MEHERZIN CO OPERATIVE HOUSING SOCIETY LIMITED ,MUMBAI vs. ITO WARD 25(2)(1), MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER;

CIT(A)/NFAC, Delhi dated 15.07.2025 for Assessment Year (A.Y.) 2017-18.The assessee has raised the following grounds of appeal:

“a) In allowing the deduction u/s 80P(2)(d) of the Income Tax Act, to the housing cooperative society only to the extent of bank interest earned from cooperative banks which are excluded from the list of banks as per second schedule of RBI Act, 1934(which displays the list of banks known as scheduled banks) and has disregarded fully the interest earned from cooperative banks included in such schedule for allowing the deduction u/s 80P(2)(d) b) In not appreciating that such deduction is to be allowed in respect of bank interest earned from all cooperative banks whether such cooperative banks are included or excluded in the second schedule of RBI Act, 1934.

The appellant craves leave to add or amend or alter any of the grounds of appeal on or before the hearing of the appeal.”

The learned Authorised Representative (ld. AR) of the assessee submits that (A.Y. 2017-18) Diamond Tradecom Private Limited grounds of appeal raised by assessee is covered by a series of decision as has been relied before ld. CIT(A), which are recorded in para 6.3 of his order. The ld. AR of the assessee submits that co-operative banks are primarily co- operative society and the interest income earned from such co-operative bank are eligible for deduction under section 80P(2)(d). The ld. CIT(A) though allowed relief to the assessee but allowed with condition to allow deduction of interest income earned from the co-operative bank which are not scheduled bank. Such condition is uncalled for. The co-operative banks are required to follow the guidelines of Reserve Bank of India (RBI). The ld. AR of the assessee further submits that RBI includes only those banks in the second schedule which satisfy the criteria mentioned in section 42(6)(a) of RBI Act, 1934 and have a specified minimum paid up capital and reserve. The banks included in the second schedule are known as "Scheduled Banks" and such banks are granted certain privileges/special facilities and also imposed upon specific obligations / stricter regulations designed to maintain stability and integrity of the Indian Banking System.The inclusion of the bank in second schedule of RBI, only depicts the fact that in the eyes of RBI, such bank is considered as financially stable. Inclusion of any bank in the second schedule does not change the basic character/status of the bank. The bank remains a co-operative society governed by the provisions of the state co-operative law and it simultaneously also becomes a scheduled bank under the RBI Act, 1934. Such banks are also addressed as "Scheduled Co-operative Bank" for all practical purposes. The ld. AR of the assessee submits that there are series of various High Court’s decision wherein it has been consistently held (A.Y. 2017-18) Diamond Tradecom Private Limited that co-operative banks are primarily co-operative society and interest earned from such co-operative banks is to be allowed under section 80P(2)(d).