ITO-17(2)(1), MUMBAI, MUMBAI vs. THE BEST EMPLOYEES CO-OP CREDIT SOCIETY LIMITED, MUMBAI

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ITA 6733/MUM/2024Status: DisposedITAT Mumbai24 February 2025AY 2020-21Bench: SHRIAMARJIT SINGH (Accountant Member), SHRI ANIKESH BANERJEE (Judicial Member)4 pages
AI SummaryDismissed

What did the Tribunal hold?

The Income Tax Appellate Tribunal (ITAT) dismissed the revenue's appeal, upholding the CIT(A)'s decision. The ITAT relied on its co-ordinate bench's previous rulings in the assessee's own case and other similar cases, which consistently held that co-operative banks qualify as co-operative societies. Following the Supreme Court's decision in *Totgars Co-operative Sale Society Ltd vs ITO*, the tribunal affirmed that interest and dividend income derived from co-operative banks by a co-operative society is eligible for deduction under Section 80P(2)(d) of the Act.

What were the facts?

The assessee, a co-operative credit society, invested in co-operative banks, earning interest totaling Rs. 11,57,02,565/- and claimed a deduction under Section 80P(2)(d) of the Income-tax Act. The Assessing Officer disallowed this, arguing that co-operative banks are not co-operative societies for the purpose of this deduction. However, the Ld. CIT(A) allowed the assessee's appeal.

What were the issues?

Whether interest and dividend income earned by a co-operative credit society from investments in co-operative banks is eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961, and if a co-operative bank qualifies as a co-operative society for this deduction.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(3),Section 144B,Section 80P(2)(d),Section 80P(4)

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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI

Before: SHRIAMARJIT SINGH & SHRI ANIKESH BANERJEE

For Appellant: Shri. G.P. Mehta
For Respondent: Ms. Monika Khare,PCIT-DR
Hearing: 24/02/2025Pronounced: 24/02/2025

The instant appeal of the revenue was filed against the order of theNational Faceless Appeal Centre, Delhi [for brevity, ‘Ld.CIT(A)’] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), for Assessment Year 2020-21, date of order24.10.2024.The impugned order was emanated from the order of the Assessment Unit, Income-tax Department (for brevity the “Ld. AO”), passed under section 143(3) read with section 144B of the Act, date of order 16/09/2022.

The Best Employees Co-op Credit Sty Ltd 2. The key facts of the case are as follows: The assessee, a co-operative credit society, invested in co-operative banks by way of deposits and earned interest totaling Rs. 11,57,02,565/-. The assessee filed a regular return and claimed an interest deduction under section 80P(2)(d) of the Act. However, during the assessment, the Ld. AO did not recognize the co-operative bank as a co-operative society from which the assessee received the interest and dividend. Consequently, the deduction under section 80P(2)(d) was disallowed, and an addition of Rs. 11,57,02,565/- was made. The aggrieved assessee then filed an appeal before the Ld. CIT(A), who, considering the rulings of various High Courts and Tribunals, allowed the assessee’s appeal. Dissatisfied with this decision, the revenue has now filed an appeal before us.

3.

We heard the rival submissions and considered the documents available in the record. The Ld.DR vehemently argued and submitted that the assessee has claimed deduction under section 80P(2)(d) of the Act and accordingly, this deduction is not at all applicable for the assessee as the assessee has invested the amount in the co-operative bank, which has not been considered as co-operative society. Accordingly, in pursuance to the insertion of sub section 4 of section 80P of the Act, the assessee is no more entitled for claiming deduction under section 80P(2)(d) of the Act. She fully relied on the impugned assessment order.

4.

The Ld.AR argued and relied on the order of the co-ordinate bench of ITAT- Mumbai in assessee’s own case bearing date of pronouncement 17/10/2024 where the co-ordinate bench has considered the co- operative bank as a co-operative society and the interest and dividend which were received by the assessee from the co-operative banks is held to be eligible The Best Employees Co-op Credit Sty Ltd for deduction under section 80P(2)(d) of the Act. The Bench has considered the ruling of Hon’ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd vs ITO (2010) 322 ITR 283 (SC)which was rendered in the context of section 80P(2)(d) of the Act in connection with expression use “any income by way of interest”. Thus, “any income by way of interest” derived by co-operative society is eligible and the deduction under section 80P(2)(d) of the Act irrespective of the fact, is also applicable as for co-operative banks also as the co-operative banks are also the co-operative society. The same view was followed in assessee’s own case for A.Y. 2015-16 and 2018-19 in and 1275/Mum/2024, respectively, order dated 05/09/2024 where the bench rejected the appeal filed by the revenue and upheld the view taken by the Ld. CIT(A).

5.

We respectfully follow both the orders of the co-ordinate bench of ITAT, Mumbai Benches cited supra and accordingly, the grounds taken by the revenue are dismissed.

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