SHRI KUMAR COOPERATIVE HOUSING SOCIETY LTD,MUMBAI vs. JAO MUM -W-22(3)(1), MUMBAI

PER OM PRAKASH KANT, AM

This appeal by the assessee is directed against order dated
31.08.2024 passed by the Ld. Commissioner of Income-tax
(Appeals) [in short ‘the Ld. CIT(A)’] for assessment year 2021-22, raising following grounds:
Disallowance of Rs. 12,05,880 u/s. 80P(2)(d) of the Act being
Interest Income derived from Cooperative Banks :

T. (Appeals) erred in upholding the Intim
) dated 30/09/2022 disallowing a s being Interest Income derived from Coope reciating that Cooperative Banks regis
Cooperative Societies Act, 1960 are as such Interest Income derived by the deduction U/s 80P(2)(d) of the Act. an ought to be deleted.
I.T. (A) erred in not granting the relief U fact that the Society is eligible for Dedu r.w.s. 80AC of the Act insofar as the Retu hin the due date prescribed U/s 139(1) of facts of the case are that the a on 28.02.2022 declaring to aiming deduction of Rs.12,05,8
Co-operative Bank in terms of s
Act, 1961 (in short ‘the Act’). T entral Processing Centre, Bengl sed u/s 143(1) of the Act, the CP
P(2)(d) of the Act. Aggrieved, th d. CIT(A) and submitted that i r of the assessee by way of vari ches of the Tribunal, but the Ld interest received from co-oper n for the reason that those co-o rative society. The relevant fin as under:
und No. 1 of appeal is related to the non under Section 80P by the order u/s 143( ntimation date of 30.09.2022. The ap operative Housing Society
Ltd.
2
mation Order sum of Rs.
rative Banks stered under Cooperative
Appellant is nd therefore
U/s 80P(2)(d) uction under urn of Income f the Act.
assessee filed its otal income at 883/- in respect section 80P(2)(d)
The return was luru and in the PC denied claim he assessee filed ssue in dispute ous decisions of . CIT(A) rejected rative bank was operative banks nding of the Ld.
n-allowability
1) passed by ppellant has claimed an am
80P of the A above-mentio
5.2. The appe relevant part
"80P(1) Wher society, the g sub-section (2
subject to the section (2), in * (2) The sum namely:-
…..
(d). In respect by the coope cooperative so 5.3. Whereas
Cooperative S the interest ea submitted d corresponding
Cooperative B
Saraswat Coo judicial prono claiming that under Cooper
Cooperative s more particula
5.4.In the cas brought to the Section 80P(4
01.04.2007. below:
"(4) . The pro any co-opera society of development b
Shrikumar Co- mount of Rs. 12,05,883/- as deduction u
Act. However, this deduction was disall ned order.
ellant has claimed deduction under Sect of the Act is being reproduced below:
re in the case of an assessee being a gross total income includes any income re
2), there shall be deducted, in accordan e provisions of this section, the sums spec computing the total income of the assess ms referred to in sub-section (1) shall be t t of any income by way of interest or divid erative society from its investments wit ociety, the whole of such income.
s the entity mentioned in the Section Society, but the appellant has claimed d arned from a Cooperative Bank. From th during the proceedings, it is noted g banks are (i) NKGSB Co-operative B
Bank Ltd iii) Maharashtra State Cooperat operative Bank. The appellant has relied ouncements from different benches of H t since the Cooperative banks are als rative Societies Act therefore, they are a societies for the purposes of Income Tax A arly Section 80P (2)(d).
se of appellant, it is important to note 2 a e Act with respect to the status of Cooper
4) was introduced vide Finance Act 2006
The relevant part of the Act is being ovisions of this Section shall not apply i ative bank other than a primary agricu a primary cooperative agricultural bank."
operative Housing Society
Ltd.
3
under Section lowed in the tion 80P. The a cooperative eferred to un nce with and cified in sub- ee.
the following dend derived th any other
80P(2)(d) is deduction for he documents d that the Bank (ii) SVS tive Bank (iv) d upon many
Hon'ble ITAT so registered also same as Act 1961, and amendments rative banks.
6 w.e.f. from g reproduced in relation to ultural, credit and rural

The other is, excluding the operative soci
(v) to such in than a coope credited or pa society."
5.5. Reliance
High Court in Society Sirsi relevant part
"13. What Se specifically a Court, envisa assessee co-o with any oth
Banks' are m the Act. Even:
though a co- skeleton of a different and regulated by Only the Prim work of prov governed by of the Act.
14. The bank bank is soug exemption or of bringing on Act was to e altogether to banking bus category. The are: "The pro any co-opera society ..... " T and even the a co-operative
Section 80P(4
Section 80P(2
respondent a Shrikumar Co-

, the amendment of Section 194A(3)(v) e Cc... operative banks from the defin iety by Finance Act, 2015. come credited or paid by a cooperative s erative bank to a member thereof or to aid by a cooperative society to any other is also placed on the judgment of Hon'bl n the case of PCIT v. The Totagars Co-op in ITA No. 100066/2016 dated 16.0
of the judgment is being reproduced below ection 80P(2)(d) of the Act, which was argued and canvassed before the Hon'b ages is that such interest or dividend ea operative society should be out of the her co-operative society. The words missing in clause (d) of subsection (2) of Se
:
- operative bank may have the corpor a cooperative society but its business that is the banking business, which is g the provisions of the Banking Regulatio mary Agricultural Credit Societies with viding credit facility to its members con the ambit and scope of deduction under king business, even though run by a C ght to be excluded from the beneficial p deduction under Section 80P of the Act.
n the statute book sub-section (4) in Sectio exclude the applicability of Section 80P any co-operative bank and to exclude siness income from such exemption /
e words used in Section 80P(4) are sign ovisions of this section shall not apply i ative bank other than a primary agricu
The words "in relation to" can include wit interest income earned by the responde e Society from a Co-operative Bank. This 4) of the Act even though without any am
2)(d) of the Act is sufficient to deny the assessee for deduction under Section 80P operative Housing Society
Ltd.
4
) of the Act nition of Co- society other such income r cooperative le Karnataka perative Sale
6.2017. The w:
s though not ble Supreme arned by an investments
'Co-operative ection 80P of rate body or s is entirely governed and n Act, 1949. their limited tinued to be r Section 80P
Co- operative provisions of The purpose on 80P of the P of the Act e the normal
/ deduction nificant. They in relation to ultural credit thin its ambit ent-assessee, exclusion by mendment in claim of the P(2)(d) of the Act. The only society. The the present c credit society.
5.6.In view of 3. We have heard the relevant material
Court in the case of Development Bank L if the co-operative ba defined u/s 5(b) of t co-operative bank sh
Act in view of prohibi operative bank not fa shall be considered a 80P(2)(d) of the Act.
case of GSSS Credit C
249 & 250/Bang/20
said finding is reprod
“12. Regarding this regard, w operative Bank
No.248, 249 &
words, if the C then in our con investment ma reason that su
Hon'ble Supre
Agricultural an 305, wherein agricultural an Co-operative S
Shrikumar Co- y exception is that of a primary agricu depository Kanara District Central Ban case is admittedly not such a primary
.
f the above, this Ground of appeal is dism rival submissions of the parti ls on record. We find that the H
Kerala State Co-Operative Agric td. [2023] 154 taxmann.com 30
ank is carrying out the busines the Act Banking regulation Act hall be barred for deduction u/s ition u/s 80P(2)(4) of the Act, ot alling u/s 5(b) of the Act Bankin as co-operative society eligible fo
The Co-ordinate Bench of the Co-operative Society Ltd. v. ITO
024 held similar finding. For r duced as under:
g the interest income earned from the Co-ope we are of the opinion that we have to see w k is carrying on the business of bank as & 250/Bang/2024 under the Bank Regulation
Co-operative Bank is not carrying out any ban nsidered view, the deduction on account of ade in such Co-operative Bank cannot be ch Co- operative Bank is not a bank as per t eme Court in the case of Kerala Stat nd Rural Bank Ltd., Vs. ACIT reported in 15
it was observed that the assessee was nd rural development bank and governed un ocieties Act, 1969 as a co-operative society.
operative Housing Society
Ltd.
5
ultural credit nk Limited in y agricultural missed.”
ies and perused
Hon’ble Supreme cultural & Rural
05 (SC) held that ss of banking as then only such 80P(2)(d) of the therwise the co- ng regulation Act or deduction u/s Tribunal in the O in ITA No. 248, ready reference, erative Bank, in whether the Co- s provided ITA n Act. In simple nking business, interest on the denied for the the judgment of e Co-operative
4 taxmann.com s a state-level nder the Kerala
The activity of the assessee w the assessee c the return of i that the assess provisions of s claiming dedu reached the Ho under section 5
for the purpose repayable on order or otherw business with business of ba operative bank and would be the Act. Since, within the mea
Banks Act, 19
financial acco
250/Bang/202
members of the of section 5(b) r the deduction invoking Sectio
13. In view of functioning the Regulation Act, operative Socie the Act. Theref eligible for ded
14. However, if defined u/s 5(b entitled for th investments ma the Act. Howe shall be eligibl nationalized ba
3.1 Accordingly, th
Assessing Officer for whom interest is rec
Regulation Act or n accordance with law.
Shrikumar Co- was to provide credit facilities to its member claimed a deduction under Section 80P(2)(a) ncome. But the AO disallowed the same on see was a cooperative bank and, therefore, it section 80P(4) of the Act and thus would no ction under section 80P(2) of the Act. Fin on'ble Apex Court where it was held that ban
5(b) of the Banking Regulation Act, 1949 to m e of lending or investment, deposits of money f demand or otherwise, and withdrawal by wise. Therefore, a banking company must tra the public. If a co-operative society would n anking as defined in Section 5(b), it would k within the meaning of section 56 of Banking entitled to the benefit of deduction under Se
, the assessee society was an apex co- op aning of Kerala State Co-Operative Agricultur
984 (State Act, 1984) whose primary object ommodation to its members
ITA
No.
24 who were all other co-operative soci e public, it was not a co-operative bank with read with Section 56 of Banking Regulation A under Section 80P could not be denied to th on 80P(4) of the Act.
f the above, we hold that if the Co-operativ e business of banking as defined u/s 5
t, then such Co-operative Bank shall be con ety for the purpose of the deduction claimed u fore, in our considered view, such interest uction u/s 80P(2)(d) of the Act.
f the Co-operative Bank is carrying out banki b) of the Bank Regulation Act, then the assess he deduction with respect to the interest ade with such bank under the provisions of s ever, corresponding interest cost incurred by le to be adjusted against such interest inco ank.”
he matter is restored back to verifying whether the Co-opera ceived, are registered u/s 5(b) not and thereafter shall decid
. The assessee may file necessa operative Housing Society
Ltd.
6
rs. Accordingly,
(i) of the Act in n the reasoning t was hit by the t be eligible for nally, the issue nking is defined mean accepting, from the public, cheque, draft, ansact banking not transact the d not be a co- g Regulation Act ection 80P(2) of perative society ral Development was to provide
248,
249
&
ieties and not hin the meaning
Act. Accordingly, he assessee by ve Bank is not (b) of Banking nsidered as Co- u/s 80P(2)(d) of income will be ing activities as see shall not be earned on the sec. 80P(2)(d) of y the assessee me at par with the file of the ative Banks from of the Banking de the issue in ary document in support of its conten the grounds of appe purposes.
Order pronoun (RAHUL CHA
JUDICIAL M
Mumbai;
Dated: 21/01/2025
Rahul Sharma, Sr. P.S.

Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.

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Shrikumar Co- ntion before the Assessing offic eal of the assessee are allowe nced in the open Court on 21/
/-
AUDHARY)
(OM PRAK
MEMBER
ACCOUNTA ded to :

BY ORDER

(Assistant Re

ITAT, Mu operative Housing Society
Ltd.
7
cer. Accordingly, d for statistical
/01/2025. KASH KANT)
ANT MEMBER
R, gistrar) umbai