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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI S. RIFAUR RAHMAN
PER S. RIFAUR RAHMAN, A.M.
The captioned appeals have been filed by the Revenue challenging two separate orders dated 15th March 2019 for A.Y. 20013–14 and order dated 20th March 2019 for A.Y. 2014–15, passed by the learned Commissioner (Appeals)–32, Mumbai.
Since both these appeals pertain to the same assessee involving one common issue which arose out of mutatis mutandis identical set of
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facts and circumstances, therefore, as a matter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. However, in order to understand the implication, it would be necessary to take note of the facts of one appeal. We are accordingly narrating the facts, as they appear in the appeal in ITA no.3870/Mum./2019, for assessment year 2013–14, the decision of which will be applicable to the appeal for A.Y. 2014–15 as well, since the issue involved is common in both the years under consideration, except variation in figures.
ITA no.3870/Mum./2019 Assessment Year – 2013–14
The only ground raised in both the years under consideration is reproduced below:–
“On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance under section 80P(2)(d), rightly made by the Assessing Officer on account of claim of interest income from the deposits in Co–operative bank, in view of the decision of the Hon’ble Karnataka High Court in the case of Totagars Co–operative Society (395 ITR 611).”
Facts in brief:– The assessee is a Co–operative Housing Society and during the year under consideration declared total income from house property, income from capital gains and income from other sources. The assessee filed its return of income for the assessment year 2013–14 on 24th September 2013, declaring total income at `
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2,13,29,800, after claiming disallowance of ` 2,09,07,670, made under section 80P of the Act. For the assessment year 2014–15, the return of income was filed on 30th August 2014, declaring total income of ` 4,11,47,400, after claiming disallowing of ` 2,46,31,070, under section 80P of the Act.
The Assessing Officer disallowed the claim for both the years under consideration holding that the deduction is available for investment in other co–operative societies and not other co–operative banks. He was of the view that Co-operative Society and Co–operative Banks have been given different treatment even under section 194A of the Act which relates to TDS. The Assessing Officer vide his letter dated 2nd March 2016, sought explanation from the assessee as to why the deduction claimed should not be disallowed and added back to the total income in view of the provisions of section 80P(2)(d) of the Act. In response, the assessee submitted its detailed reply dated 15th March 2016. After considering the submissions of the assessee in the context of Facts and material on record, the Assessing Officer rejected the submissions with the following reasons:–
“1. The said interest income on from other co–operative banks is not eligible for deduction under section 80P(2)(d) since these banks are not a co–operative society in view of the definition contained in section 2(19) of the Act and in view of the provisions of section 80P(4) w.e.f. 01.04.2007, which provides that a co–
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operative bank is not eligible for deduction under section 80P, and thus differentiates the co–operative bank from other co–operative societies. Further, that the co–operative banks are functioning at par with commercial bank. 2. The interest income earned from co–operative banks by the appellant does not satisfy the condition of mutuality and is accordingly taxable as income from other sources. The A.O. has relied on the decision of Hon’ble Apex Court in the case of Bangalore Club v/s CIT, (2013) 29 taxmann.com 29 (SC). The A.O. has also relied on the decision of Hon’ble Supreme Court in the case of Totgar’s Co–operative Sale Society Ltd. v/s ITO, (2010) 188 Taxman 282 to hold that the interest earned on deposits with other banks would fall under the head income from other sources u/s 56.”
The Assessing Officer held that the co–operative bank is a commercial bank and does not fall under the purview of a “Co– operative Society” referred in section 80P(2)(d) of the Act and the assessee has earned interest income from Co–operative Bank and not from Co–operative Society. Accordingly, he disallowed the claim made under section 80P(2)(d) of the Act and added the same to the total income of the assessee. Aggrieved, the assessee contested the issue before the first appellate authority.
The learned Commissioner (Appeals) directed the Assessing Officer to allow the deduction under section 80P(2)(d) of the Act relying upon the decisions of the Co–ordinate Bench in ITO v/s Citiscape Co. Operative Housing Society Ltd., ITA no.5435–5436/ Mum./2017, A.Y. 2011–12 and 2012–13, order dated 8th December 2017 as well Kaliandas Udyog Bhavan Premises Co. Operative Society
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Ltd. v/s ITO, [2018] 94 taxmann.com 15 (Mum.)(Trib.) and held that the assessee would be entitled for claim of deduction under section 80P(2)(d) of the Act in respect of interest income earned by the assessee on the investments held with the Co–operative Bank and the Assessing Officer was not justified in disallowing the deduction. The learned Commissioner (Appeals) further noticed that the said amount of ` 2,09,07,669, is less than the gross total income of ` 2,13,29,796 and, therefore, the Assessing Officer was directed to allow the deduction. The Revenue being aggrieved by the order so passed by the learned Commissioner (Appeals) is in appeal before us.
The learned Departmental Representative supported the order of the Assessing Officer submitted that the disallowance made by the assessing officer under section 80P(2)(D) of the Act was rightly made by the Assessing Officer on account of claim of interest income from the deposits in Co–operative Banks in view of the decision of the Hon’ble Karnataka High Court in Totagar’s Co–operative Society reported as 395 ITR 611 (Kar.) wherein the Hon’ble Court has allowed Revenue’s appeal by deciding the issue in favour of the Revenue and against the assessee. He accordingly prayed that the order of the Assessing Officer may be upheld.
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The learned Counsel for the assessee on the other hand relied upon the order of the learned Commissioner (Appeals) and submitted that the deduction claimed under section 80P(2)(d) of the Act in respect of interest income earned from Co–operative Bank is now settled by the Co–ordinate bench decisions of the Tribunal. He submitted that the issue is now covered by the by the following Co– ordinate Bench decisions:–
i) Amit Tata Employees Co–operative Housing Society Ltd. v/s ACIT, ITA no.292/Mum./2018, A.Y. 2014–15, order dated 26.07.2019; ii) Poonam Chambers Premises Co–operative Society Ltd. v/s ACIT, ITA no.4463/Mum./2017, A.Y. 2014–15, dated 23.08.2018; iii) Merwanjee Cama Park Co–operative Housing Society Ltd. v/s ITO, ITA no.6139/Mum./2014, A.Y. 2010–11, order dated 27.09.2019; and iv) ITO v/s Eternity Co–operative Housing Society Ltd., ITA no. 6159/Mum./2017, A.Y. 2013–14, order dated 15.05.2018.
Copies of the aforesaid decisions are placed on record. The learned Counsel for the assessee accordingly prayed that based on the aforesaid Co–ordinate bench decisions, the order of the learned Commissioner (Appeals) be upheld.
Considered rival submissions and perused the material available on record including the case laws relied upon by the parties. We find that the issue in respect of deduction claimed in respect of interest
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income earned from Co–operative Banks under section 80P(2)(d) of the Act is squarely covered by the decisions relied upon by the learned Counsel for the assessee as aforesaid wherein identical issue, except variation in figures, has been decided by the Tribunal in (i) Amit Tata Employees Co–operative Housing Society Ltd. v/s ACIT, ITA no.292/Mum./2018, A.Y. 2014–15, order dated 26.07.2019; (ii) Poonam Chambers Premises Co–Op. Society Ltd. v/s ACIT, ITA no. 4463/Mum./2017, A.Y. 2014–15, dated 23.08.2018; (iii) Merwanjee Cama Park Co–operative Housing Society Ltd. v/s ITO, ITA no.6139/ Mum./2014, A.Y. 2010–11, order dated 27.09.2019; and (iv) ITO v/s Eternity Co–operative Housing Society Ltd., ITA no. 6159/Mum./2017, A.Y. 2013–14, order dated 15.05.2018. Consistent with the view taken in the aforesaid Co–ordinate Bench decisions in which the decision of the Hon’ble Karnataka High Court in Totagars Co–operative Society (supra), was distinguished by the Co–ordinate Bench. Therefore, we hold that the assessee is a Co–operative Society is entitled for claiming deduction under section 80P(2)(d) of the Act in respect of the interest income earned from either from Co–operative Bank or from Co–operative Society whatsoever that may be. Consequently, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the Revenue.
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In the result, Revenue’s appeal is for the A.Y. 2013–14 is dismissed.
ITA no.3871/Mum./2019 Revenue’s Appeal – A.Y. 2014–15
As it appears from the ground of appeal raised by the Revenue for the assessment year 2013–14, identical ground has been raised by the Revenue for the assessment year 2014–15, except variation in figures. Since the issue of deduction claimed under section 80P(2)(d) of the Act in respect of interest income earned from Co–operative Bank is covered by the Co–ordinate Bench decisions (supra), consistent with the view taken therein as well as the decision taken in Revenue’s appeal being ITA no.3870/Mum./2019, for A.Y. 2013–14, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the Revenue for A.Y. 2014–15 also.
In the result, Revenue’s appeal for A.Y. 2014–15 is also dismissed.
To sum up, both the appeals of the Revenue are dismissed. Order pronounced in the open court on 13.05.2021 Sd/- Sd/- MAHAVIR SINGH S. RIFAUR RAHMAN VICE PRESIDENT ACCOUNTANT MEMBER
MUMBAI, DATED: 13.05.2021
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Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Mumbai City concerned; (5) The DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai