sole ground raised by the assessee is allowed.
In the result, the appeal by the assessee is allowed.
Order pronounced in the open Court on 26/06/2025