HAVELI TALUKA VEEJ KAMGAR SAHAKARI PATHSANSTHA MARYADIT,PUNE vs. INCOME TAX OFFICER WARD 6 (1) PUNE, PMT BUILDING, SWARGATE

आदेश / ORDER

PER ASTHA CHANDRA, JM :

1. The Ld. CIT(A) has wrongly confirmed the disallowance of deduction of Rs.8,84,993/- claimed by the appellant u/s. 80P (2)(a)(i) of the Income Tax Act, 1961 of interest income earned from deposit with PDCC Bank.

2. Alternatively, the interest income earned by the appellant from the investments in a co-operative bank is also eligible for deduction under section 80P (2) (d) of the Income Tax Act, 1961.

3. The Ld. CIT (A) has wrongly confirmed the disallowance of deduction u/s. 80P of commission receipts of Rs.53,52,723/- after deducting the salary expenses of Rs.3,00,202/- from the total commission receipts of Rs.56,52,925/-. Being the same income is received from the MSEB on account of running cash counter for MSEB bill payments and the same is treated as Income from Other sources.

4. The Appellant crave leave to add, delete, amend, alter, vary and/or withdraw all or any one of the above grounds of appeal.”

3. Briefly stated, the facts of the case are that the assessee is a Co- operative Society engaged in carrying out banking business providing credit facility to its members. It is registered under the Maharashtra State Co-operative Society Act, 1960. It filed its return of income on 31.10.2017 for AY 2017-18 declaring income at Rs.Nil. The return was processed u/s 143(1) of the Income Tax Act, 1961 (the “Act”). Subsequently, the case was selected for scrutiny through CASS. Statutory notice(s) u/s 143(2)/142(1) of the Act were issued calling for various details. During the assessment proceedings, the Ld. Assessing Officer (“AO”) found that the assessee has earned interest of Rs.8,84,993/- on investments and Rs.56,52,925/- as cash counter commission and claimed deduction u/s 80P of the Act in respect of the same. The Ld. AO issued show cause notice on 22.11.2019 to which the assessee filed its reply. However, the said reply of the assessee was not acceptable to the Ld. AO. According to the Ld. AO the assessee has earned interest of Rs.8,84,993/- on capital NRD deposits with PDCC Bank. Since, the investments are not in a Co- operative Society, the deductions availed by the assessee u/s 80P(2)(a)(i)/80P(2)(d) of the Act was incorrect. Further, the Ld. AO observed that the assessee has earned commission income of Rs.56,52,925/- from MSEB on account of running cash counter for MSEB bill payments. After reducing the salary expenses of Rs.3,00,202/- from the commission receipts of Rs.56,52,925/-, the Ld. AO added the amount of Rs.53,52,723/- to the income of the assessee as the income from other sources. The Ld. AO, therefore, completed the assessment on total income of Rs.62,37,716/- on 30.11.2019 u/s 143(3) of the Act by making an addition of-(i) Rs.8,84,993/- on account of disallowance of claim of deduction u/s 80P(2)(a)(i)/80P(2)(d) of the Act in respect of interest earned from PDCC Bank and (ii) on account of income of Rs.53,52,723/-, to the Nil income retuned by the assessee.

4. Aggrieved, the assessee filed appeal before the Ld. CIT(A) who dismissed the assessee’s appeal by recording the following findings and observations : Interest income of Rs.8,84,993/- “6.11 From the discussion, made above as well as in view of the provisions contained in section 80P(2)(d) of the Act and the settled legal position of law enunciated by various Courts of law, including the Hon'ble Apex Court referred (Supra), the addition amounting Rs.8,84,993/- made by the AO u/s 80P(2)(d) is justified and sustainable in the eyes of law. The claim of deduction u/s 80P(2)(a)(i) was not considered by the AO in disallowing deduction claimed u/s 80P rightly and while by doing so, the AO has not committed any illegality. Therefore, the impugned addition amounting Rs.8,84,993/- is upheld. Accordingly, the Ground No.1 of the Appeal is dismissed.” Commission income of Rs.56,52,925/- 7.1.12 From the above legal proposition laid down by the Hon'ble Supreme Court and Hon'ble High Court Madras, it is quite obvious that the appellant, who is merely a 'Co-Operative Credit Society', and does not possess a licence from the Reserve Bank of India, cannot conduct the banking activities at par with that of a 'Cooperative Bank'. The Hon'ble Supreme Court's observations made in the case of 'Mavilayi (supra) has also applied the ratio decidendi of its judgment rendered in Citizen Co-operative Society Limited V. Assistant Commissioner of Income-Tax, Circle -9(1), Hyderabad (397 ITR 1). Therefore, in view of the law laid down by the Hon'ble Supreme Court in the case of Citizen Co-operative Society Limited V. Assistant Commissioner of Income- Tax, Circle -9(1), Hyderabad (397 ITR 1) that the Cooperative Societies, who are providing the credit facilities to their members their operations would be confined to their members only. As such, it is amply clear that the appellant under the Appeal, a Co-operative Credit Society, while earning the 'Commission Income' from 'MSEB', has conducted purely the commercial activities, which under no stretch of imagination can be said to be attributable to any activity falling under the category of those specified for deduction u/s 80P(2)(a)(i). Moreover, in view of the law enunciated by the Hon'ble Supreme Court in the case of there is lack of mutuality. The foremost condition, to avail the benefit of 'Mutuality' as mentioned above, is that 'no person can earn from him'. However, in this case the appellant has received Commission from MSEB, who is nothing but a 'Third Party' to the Appellant Society and cannot be regarded as 'Member' of the Appellant. Therefore, on account of this very reason also the appellant's claim u/s 80P(2)(a)(i) is not sustainable in the eyes of law. The case laws relied by the appellant, are of no avail to it, keeping in view the discussion made hereinabove, Accordingly, addition made by AO amounting Rs.53,52,723/- is justified and sustainable in the eyes of law and the same is Thus Ground No. 2 of Appeal is dismissed.

5. Dissatisfied, the assessee is in appeal before the Tribunal challenging the decision of the Ld. CIT(A) and all the grounds of appeal relate thereto.

6. The Ld. AR submitted that the impugned issues are covered in favour of the assessee by placing reliance on several decisions of the Co- ordinate Bench of this Tribunal allowing the deduction claimed in respect of interest earned from the Co-operative Banks u/s 80P(2)(a)(i) or 80P(2)(d) of the Act as well as commission earned from MSEB. As regards the addition made by the Ld. AO and confirmed by the Ld. CIT(A) on account of commission received from MSEB, the Ld. AR further submitted that the impugned addition has been deleted by the Ld. CIT(A) in assessee’s own case for preceding AY 2014-15 wherein the Ld. CIT(A) relying on the decision of Jurisdictional Bombay High Court in the case of CIT Vs. Ahmednagar District Central Co-operative Bank Ltd. (2003) 264 ITR 38 (Bom) and CIT Vs. Amravati District Central Co-operative Bank Ltd. (ITA No. 73 of 2009) dated 24th February, 2015 held that the commission earned by the Co-operative banks on collection of the electricity dues from customers qualify for deduction u/s 80P(2)(a) of the Act and directed the Assessing Officer to grant the deduction on commission received from MSEDCL. The Ld. AR submitted a compilation of case laws in support of its claim of deduction u/s 80P(2) of the Act in respect of commission income of Rs.56,52,925/- received by the assessee from MSEB, comprising of the following decisions :

1. 1. Anand Urban Co-Operative Credit Society Ltd. Vs. Income Tax Officer, (2024) 206 ITD 36 (Pune).

2. Bhagyalaxmi Nagri Sahakari Patsanstha Meryadit vs. ITO, 14.03.2022.

3. Haveli Taluka Veej Kamgar Sahakari Pathsanstha Maryadit, Assessment Order passed for the A.Y. 2014-15.

4. Commissioner of Income Tax vs. Ahmednagar District Central Co- operative Bank Ltd., [2003] 264 ITR 38 (BOM).

5. Commissioner of Income Tax vs. Amravati District Central Co- operative Bank Ltd., 24th February, 2015.

6. Ruby Hall Clinic Karmachari Sahakari PatSanstha Maryadit Vs. The Income Tax Officer, Ward - 7(1), ITA No. No.31/PUN/2024.

7. Mazi Sainik Nagari Sahakari Patsanstha Vs. The Income Tax Officer, Ward-7 (3), ITA No: 1151/PUN/2023.

8. Baner Nagari Sahakari PatSanstha Maryadit Vs. The CIT (A), National Faceless Appeal, ITA No: 1322/PUN/2023.

7. The Ld. DR relied on the orders of the Ld. AO/CIT(A).

9. As regards the claim of deduction on interest income from investments in the Co-operative Banks u/s 80P(2)(a)(i)/80P(2)(d) of the Act, the Co-ordinate Bench of Pune Tribunal in the case of Shri Vivekvardhini Nagari Sahakari patsanstha Ltd. Vs. ITO in dated 05.08.2024 has held as under : “8. As regards, the issue as to the allowability of exemption under the provisions of section 80P(2)(a)(i) in respect of interest income earned by a cooperative society from the cooperative banks/commercial banks, there is a cleavage of judicial opinion among several High Courts on the issue of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i) of the Act. The Hon’ble Punjab & Haryana High Court in the case of CIT vs. Punjab State Cooperative Federation of Housing Building Societies Ltd. 11 taxmann.com 448, the Hon’ble Gujarat High Court in the case of State Bank of India Vs. CIT 389 ITR 578 (Guj.), the Hon’ble Delhi High Court in the case of Mantola Co-operative Thrift & Credit Society Ltd. Vs. CIT 50 taxmann.com 278, the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Punjab State Cooperative Agricultural Development Bank Ltd. 389 ITR 68 and the Hon’ble Kolkata High Court in the case of CIT Vs. Southern Eastern Employees Cooperative Credit Society Ltd. 390 ITR 524 took a view that the income arising on the surplus invested in short term deposits and securities cannot be attributed to the activities of the society and, therefore, not eligible for exemption u/s.80P(2)(a)(i) of the Act. However, the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 taxmann.com 309 (Kar.) and the Hon’ble Telangana and Hon’ble Andhra Pradesh High Court in the case of Vaveru Co-operative Rural Bank Ltd. v CIT [(2017) 396 ITR 371 took a view that such interest income is attributable to the activities of the society and, therefore, eligible for exemption u/s 80P(2)(a)(i) of the Act. Similar view has been taken by the Hon’ble Calcutta High Court in the case of PCIT vs. Gunja Samabay Krishi Unnayan Samity Ltd., 147 taxmann.com 518 (Calcutta) and the Hon’ble Madras High Court in the case of Chennai Central Cooperative Bank Ltd. vs. ITO, 148 taxmann.com 17 (Madras). The Coordinate Bench of Pune Benches in the case of M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit Vs. ITO (ITA Nos.559/560/PUN/2018, dated 11-12-2018) taken view in favour of the assessee following the judgment of Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). Following the decision of the Coordinate Bench of the Tribunal, we are of the considered opinion that the interest income earned on fixed deposits with cooperative bank/scheduled bank partakes character of the business income, which is eligible for deduction u/s 80P(2)(a)(i) of the Act. Therefore, we direct the Assessing Officer to allow the exemption u/s.80P(2)(a)(i) and section 80P(2)(d) of the Act. Thus, the grounds of appeal filed by the assessee stand allowed.”

9.1 The claim of the assessee also finds support from the decision of the Co-ordinate Bench of this Tribunal in the case of Yogiraj Nagari Sahkari Patsanstha Maryadit Vs. ITO in dated 06.06.2024 wherein the Tribunal decided the impugned issue in favour of the assessee by observing as under : “8. The Co-ordinate Bench of the Tribunal in the case of The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit for A.Y. 2012-13 order dated 27.05.2022 held in favour of the appellant society. The relevant paragraphs of the said order of Co-ordinate Bench of the Tribunal (supra) is reproduced herein under :- “8. We heard the rival submissions and perused the material on record. The only issue in the present appeal is pertaining to the allowability of deduction under the provisions of section 80P(2)(d) of the Act. On perusal of provisions of section 80P(2)(d), it is clear that the income derived by a cooperative society from its investment held with other cooperative societies shall be exempt from the total income of a cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. In the present case, the reasoning given by the lower authorities for denial of exemption u/s 80P(2)(d) of the Act is that interest was received from cooperative bank has no legs to stand as a cooperative bank is also a cooperative society. This issue was considered by the Hon’ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society, 392 ITR 74 (Karn) wherein the Hon’ble High Court referring to the Hon’ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. (supra) held that the ratio of decision of the Hon’ble Supreme Court in the aforesaid case (supra) not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act.

9. Even the decision of Pune Bench of the Tribunal in the case of Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. vs. ITO, 120 taxmann.com 10 wherein the Tribunal after making reference to the decisions of the Hon’ble Supreme Court in the case of Totgars Cooperative Sales Society Ltd. (supra) and having noticed the divergent views of the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. vs. ITO, 55 taxmann.com 447 and the Hon’ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. vs. CIT, 50 taxmann.com 278, decision of the Hon’ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. (supra) had not been preferred to view of the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. (supra). The relevant observation of the Pune Bench of the Tribunal in the case (supra) is as under :- “9. The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT (ITA No.713/PUN/2016, dated 9-4-2019) decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014, dated 19-8-2015) has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon'ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 Taxman 309 (Kar.) allowing deduction u/s. 80P on interest income and that of the Hon'ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from banks. Both the Hon'ble High Courts took into consideration the ratio laid down in the case of Totgar's Cooperative Sale Society Ltd. (2010) 322 ITR 283 (SC). There being no direct judgment from the Hon'ble jurisdictional High Court on the point, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra).

10. Insofar as the reliance of the ld. DR on the case of Pr. CIT and Another Vs. Totagars Cooperative Sales Society (2017) 395 ITR 611 (Kar.) is concerned, we find that the issue in that case was the eligibility of deduction u/s.80P(2)(d) of the Act on interest earned by the assessee co-operative society on investments made in co-operative banks. In that case, the assessee was engaged in the activity of marketing agricultural produce by its members; accepting deposits from its members and providing credit facility to its members; running stores, rice mills, live stocks, van section, medical shops, lodging, plying and hiring of goods and carriage etc. It was in that background of the facts that the Hon'ble High Court held that the assessee could not claim deduction u/s.80P(2)(d) of the Act. When we consider the impact of this decision, it turns out that the same is not germane to case under consideration in view of the position that the claim of the instant assessee is directly about the eligibility of deduction u/s.80P(2)(a)(i) of the Act and not u/s.80P(2)(d). Moreover, so many decisions relied on by the ld. AR amply go to prove that the view taken by the AO, cannot by any standard, be construed as not a possible view. We, therefore, hold that the ld. Pr. CIT was not justified in exercising the revisional power anent to interest income of Rs.22,34,270/- earned on investments made with co-operative banks.”

9.2 In the case of ITO Vs. Shiv Pratap Nagari Cooperative Credit Society Limited in dated 17.10.2024 the Pune Tribunal allowed the claim of the assessee u/s 80P(2)(d) on the impugned issue by observing and holding as under : “8. The Co-ordinate Bench of the Pune Tribunal in the case of ITO Vs. Goreshwar Gramin Bigar Sheti Sahakari Pat Sanstha Maryadit in dated 04.06.2024 decided the impugned issue in favour of the assessee by holding as under : “4. Suffice to say, the Revenue’s sole substantive grievance canvassed in the instant appeal is only for reviving the learned Assessing Officer’s action disallowing the assessee’s sec.80P deduction claim representing interest income from co-operative society(ies)/bank(s)/nationalized bank(s) involving varying sums; as the case may be. It is in this factual backdrop that we first of all note that the tribunal in The Rena Sahakari Sakhar Karkhana Ltd. vs. PCIT’s case has already rejected the Revenue’s stand regarding interest income derived from co-operative bank(s)/institution(s) in ITA.No.1249/PUN./2018 dated 07.01.2022 reading as under : “3. After culmination of the assessment proceedings, the Pr. CIT called for the assessment records of the assessee. It was observed by the Pr. CIT that the assessee had during the year shown interest income from FDs with Cooperative Banks amounting to Rs.75,38,534/-, against which it had claimed deduction under Sec.80P(2)(d) of the Act. It was observed by the Pr. CIT, that the A.O while framing the assessment had allowed the aforesaid claim of deduction raised by the assessee. Observing, that as cooperative banks were commercial banks and not a cooperative society, therefore, the Pr.CIT was of the view that the assessee was not eligible for claim of deduction under Sec.80P(2)(d). In the backdrop of his aforesaid conviction, the Pr. CIT was of the view that the assessment order passed by the A.O under Sec.143(3), dated 07.03.2016, therein allowing the assesses claim for deduction under Sec. 80P(2)(d), had therein rendered his order as erroneous, insofar it was prejudicial to the interest of the revenue. Accordingly, the Pr.CIT not finding favour with the reply of the assessee, wherein the latter had tried to impress upon him that it was duly eligible for claim of deduction under Sec.80P(2)(d) of the Act, therein “set aside” the order of the A.O with a direction to redecide the issue afresh and reframe the assessment.

5. On merits, it was submitted by the ld. A.R, that as the A.O while framing the assessment had after making necessary verifications taken a plausible view, therefore, the Pr. CIT had exceeded his jurisdiction by seeking to review the order passed by him in the garb of the revisional powers vested with him under Sec.263 of the Act. It was submitted by the ld. A.R, that the issue as regards the eligibility of the assessee for claim of deduction under Sec.80P(2)(d) on interest income derived from investments/deposits lying with co-operative banks was squarely covered by the various orders of the coordinate benches of the Tribunal viz., (i). M/s Solitaire CHS Ltd. vs. Pr. CIT, dated 29.11.2019 ( ITAT “G” Bench, Mumbai); Kaliandas Udyog Bhavan Premises Co-op Society Ltd. Vs. ITO-21(2)(1), Mumbai, (ITAT Mumbai); and (iii). Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT, Circle-3, Aurangabad, ITA No, 308/Pun/2018 (ITAT Pune). On the basis of his aforesaid contentions, it was averred by the ld. A.R that as the Pr. CIT had exceeded his jurisdiction and had not only sought to review the plausible view that was taken by the A.O after necessary deliberations which was in conformity with the order of the jurisdictional bench of the Tribunal, therefore, his order may be vacated and that of the A.O be restored.

8. After necessary deliberations, we are unable to persuade ourselves to concur with the view taken by the Pr. CIT. Before proceeding any further, we may herein cull out the relevant extract of the aforesaid statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. Where in the case of an assessee being a cooperative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in subsection (2), in computing the total income of the assessee. (2). The sums referred to in sub-section (1) shall be the f ollowing, namely:- (a)................................................................................. (b)................................................................................. (c).................................................................................. (d) in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other co-operative society, the whole of such income;” On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investments held with any other co-operative society shall be deducted in computing its total income. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co-operative society with any other cooperative society. We are in agreement with the view taken by the Pr. CIT, that with the insertion of subsection (4) to Sec. 80P of the Act, vide the Finance Act, 2006 with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co- operative agricultural and rural development bank. However, at the same time, we are unable to subscribe to his view that the aforesaid amendment would jeopardize the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of its interest income on investments/deposits parked with a co- operative bank. In our considered view, as long as it is proved that the interest income is being derived by a cooperative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We find that the term „co-operative society‟ had been defined under Sec. 2(19) of the Act, as under:- “(19) “Co-operative society” means a cooperative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of co-operative societies;” We are of the considered view, that though the cooperative banks pursuant to the insertion of subsection (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a cooperative bank continues to be a co- operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co- operative society from its investments held with a co-operative bank would be entitled for claim of deduction under Sec.80P(2)(d) of the Act.

10. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and allowed the assessee’s claim for deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 of the Act for dislodging the same. Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263 of the Act, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we set-aside his order and restore the order passed by the A.O under Sec. 143(3), dated 07.03.2016.”

6. This Revenue’s appeal is dismissed in above terms.”

9. So far as the exclusion of interest received by the assessee from commercial banks and other institutions as directed by the Ld. CIT(A)/NFAC is concerned, the facts on record reveals that the assessee in the relevant AY 2020-21 has earned interest income from investments in other Co-operative Banks and Co-operative Societies and not from commercial bank(s)/other institutions. Nothing has been brought on record by the Revenue to controvert the findings of Ld. CIT(A)/NFAC in this regard.

10. As regards the claim of deduction in respect of commission income received by the assessee from MSEB as cash counter commission, we observe that the Ld. CIT(A) has allowed the said claim of the assessee for AY 2014-15 relying on the decision(s) of the Jurisdictional Bombay High Court in the case of Ahmednagar District Central Co-operative Bank Ltd. (supra) and in the case of Amravati District Central Co-operative Bank Ltd. (supra) and the Revenue seems to have not challenged the said decision of the Ld. CIT(A) as nothing has been brought on record by the Revenue before us in respect of the same.

10.1 The Hon’ble Bombay High Court in the case of Ahmednagar District Central Co-operative Bank Ltd. (supra) decided the impugned issue in favour of the assessee by observing and holding as under : “6. At the outset, we would like to deal with the main contention advanced on behalf of the Department. Section 5(b) defines "banking" to mean acceptance of deposits for the purpose of lending or investment whereas, Section 6(1) states, inter alia, that in addition to the business of banking, a banking company may engage in the following forms of business as enumerated in Section 6(1)(a) to (o). Therefore, there is a clear dichotomy between the business of banking and other forms of business. To take an example, under Section 6(1)(a) providing of safe deposit vaults to the customer is mentioned. In the case of Mehsana District Central Co-operative Bank Ltd. v. ITO [2001] 251 ITR 522, the Supreme Court has held that the income derived by the co-operative bank by way of rent from the customer for enjoying safe deposit vault as a facility, would squarely come under Section 6(1)(a) of the Banking Regulation Act and that such income derived by the assessee-bank from hiring out safe deposit vaults was income from the business of banking and, therefore, deductible under Section 80P(2)(a)(i) of the Income-tax Act. Now, in the present case, MSEB and MPCS are the public undertakings. Both these public undertakings were the customers of the assessee-banks. They were having current account with the assessee-bank. The assessee-bank undertook on behalf of these two customers the work of collecting electricity dues from the consumers of electricity who were charged bills by the two public undertakings. This was a facility given by the assessee-bank to the aforestated two public undertakings who were their customers. Banking, today, covers a large number of activities. With globalisation, banking is not restricted to receiving deposits for the purposes of lending. Banks offer various facilities to its customers. They provide lockers, safe deposit vaults, finance for margin trading, collecting dues and charges for and on behalf of the Government, local authority, MTNL, BEST, MSEB, etc. Section 6(1)(a) of the Banking Regulation Act is an enabling provision. It provides for various forms of business akin to banking. Therefore, Section 6(1) states, inter alia, that in addition to the banking business, a banking company may engage in specified forms of business enumerated in Section 6(1)(a) to (o). We are confining our case to the activity of the bank collecting charges for and on behalf of MSEB, MPCS for commission/fees. The construction put by the Department on the word "banking" is very narrow. It is true that, in this case, we are required to consider the benefit of exemption under Section 80P(2)(a)(i). It is equally true that the said section is required to be read in the strict sense. However, the judgment of the Supreme Court in the case of Mehsana District Central Co-operative Bank Ltd. [2001] 251 ITR 522 shows that the word "banking" is not restricted only to accepting deposits from customers for the purposes of lending and that the word "banking" has been interpreted by the Supreme Court to cover even rent charged by the banks for hiring out safe deposit vaults to its customers. In the circumstances, we hold that income earned by the assessee-bank by way of commission/fees from its customers being public sector undertakings would be exempt under Section 80P(2)(a)(i). Our view is also supported by Section 6(1)(b) of the Banking Regulation Act, 1949, which states that in addition to the business of banking, a banking company may engage itself as agent for Government or local authority or any other person for giving receipts and discharges that is to say for collecting electricity bills from the customers for and on behalf of MSEB and MPCS.

7. Before concluding, we wish to clarity that we find merit in the alternative argument advanced on behalf of the Department that each activity/form of business enumerated in Section 6(1) has to be scrutinised. That, per se, the activities/forms of business enumerated in Section 6(1)(a) to (o) may not attract the reliefs under Section 80P(2)(a)(i), We are, therefore, confining our judgment to the facts of this case which we have decided in the light of the judgment of the Supreme Court in the case of Mehsana District Central Co- operative Bank Ltd. [2001] 251 ITR 522.”

10.2 Similarly, the subsequent decision of the Hon’ble Bombay High Court in the case of Amravati District Central Co-operative Bank Ltd. (supra) considered the question; “ii] Whether on the fact and in the circumstances of the case the learned ITAT was justified in holding that the assessee is entitled to deduction u/s 80P(2)(a) of an 3 ITL 73.09.odt amount Rs. 43,75,229/- being commission on electricity bill even though such as activity was in addition to the carrying on the business of banking?" and held as under : “6] With the assistance of the respective Counsel, we have perused the judgment of the Hon'ble Apex Court in case Commissioner of 4 ITL 73.09.odt Income Tax vs Nawanshahar Central Co-op. Bank Ltd, reported at (2012) 349 ITR 689 (SC). In this case, the Hon'ble Apex Court has considered the income from underwriting commission for eligibility under Section 80P. It has relied upon the earlier judgment in case of Commissioner of Income Tax, Jalandhar vs Nawanshahar Central Cooperative Bank Limited and dismissed the challenge as raised by the Department. Thus, the Hon'ble Apex Court has found that the income derived by the Cooperative Bank from underwriting commission and interest on PSEB Bonds and IDBI Bonds is eligible for the deductions. 7] The Division Bench of this Court in judgment reported at (2003) 264 ITR 38 (Bom.) in case Commissioner of Income-Tax vs Ahmednagar District Central Co-operative Bank Ltd, has considered the commission earned by Ahmednagar Central Cooperative Bank for collecting the electricity dues from the customers of the then Maharashtra State Electricity Board. The facility of such collection of bills provided by the bank is found to qualify as banking activity and the commission has been thus allowed to be deducted under Section 80P(2)(a) of the said Act.

8] In this situation, it is apparent, that the question no.1 which is about the commission earned by the assessee on account of collection 5 ITL 73.09.odt of electricity bills needs to be answered against the appellant.”

10.3 The case of the assessee also finds support by the order of the Co- ordinate Bench of the Pune Tribunal in the case of Banganga Nagri Sah. Patsanstha Ltd. Vs. ITO in dated 31.03.2016 and in the case of ITO Vs. Vijkamgar Co-operative Credit Society Ltd. in dated 29.05.2014.

10.4 In the case of Banganga Nagri Sah. Patsanstha Ltd. (supra), the Tribunal held as under : “6. We have heard the submissions made by the ld. DR. We have also perused the orders of the authorities below and the written submissions filed by the assessee. The assessee in appeal has assailed the order of Commissioner of Income Tax (Appeals) in disallowing deduction u/s. 80P(2) in respect of incomes earned by the assessee from the following activities : 1) Locker Rent 2) Ambulance Rent 3) Commission on Collection of MSEB bills 4) Health Club Apart from the above, the assessee has also assailed the action of Commissioner of Income Tax (Appeals) in disallowing deduction u/s. 80P(2)(c)(ii) which was earlier granted by the Assessing Officer. We observe that on similar grounds the assessee has filed appeals before the Tribunal against the order of Commissioner of Income Tax (Appeals) for assessment years 2010-11 and 2011-12 in & 1522/PN/2015, respectively. The Tribunal vide order dated 10-03-2016 decided the issues in favour of the assessee with the following observations: “10. We have carefully considered the rival submissions, orders of the authorities below and case law cited. The short question before us is to determine eligibility of deduction under section 80P of the Act in respect of income earned from certain allied activities viz. (i) Locker Rent; (ii) Ambulance Rent; (iii) Commission on Collection of MSEB bills; and (iv) Health Club by cooperative credit society carrying on banking business. The alternate ground agitated by the assessee is towards ad-hoc estimation of expenses in relation to such income @ 10% of the gross receipt as against actual and proportionate expenses attributable for the purpose of carrying on such allied activities. This has resulted in higher incidence of taxation owing to denial of deduction under section 80P on such income. We find that eligibility of the assessee for deduction under section 80P of the Act in respect of locker rent income is covered by the decision of the Hon’ble Supreme Court in the case of Mehsana District Central Co-op. Bank Ltd. (supra). Therefore, we set-aside the direction of the CIT(A) in this regard and hold that the assessee is eligible for deduction under section 80P of the Act in respect of this income. With respect to the income from running of Ambulance, while holding that the assessee is not eligible for deduction under section 80P(2)(a) or (b), we are in total agreement with the alternate plea of the assessee that the expenses attributable for the purpose operating such activity ought to have to be allowed on actual/proportionate basis. We are of the view that the action of the CIT(A) in restricting the expenses artificially @ 10% of the gross income from such activities is not sustainable in law being devoid of objectivity. The Assessing Officer is accordingly directed to allow the expenses which are attributable to the running of Ambulance and determine the income from the aforesaid activity. The surplus if any, from this activity would be entitled to relief made residuary clause of section 80P(2)(c)(ii). We also notice that the Income from MSEB commission is held to be business activity as per decision cited by the assessee in the case of Ahmednagar District Co-operative Bank Ltd. (supra) and other decisions noted above. Accordingly, we hold that the assessee is entitled to relief under section 80P as per law. We also simultaneously find merit in the alternate plea of the assessee that proportionate expenses attributable to earning of such income ought to have been allowed by the authorities below. In view of the fair admission on the part of the assessee, the finding of the CIT(A) in respect of Shop Rent Income is sustained. With regard to other income, namely, Health Club Fees, we once again hold that expenses attributable to the running of the Health Club should be allowed to the assessee while determining the income from such activity on reasonable/proportionate basis. However, we do not find any merit in claim of the assessee for deduction under section 80P(2)(a)/80P(2)(b) of the Act in respect of this activity.

11. As regards withdrawal of deduction of Rs.50,000/- as allowed by the Assessing Officer under section 80P(2)(c), we find merit in the plea of the assessee that a co-operative society engaged in any business activity which is not otherwise eligible for deduction under section 80P(2)(a) or (b), in such a scenario, it is eligible for deduction to the extent of Rs.50,000/- as per plain provisions of the Act. We also find that the action of the CIT(A) in withdrawing the aforesaid deduction without affording the opportunity to the assessee in this regard also offends the provisions of the Act as well as principles of natural justice. In the light of the aforesaid, we hold that the assessee is entitled to deduction under section 80P(2)(c)(ii) of the Act in respect of business activities such as running of Ambulance, Health Club fee etc. which are not eligible for deduction under section 80P(2)(a) or 80P(2)(b) of the Act. In the light of the aforesaid observations, the assessee gets part relief in terms of above.” The issues raised in the present appeal by the assessee are identical to the issues already decided by the Tribunal. No material has been placed on record by the Revenue to controvert the findings of Co-ordinate Bench. In such circumstances, we do not find any reason to take any contrary view. Thus, in the facts and circumstances of the preset case and order of Co-ordinate Bench of the Tribunal, we allow the grounds raised by the assessee in appeal, except ground no. 6.

10.5 In the case of Vijkamgar Co-operative Credit Society Ltd. (supra), the Tribunal held as under : “4. The next issue is with regard to addition of ₹ 1,74,516/- on account of income from cash collection counter. The Assessing Officer has made this disallowance in para 4 of the assessment order. The Assessing Officer has noticed that the assessee has earned commission on collection of electricity bills to the extent of ₹ 10,53,379/- and in respect of the same, expenses have been incurred to the extent of ₹ 8,78,863/- [₹ 8,35,234/- (+) ₹ 43,629/-] and the net income earned is ₹ 1,74,516/-. The Assessing Officer has held that the deduction u/s.80P(2)(a)(i) is not allowable in respect of this activity, hence, treated the same as taxable income. 4.1 In appeal, the CIT(A) has allowed the same following the decision of Hon’ble Bombay High Court in the case of CIT Vs. Ahmednagar District Central Co-operative Bank Ltd. The same has been opposed before us on behalf of revenue.

4.2 We find that the business activity of credit co-operative society and co- operative banks are similar in respect of accepting deposits, providing credit facilities and also carrying on activity of electricity bills, telephone bills collection centre. The Hon’ble Bombay High Court in the case of CIT Vs. Ahmednagar District Central Co-operative Bank Ltd. (2003) 264 ITR 38 (Bom) has laid down that the activity of collecting bills, dues and charges for and on behalf of government, local authority, MTNL, BEST, MSEB, etc. is akin to banking activity and is eligible for deduction u/s. 80P(2)(a)(i). In view of above, the CIT(A) was justified in directing the Assessing Officer to allow the deduction u/s. 80P(2)(a)(i) in respect of the said income of ₹ 1,74,516/-. We uphold the same.”

Order pronounced in the open court on 15th January, 2025.