M/S MIDDLE INCOME GROUP III CO OP HSG SOCIETY LIMITED ,MUMBAI vs. INCOME TAX OFFICER, WARD 23(2)(3), MUMBAI

Although, against the said order of assessment, assessee preferred appeal but the same was rejected by Ld. CIT(A) vide its order dated 21.11.2024. Co-Op Housing Society Ltd., Mumbai

Now before me the present appeal has been filed by the assessee thereby raising two grounds of appeal. Both the grounds raised by the assessee are interrelated and interconnected relates to challenging the order of Ld. CIT(A) in confirming the disallowance of deduction u/s 80P(2)(d) of the Act. Therefore, I have decided to take up both the issues together and to adjudicate the same through the present consolidated order.

The Ld. AR while reiterating the same arguments as were raised by him before the revenue authorities and also relied upon his written submissions, the contents of the same are reproduced herein below:

The appellant is a Co-operative Housing Society and filed its return of Income for both the year after claiming deduction U/s 80P(2)(d) on interest received from Co-operative Banks. Yearwise details of returned income and deduction claimed are as under:

During assessment AO disallowed claim of deduction U/s 80P(2)(d) on the plea that that as per section 2(19) the definition of Co-operative societies does not include 'bank' and accordingly co-operative banks can not be treated as co-operative societies, hence assessee is not eligible to claim deduction U/s 80P(2)(d) for the interest received from such banks. Co-Op Housing Society Ltd., Mumbai

Learned CIT - A rejected the explanation of the assessee which was also before the learned AO that deduction by way of interest is allowed only when the cooperative society investment is made in another cooperative society and cooperative banks are not cooperative societies. Therefore, assessee's investment in cooperative banks earning interest income is not eligible for deduction under section 80 P (2) (d) of the act. The learned CIT - A further referred to the provisions of section 80 P (4) of the act and as well as the definition of cooperative society under section 2 (19) of the act and held that there is no ambiguity in this issue and the assessee has invested in different cooperative banks and earned interest thereon is not eligible for deduction under section 80 P (2) (d) of the act. He also relied upon the decision of Hon'ble 4. Before the Hon'ble Bench we submit as under: - i. According to the provisions of section 80 P in case of a cooperative society the gross total income if it includes the income referred to in is subsection (2) then same shall be granted as a deduction subject to the conditions and to the extent of amount specified from the total income. In subsection 2, clause (d) provides that in respect of income by way of interest on dividend derived by the cooperative society from its investment with any other cooperative society the whole of such income is eligible for deduction. Therefore, if the cooperative society makes any investment in another cooperative societies and consequently on any interest or dividend earned from such investment total sum so earned is eligible for deduction.

The Ld. AR further submitted that the issue in question is squarely covered in favour of assessee.

On the other hand, Ld. DR representing the respondent relied upon the orders passed by the revenue authorities. Co-Op Housing Society Ltd., Mumbai

I have heard the counsels for both the parties and I have also perused the material placed on record, judgements cited before us and also the orders passed by the revenue authorities. Ld. AR submitted that the issue in the present appeal are fully covered by the decision of coordinate bench of ITAT in case of Ashok tower “D” Co. Op. Housing Society Ltd. Vs. ITO, reported in [2024] 163 taxmann.com 598 (Mumbai-Trib), where in it was held that assessee co-operative housing society was eligible for deduction u/s 80P(2)(d) in respect of interest income earned by it from a co-operative bank and accordingly, AO was directed to grant deduction to assessee on interest income earned from cooperative banks u/s 80(2)(d). The operative portion of the order of the coordinate bench of ITAT is reproduced herein below:

We have heard the rival contentions and perused the orders of the lower authorities. The simple controversy involved in this appeal is that assessee is a co-operative society, has placed certain funds with cooperative banks and earned interest thereon of Rs. 1,472,930/-. The claim of the assessee is that deduction is available under section 80 P (2) (d) of the act to the assessee.

According to the provisions of section 80 P in case of a cooperative society the gross total income if it includes the income referred to in is subsection (2) then same shall be granted as a deduction subject to the conditions and to the extent of amount specified from the total income. In subsection 2, clause (d) provides that in respect of income by way of interest on dividend derived by the cooperative society from its investment with any other cooperative society the whole of such income is Co-Op Housing Society Ltd., Mumbai eligible for deduction. Therefore if the cooperative society makes any investment in another cooperative societies and consequently on any the cooper dividend earned from such investment total sum so is eligible for deduction

The controversy involved here is that the argument of the revenue is that when the assessee has made investment in another cooperative society copy then this deduction is allowable. Therefore according to the if amount is not investment trative society, the deduction is not eligible. The reden to the AO if the count is investment in a cooperative bank which is different from cooperative societies or the says that cooperative societies and therefore the assessee is not entitled to deduction under section 80 P (2) (d) of the Act.

Section 2 (19) of the act defines cooperative society means a cooperative society registered under the Cooperative societies act, 1912 or under any other law for the time being in force in any State for the registration of cooperative societies. Thus if the cooperative banks are falling into the definition of cooperative societies', naturally the deduction would be eligible to the assessee under section 80 P (2) (d) of the act. Therefore it needs to be examined that whether the cooperative banks are operative societies under section 2 subsection (19) of the act are not.

Section 2 (10) of the Maharashtra cooperative societies act defines "Co-operative bank" means a Co- operative society which is doing the business of banking as defined in clause (b) of sub- sections (1) of section 5 of the Banking Companies Act, 1949 and includes any society which is functioning or is to function as an Agricultural and Rural Development Bank under Chapter XI; Therefore according to the above definition, the cooperative banks are also cooperative society

Thus, though the assessee has referred to several judicial precedents, even after considering those precedents, which also holds the same view, we do not have any hesitation to hold that the amount of investment made by the assessee with cooperative Co-Op Housing Society Ltd., Mumbai banks in Maharashtra are also investment made in cooperative society.

Thus, on plain reading of the sections of the income tax act it is clear that if assessee has made an investment in fixed deposit receipts or in savings bank account, interest earned thereon is eligible for deduction under section 80 P (2) (d) of the act. The words of the statute are plain and clear and there is no room for applying any of the principles of interpretation. We are supposed to interpret them as they stand. It is not the claim of the revenue that assessee is not a cooperative society.

In the result, the orders of the lower authorities are reversed and the learned AO is directed to grant deduction to the assessee on interest income earned from cooperative banks u/s 80 P (2) (d) of The Act.

In the result, Appeal of the assessee is allowed.

In view of the discussion made above and respectfully, following the decision in the case of Ashok tower “D” Co. Op. Housing Society Ltd. (supra) cited above, I decide ground No. 1 & 2 in favour of assessee and accordingly grounds raised by the assessee are allowed.

As the facts and circumstances in these appeals are identical to ITA No 6363/Mum/2024 for the A.Y 2017-18 (except variance in figures) and the decision rendered in above paragraph would apply ‘mutatis mutandis’ for these Co-Op Housing Society Ltd., Mumbai appeals also. Accordingly, the grounds of appeal of the assessee are allowed.

In the result, both the appeals filed by the assessee are allowed.

अपीलाथ / The Appellant 2. थ / The Respondent. 3. संबंिधत आयकर आयु / The CIT(A) 4. आयकर आयु(अपील) / Concerned CIT 5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, मुबई / DR, ITAT, Mumbai 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, सािपत ित ////

उप/सहायक पंजीकार ( Asst.