DURGA CO. OP.CREDIT SOCIETY LTD,MUMBAI vs. O/O THE INCOME TAX OFFICER, WD 22(1) (2), MUMBAI

Appellant by : None Respondent by : Smt. Mahita Nair Date of Hearing 11.08.2022 Date of Pronouncement 24.08.2022 आदेश / O R D E R Per Amarjit Singh (AM): The solitary ground of appeal of the assessee is directed against the decision of CIT(A)-29, Mumbai, in sustaining the order of A.O for denying deduction u/s 80P(2)(a)(i) on account of interest earned from other cooperative society/bank. The assessee has raised the following ground:

“1. The Ld. CIT (Appeals) has erred in confirming with the Ld. AO and considering the interest earned by the society from other co-operative societies earned in due course of business as income from other sources and denying deduction u/s 80P(2)(a)(i) against the same 2 Durga Coop Credit Society Ltd. Vs. The ITO-22(1)(2) 2. Alternatively, the interest income earned from other co-operative societies/banks is eligible for deduction u/s 80P(2)(d), the Ld. AO had erred in not allowing the same to the society. The Ld. CIT(Appeals) has erred in confirming with the Assessing officer and not.

3. The Ld. CIT (Appeal) has also erred by confirming with the AO and not considering deduction u/s 80P(2)(c) amounting to Rs. 50,000/- eligible against taxable income of the society.

4. Your appellant further reserves the rights to add, amend or alter the aforesaid grounds appeal as they may think fit by themselves or by their representatives.”

“5. We heard the Ld. DR and perused the material on record. Prima- facie the sole grievance of the revenue is that the CIT(A) has erred in directing the AO to allow the deduction u/s 80(P)(2)(a)(i) of the Act. Without appreciating the facts that the assessee is not a primary cooperative bank. We find the assessee is a co-operative society and is engaged in providing credit facilities to its members which is not disputed. At this juncture we consider it appropriate to refer to the observations of the CIT(A) at page 12 Para 4 to 4.5 of the order allowing the claim of deduction u/sec 80P(2)(a)(i) of the Act , which is read as under: 4. DECISION: The 1st Ground of appeal relates to denial of deduction u/s 80P of the Act by A.O. as the AO observed that the appellant is a Co- operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank and therefore provisions of Sec. 80P(4) are applicable in the case of the appellant. On the other hand, the appellant contended that the provisions of Sec. 80P(4) are not applicable in the case of the appellant as the appellant is not a co-operative bank and it is a co-operative society duly registered under the Maharashtra Co-operative Societies Act, 1960. I have carefully considered the impugned Assessment Order and the submissions made by the appellant. The appellant is an Co Operative Credit Society Ltd. had shown gross total income of Rs. 2,67,25,499/- and claimed deduction u/s 80P of Rs. 2,64,85,491/- and declared total income of Rs. 2,40,008/-. Case was taken-up for scrutiny assessment and order u/s.143(3) of the Act was passed on 21/12/2016 determining the total income of Rs. 2,67,25,499%.

4 Durga Coop Credit Society Ltd. Vs. The ITO-22(1)(2) 4.1 The AO while denying the deduction to the Assessee u/s 80P(2) (a)(i) took the view that the Assessee is a primary co-operative bank and therefore provisions of Sec. 80P(4) are applicable in the case of the Assessee. He relied upon the decision of the Hon'ble Kerala High Court in the case of Muhammed Usman Vs