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Facts
The assessee, a Cooperative Housing Society, filed its return for AY 2021-22 declaring income of Rs. 7,96,240. It claimed a deduction of Rs. 1,80,936 on interest income received from other cooperative banks, on the grounds of mutuality. The Assessing Officer disallowed this deduction, and the assessee's appeal before the CIT(A) was also dismissed.
Held
The Tribunal held that the assessee, being a cooperative society, is eligible for deduction under Section 80P of the Act. It further held that the interest income received from other cooperative banks falls within the ambit of Section 80P(2)(d) and is not taxable in the hands of the assessee due to the principle of mutuality, as the other cooperative banks are also cooperative societies.
Key Issues
Whether the interest income received by the assessee (a cooperative housing society) from other cooperative banks is eligible for deduction under Section 80P(2)(d) of the Income Tax Act, 1961, on the grounds of mutuality.
Sections Cited
143(1), 80P(2)(d), 2(19), 80P(4), 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “G ” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI RAHUL CHAUDHARY, JM
This appeal is filed by the assessee for Assessment Year (A.Y.) 2021-22 against the appellate order passed by the Joint Commissioner of Income Tax (Appeals)-4, Kolkata [the learned
CIT(A)] dated 02.02.2024 wherein the appeal filed by the assessee against the intimation passed u/s. 143(1) of the Income Tax Act, 1961 (the Act) dated 10.11.2022, was dismissed.
The assessee is aggrieved with the same and has preferred the following grounds of appeal:
1. “On the facts and circumstances of the case and in law, the Hon'ble Commissioner of Income Tax, Appeal ADDL/JCIT(A)-4 KOLKATA [Hon'ble CIT(A)'] erred in confirming Appellants income at Rs. 9,77,180/- as determined under intimation/Order u/s 143(1) of the Act, dated 10-11- 2022 (the said Intimation/Order) as against Appellant's Returned income of Rs. 7,96,240/-
The Appellant's prays that its income be restored to 7,96,240/-
2. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming disallowance of Appellant's claim of Rs. 1,80,936/- u/s 80P(2)(d) of the Act being interest received from Co-operative Banks as disallowed in the said Intimation/Order.
The Appellant's prays that the said disallowance of deduction u/s 80P(2)(d) of the Act be deleted.
Without Prejudice to the above, on the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming disallowance of Appellant's claim of Rs. 1,80,936/- u/s 80P(2)(d) of the Act being interest received from Co-operative Banks as disallowed in the said Intimation/Order inasmuch in as much as the said interest is not taxable in Appellant's hands on ground of mutuality.
The Appellant's prays that the said interest be held as not taxable in its hands.
4. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming levy of interest u/s 234B and 234C of the Act as levied in the said Intimation/Order.
The Appellant's prays that the said interest levied u/s 234B and 234C of the Act be deleted.
5. The above Grounds of Appeal are without prejudice to each other and the Appellant craves leave to add to/amend any of the said Grounds of Appeal any time before/at the time of hearing of the Appeal.”
3. The brief facts of the case shows that only issue involved in the appeal is whether the assessee would be entitled to deduction u/s.80P(2)(d) of the Act or not on interest income of Rs. 1,80,936/- on the interest income received from Cooperative Banks. The learned CIT(A) has held that assessee is not entitled to the same.
The brief facts of the case shows that the assessee is a Co- operative Housing Society. Its filed return of income for A.Y. 2021-22 on 25.11.2021 at a total income of Rs. 7,96,240/-. The facts shows that the assessee has received bank interest on fixed deposits of Rs. 92,031/- with SVC Co-operative Bank Ltd. and Rs. 88,905/- on Saraswat Cooperative Bank Ltd. aggregating to Rs. 1,80,936/-. This claim was made by the assessee for the reason that all this Co-operative Banks are also Co-operative Societies and in case of all Co-operative societies , other than the Cooperative Bank, they are entitled to deduction of investment income with other Cooperative Banks u/s. 80P(2)(d) of the Act.
The Central Processing Centre passed an intimation u/s. 143(1) of the Act wherein the above deduction was disallowed and total income of the assessee was assessed at Rs. 9,77,180/-.
Aggrieved with that intimation, the assessee filed appeal before the learned CIT(A). The learned CIT(A) dismissed the appeal of the assessee on this ground.
We have heard the rival contention and find that assessee is a Co-operative Societies eligible for deduction u/s. 80P of the Act. It has made investment with other two other Cooperative Societies, which are also cooperative banks. On that investment assessee has received interest thereon.
According to the provisions of Section 2(19) of the Act Co- operative Societies are defined to be Cooperative Societies under the Co-operative Societies Act or any other law for the time being enforced. Undisputedly, the assessee is not a Co- operative Bank and, therefore, the provisions of Section 80P(4) does not apply to the assessee. According to Maharashtra State Cooperative Act, all Co-operative Banks are necessarily Co- operative Societies carrying on the Banking business. Thus, merely because they are Co-operative Banks, they do not go out of the definition of Co-operative Societies. Several judicial precedents were cited before us, which also subscribed to the above view. In view of this, we find that the assessee is entitled to a deduction of Rs. 1,80,936/- u/s. 80P(2)(d) of the Act. Accordingly the orders of the learned lower authorities are reversed and Ground No.1 of the appeal of the assessee is allowed.
All other two grounds are supportive or consequential. Thus, those grounds are also allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 28/08/2024.