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HC-KAR NC: 2025:KHC:36972-DB ITA No. 93 of 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 16TH DAY OF SEPTEMBER, 2025 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AND THE HON'BLE MR. JUSTICE K. V. ARAVIND INCOME TAX APPEAL NO. 93 OF 2024 BETWEEN: M/S. JUDICIAL EMPLOYEES HOUSE BUILDING COOPERATIVE SOCIETY LIMITED NO.1028/D, 1ST FLOOR, JAYALAKSHMI ROAD, CHAMARAJAPURAM, MYSURU-570005, REP. BY ITS SECRETARY SHASHIKALA N. …APPELLANT (BY SRI. MOHAN B.K., ADV.)
AND:
INCOME TAX OFFICER WARD -2(2), INCOME TAX OFFICE, NO.21/16, RESIDENCY ROAD, NAZARBAD, MYSURU-570010. …RESPONDENT (BY SRI. E.I. SANMATHI, SR. STANDING COUNSEL)
THIS APPEAL IS FILED UNDER SECTION 260A OF INCOME TAX ACT PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE; ALLOW THE APPEAL AND SET ASIDE THE ORDER DATED 11/04/2023 PASSED BY INCOME TAX APPELLATE TRIBUNAL BANGALORE IN ITA NO. 108/BANG/2023 ANNEXURE-B AND CONSEQUENTLY ALSO SET ASIDE THE ORDER DATED 26/11/2021 PASSED BY THE RESPONDENT IN APPEAL NO. CIT(A)
Digitally signed by NANJUNDACHARI Location: HIGH COURT OF KARNATAKA
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HC-KAR NC: 2025:KHC:36972-DB ITA No. 93 of 2024
MYSORE/10422/2019-20 ANNEXURE-A) FOR THE ASSESSMENT YEAR 2017-2018 AND ETC.
THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE S.G.PANDIT AND HON'BLE MR. JUSTICE K. V. ARAVIND
ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE K.V. ARAVIND)
Heard learned counsel Sri.Mohan.B.K., for the appellant/assessee and learned senior standing counsel Sri.E.I.Sanmathi for respondent/Revenue. Perused the entire appeal papers.
The assessee is in appeal under Section 260A of the Income Tax Act, 1961 (for short, ‘1961 Act’) challenging the order passed by the Income Tax Appellate Tribunal SMC ‘C’ Bench, Bengaluru (for short, ‘the Tribunal’) in ITA.No.108/BANG/2023 dated 11.04.2023 for the assessment year 2017-18.
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HC-KAR NC: 2025:KHC:36972-DB ITA No. 93 of 2024
The following substantial questions of law are raised for consideration of this Court:
“1. Whether on facts and circumstances of the case, the Tribunal was justified in coming to the conclusion that the interest derived by the Co-operative society from its investments was not with any other co-operative Society as required under Section 80P2(d)?
Whether for the purpose of Section 80P(2)(d) a Co-operative Bank should be considered as a Co-operative Society or not. For, if a Co-operative Bank is considered to be a Co-operative Society, then any interest earned by the Co-operative Society from a Co- operative Bank would necessarily be deductible under Section 80P(1)?”
The assessee filed return of income for the assessment year 2017-18 claiming interest income of Rs.25,19,453/- earned from investment with the Mysore and Chamarajanagar District Co-operative Central Bank Ltd., under Section 80P(2)(d) of the Act. The Assessing
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HC-KAR NC: 2025:KHC:36972-DB ITA No. 93 of 2024
Officer rejected the claim as the investment made was in Co-operative Bank.
The assessee carried the order of assessment in appeal before the Commissioner of Income Tax (Appeals) (for short, ‘CIT(A)’). The Appellate Commissioner by order dated 26.11.2021 rejected the appeal. Further, the assessee preferred appeal before the Tribunal. The Tribunal under impugned order following the judgment of this Court in ACIT VS. TOTAGARS CO-OPERATIVE SALE SOCIETY ((2017) 83 TAXMANN.COM 140 (KARNATAKA) held that in view of Section 80P(4) of the Act, the assessee/appellant is not entitled to deduction under Section 80P(2)(d) of the Act.
Learned counsel Sri.Mohan.B.K., appearing for the appellant/assessee submits that the Mysore and Chamarajanagar District Co-operative Central Bank Ltd., is a Co-operative Society, though engaged in banking
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HC-KAR NC: 2025:KHC:36972-DB ITA No. 93 of 2024
activity. Hence, the investment made is eligible for deduction under Section 80P(2)(d) of the Act. Learned counsel further submits that this Court in PCIT VS. TOTAGARS CO-OPERATIVE SALE SOCIETY ((2017) 78 TAXMANN.COM 169 (KARNATAKA) has held that the investment in Co-operative Bank is eligible for deduction under Section 80P(2)(d) of the Act. It is submitted that in the case of TOTAGARS CO- OPERATIVE SALE SOCIETY (supra) another decision is rendered by this Court on 16.06.2017 denying the claim under Section 80P(2)(d) of the Act. The Tribunal instead of applying the earlier judgment dated 05.01.2017 incorrectly applied the judgment dated 16.06.2017. Learned counsel further submits that the second judgment in TOTAGARS CO-OPERATIVE SALE SOCIETY (supra) is pending in appeal before the Hon'ble Apex Court.
Per contra, Sri.E.I.Sanmathi, learned senior standing counsel appearing for the respondent/Revenue
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HC-KAR NC: 2025:KHC:36972-DB ITA No. 93 of 2024
submits that undisputedly the Mysore and Chamarajanagar District Co-operative Central Bank Ltd., is registered as a Co-operative Society and carrying banking business with license issued by the Reserve Bank of India. In view of the banking activity, the Mysore and Chamarajanagar District Co-operative Central Bank Ltd., is a Co-operative Bank within the meaning of Section 80P of the Act. Learned counsel further submits that in view of a specific bar of application of Section 80P of the Act, in terms of Section 80P(4), the investment in the Co- operative Bank is not eligible for deduction under Section 80P(2)(d) of the Act. Further, learned counsel submits that in the first decision in TOTAGARS CO-OPERATIVE SALE SOCIETY (supra), the bar imposed under Section 80P(4) of the Act was not the subject matter for consideration. However, in the second TOTAGARS CO-OPERATIVE SALE SOCIETY (supra), this Court has considered the effect of Section 80P(4) of the Act and held that investment in Co-operative Bank is not eligible for
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HC-KAR NC: 2025:KHC:36972-DB ITA No. 93 of 2024
deduction under Section 80P(2)(d) of the Act. It is submitted that the Tribunal by following the judgment of this Court in second TOTAGARS CO-OPERATIVE SALE SOCIETY (supra) has rightly denied the claim of deduction under Section 80P(2)(d) of the Act.
Having considered the submissions of the learned counsel for the parties, we note that the assessee has made investment and earned interest income from the Mysore and Chamarajanagar District Co-operative Central Bank Ltd. A Co-operative Bank is a Co-operative Society registered under the Co-operative Societies Act, whether the Co-operative Society assumes the character of the Co- operative Bank depends on the activities carried on by it.
It is undisputed that the Mysore and Chamarajanagar District Co-operative Central Bank Ltd., has banking license issued by the Reserve Bank of India under the Banking Regulation Act and engaged in banking activities. Merely the Co-operative Bank is also a Co-
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HC-KAR NC: 2025:KHC:36972-DB ITA No. 93 of 2024
operative Society, the investment in Co-operative Bank cannot be considered for deduction under Section 80P(2)(d) of the Act. In the light of the judgment in second TOTAGARS CO-OPERATIVE SALE SOCIETY (supra), dated 16.06.2017 followed by the Tribunal, we are of the view that in view of the banking license of the Mysore and Chamarajanagar District Co-operative Central Bank Ltd., the same is a Co-operative Bank. Once the investment is made in a Co-operative Bank, Sub-Section (4) of Section 80P steps in and operates as a bar for deduction under Section 80P(2)(d) of the Act.
The Tribunal rightly following the judgment of this Court in the second TOTAGARS CO-OPERATIVE SALE SOCIETY (supra) has held that the assessee is not entitled to claim deduction under Section 80P(2)(d) of the Act. We agree with the finding recorded by the Tribunal based on the judgment of this Court. Further, there are no distinguishable facts or law placed to take a different
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HC-KAR NC: 2025:KHC:36972-DB ITA No. 93 of 2024
view. Accordingly, no substantial questions of law would arise.
In the light of the above, appeal fails and accordingly stands dismissed.
Sd/- (S.G.PANDIT) JUDGE
Sd/- (K. V. ARAVIND) JUDGE
NC CT:bms List No.: 1 Sl No.: 19