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Facts
The appeals were filed by the Revenue against two separate orders of the CIT(A) allowing the assessee's claim for deduction under Section 80P(2)(d) of the Income Tax Act, 1961. The assessee, a cooperative credit society, claimed deduction on interest and dividend income earned from cooperative banks. The Assessing Officer denied this deduction, viewing cooperative banks as commercial banks and not eligible for the deduction.
Held
The Tribunal held that Section 80P(4) of the Income Tax Act, 1961, which disallows deduction for cooperative banks, is applicable only to cooperative societies holding a banking license from the RBI. Since the assessee was not a licensed cooperative bank, Section 80P(4) was not attracted. The interest and dividend income earned from cooperative banks were therefore eligible for deduction under Section 80P(2)(d).
Key Issues
Whether interest and dividend income earned by a cooperative society from cooperative banks is eligible for deduction under Section 80P(2)(d) of the Income Tax Act, 1961, especially in light of Section 80P(4).
Sections Cited
Section 80P(2)(d), Section 80P(4)
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Income Tax Appellate Tribunal, E BENCH, MUMBAI
Per Rahul Chaudhary, Judicial Member: 1. These are 2 appeals pertaining to Assessment Years 2018-19, and 2020-2021 preferred by the Revenue against two separate orders, dated 30/04/2024 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’]. Since the appeals involve common issues the same were heard together and are being disposed by way of a common order.
& 3433/Mum/2024 Assessment Years 2018-19, 2020-2021 (Assessment Year 2018-19)
We would first take up appeal for the Assessment Year 2018-19 which has been preferred by the Revenue challenging the order, dated 30/04/2024, passed by the CIT(A) whereby the CIT(A) has allowed the appeal of the Assessee against the Assessment Order, dated 20/04/2021, passed under Section 143(3) read with section 144B of the Act.
3. The Revenue has raised following grounds of appeal:
1. “1. On the facts and in circumstances of the case and in law, the CIT(A) has erred in not appreciating the fact that co-operative bank is a commercial bank and does not fall under the purview of "Co-operative Society" referred in section 80P(2)(d) of the Income Tax Act, 1961 and therefore the assessee society is not eligible for deduction u/s. 80P(2)(d) of the Income Tax Act, 1961.
2. On the facts and in circumstances of the case and in law, the CIT(A) has erred in not appreciating the ratio laid down by Hon'ble Apex Court in the case of Totgar's Co-operative Sales Society Ltd. Vs ITO [322 ITR 283] in favour of revenue on the similar issue.
3. The appellant craves leave to add, amend or alter any ground/grounds, which may be necessary."
Brief facts of the case are that the Assessee, a co-operative credit society registered under Maharashtra Co-operative Societies Act 1960, filed return of income for the Assessment Year 2018-19, on 13/10/2018 declaring income of INR 16,080/- after claiming deduction under Section 80P(2)(d) of the Act.
& 3433/Mum/2024 Assessment Years 2018-19, 2020-2021
The Assessing Officer framed assessment on the Assessee, vide order dated 20/04/2021, passed under Section 143(3) read with section 144B of the Act at assessed income of INR 2,19,85,255/- by denying the deduction of INR 2,19,69,174/- claimed under Section 80(2)(d) of the Act in respect of interest/dividend income from co- operative banks. The Assessing Officer was of the view that co- operative banks were not co-operative societies and therefore, interest received from co-operative banks would be ineligible for deduction under Section 80P(2)(d) of the Act. To deny deduction, the Assessing Officer also relied upon the provisions of Section 80P(4) of the Act.
Being aggrieved, the Assessee preferred appeal before the CIT(A) against the Assessment Order, dated 20/04/2021. The CIT(A) agreed with the Assessee and vide, order dated 30/04/2024, accepted Assessee’s claim for deduction of INR 2,19,69,175/- under Section 80P(2)(d) of the Act. Thus, CIT(A) also deleted the disallowance made by the Assessing Officer.
Being aggrieved, the Revenue has preferred the present appeal against the order, dated 30/04/2024, passed by the CIT(A) on the grounds reproduced in paragraph 3 above. All the grounds raised by the Assessee, being connected, are taken up together hereinafter.
The Learned Departmental Representative supported the stand taken by the Assessing Officer by placing reliance on the judgment of the Hon’ble Karnataka High Court in the case of Principal Commissioner of Income Tax, Hubli Vs. Totagar Co-operative Sales Society: [2017] 695 ITR 611 (Karnataka), as well as the provisions contained in Section 80P(4) of the Act. According to the Ld. Departmental Representative the CIT(A) erred in overturning the decision of the Assessing Officer and deleting the addition/disallowance made by the Assessing Officer in respect of & 3433/Mum/2024 Assessment Years 2018-19, 2020-2021
interest income received by the Assessee. Per contra, Authorised Representative for the Assessee supported the order passed by the CIT(A) and submitted that the Assessee was entitled to claim deduction in respect of interest income under Section 80P(2)(d) of the Act. He submitted that the Ld. CIT(A) had followed the binding judicial precedents and therefore, no fault could be found with the order passed by the CIT(A).
We have given thoughtful consideration to the rival submission, perused the material on record and considered the position in law. We find that the issues raised in the present appeal are no longer res- integra.
In the case of Mavilayi Service Co-operative Bank Ltd. vs. Commissioner of Income Tax, Calicut: [2021] 431 ITR 1 (SC)[12-01-2021], the Hon’ble Supreme Court has held as under:
“20. We now come to the judgment of this Court in Citizen Cooperative Society Ltd. (supra). This judgment was concerned with an assessee who was established initially as a mutually aided cooperative credit society, having been registered under section 5 of the Andhra Pradesh Mutually Aided Cooperative Societies Act, 1995. As operations of the assessee began to spread over States outside the State of Andhra Pradesh, the assessee got registered under the Multi-State Cooperative Societies Act, 2002 as well. The question that the Court posed to itself was as to whether the appellant was barred from claiming deduction in view of Section 80P(4) of the Income-tax Act - see paragraph 5. After setting out the findings of fact in that case, and the income tax authorities concurrent holding that the society is carrying on banking business and for all practical purposes acts like a co- operative bank, this Court then held as follows: xx xx 21. An analysis of this judgment would show that the question of law that was reflected in paragraph 5 of the judgment was answered in & 3433/Mum/2024 Assessment Years 2018-19, 2020-2021 favour of the assessee. The following propositions may be culled out from the judgment: (I) That section 80P of the IT Act is a benevolent provision, which was enacted by Parliament in order to encourage and promote the growth of the co-operative sector generally in the economic life of the country and must, therefore, be read liberally and in favour of the assessee; (II)That once the assessee is entitled to avail of deduction, the entire amount of profits and gains of business that are attributable to any one or more activities mentioned in sub-section (2) of section 80P must be given by way of deduction; (III) That this Court in Kerala State Cooperative Marketing Federation Ltd. (supra) has construed section 80P widely and liberally, holding that if a society were to avail of several heads of deduction, and if it fell within any one head of deduction, it would be free from tax notwithstanding that the conditions of another head of deduction are not satisfied; (IV) This is for the reason that when the legislature wanted to restrict the deduction to a particular type of co-operative society, such as is evident from section 80P(2)(b) qua milk co-operative societies, the legislature expressly says so - which is not the case with section 80P(2)(a)(i); (V) That section 80P(4) is in the nature of a proviso to the main provision contained in section 80P(1) and (2). This proviso specifically excludes only co-operative banks, which are cooperative societies who must possess a licence from the RBI to do banking business. Given the fact that the assessee in that case was not so licenced, the assessee would not fall within the mischief of section 80P(4) xx xx
Applying the aforesaid decisions, it is clear that the ratio decidendi in Citizen Cooperative Society Ltd. (supra) would not depend upon the conclusion arrived at on facts in that case, the case being an authority for what it actually decides in law and not for what may seem to logically follow from it. Thus, the statement of the principles of law applicable to the legal problems disclosed by the facts alone is the binding ratio of the case, which as has been stated hereinabove, is contained in paragraphs 18 to 23 of the judgment. Paragraphs 24 to 26, & 3433/Mum/2024 Assessment Years 2018-19, 2020-2021 being the judgment based on the combined effect of the statements of the principle of law applicable to the material facts of the case cannot be described as the ratio decidendi of the judgment. Nor can it be said that it would logically follow from the finding on facts that the assessing officer can go behind the registration of a society and arrive at a conclusion that the society in question is carrying on illegal activities. On this score alone, the Full Bench's understanding of this judgment has to be faulted and is set aside.
However, this does not conclude the issue in the present case. We now turn to the proper interpretation of section 80P of the Income-tax Act. Firstly, the marginal note to section 80P which reads "Deduction in respect of income of co-operative societies" is important, in that it indicates the general "drift" of the provision. This was so held by this Court in K.P. Varghese v. ITO [1981] 7 Taxman 13/131 ITR 597 as follows: "9. This interpretation of sub-section (2) is strongly supported by the marginal note to Section 52 which reads "Consideration for transfer in cases of understatement". It is undoubtedly true that the marginal note to a section cannot be referred to for the purpose of construing the section but it can certainly be relied upon as indicating the drift of the section or, to use the words of Collins, M.R. in Bushel v. Hammond [1904] 2 KB 563 to show what the section is dealing with. It cannot control the interpretation of the words of a section particularly when the language of the section is clear and unambiguous but, being part of the statute, it prima facie furnishes some clue as to the meaning and purpose of the section (vide Bengal Immunity Company Limited v. State of Bihar [1955] 2 SCR 603])."
Secondly, for purposes of eligibility for deduction, the assessee must be a "co-operative society". A co-operative society is defined in Section 2(19) of the IT Act, as being a co-operative society registered either under the Co-operative Societies Act, 1912 or under any other law for the time being in force in any State for the registration of co- operative societies. This, therefore, refers only to the factum of a co- operative society being registered under the 1912 Act or under the State law. For purposes of eligibility, it is unnecessary to probe any further as to whether the co-operative society is classified as X or Y.
& 3433/Mum/2024 Assessment Years 2018-19, 2020-2021
Thirdly, the gross total income must include income that is referred to in sub-section (2).
Fourthly, sub-clause (2)(a)(i) with which we are directly concerned, then speaks of a co-operative society being "engaged in" carrying on the business of banking or providing credit facilities to its members. What is important qua sub-clause (2)(a)(i) is the fact that the co- operative society must be "engaged in" the providing credit facilities to its members. As has been rightly pointed out by the learned Additional Solicitor General, the expression "engaged in", as has been held in CIT v. Ponni Sugars & Chemicals Ltd. [2008] 174 Taxman 87/306 ITR 392 (SC), would necessarily entail an examination of all the facts of the case. This Court in Ponni Sugars & Chemicals Ltd. (supra) held: "20. In order to earn exemption under section 80P(2) a cooperative society must prove that it had engaged itself in carrying on any of the several businesses referred to in sub-section (2). In that connection, it is important to note that under sub-section (2), in the context of cooperative society, Parliament has stipulated that the society must be engaged in carrying on the business of banking or providing credit facilities to its members. Therefore, in each case, the Tribunal was required to examine the memorandum of association, the articles of association, the returns of income filed with the Department, the status of business indicated in such returns, etc. This exercise had not been undertaken at all." xx xx 35. Eighthly, sub-clause (d) also points in the same direction, in that interest or dividend income derived by a co-operative society from investments with other co-operative societies, are also entitled to deduct the whole of such income, the object of the provision being furtherance of the co-operative movement as a whole. 36. Coming to the provisions of section 80P(4), it is important to advert to speech of the Finance Minister dated 28-2-2006, which reflects the need for introducing section 80P(4). Shri P. Chidambaram specifically stated: "166. Cooperative Banks, like any other bank, are lending institutions and should pay tax on their profits. Primary Agricultural Credit Societies (PACS) and Primary Cooperative Agricultural and & 3433/Mum/2024 Assessment Years 2018-19, 2020-2021 Rural Development Banks (PCARDB) stand on a special footing and will continue to be exempt from tax under section 80P of the Income-tax Act. However, I propose to exclude all other cooperative banks from the scope of that section."
Likewise, a Circular dated 28-12-2006, containing explanatory notes on provisions contained in the Finance Act, 2006, is also important, and reads as follows: "Withdrawal of tax benefits available to certain cooperative banks ** ** ** 22.2 The cooperative banks are functioning at par with other commercial banks, which do not enjoy any tax benefit. Therefore section 80P has been amended and a new sub-section (4) has been inserted to provide that the provisions of the said section shall not apply in relation to any cooperative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. The expressions 'co-operative bank', 'primary agricultural credit society' and 'primary co- operative agricultural and rural development bank' have also been defined to lend clarity to them."
A clarification by the CBDT, in a letter dated 9-5-2008, is also important, and states as follows: "Subject: Clarification regarding admissibility of deduction under section 80P of the Income-tax Act, 1961. ** ** ** 2. In this regard, I have been directed to state that sub-section (4) of section 80P provides that deduction under the said section shall not be allowable to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. For the purpose of the said sub- section, co-operative bank shall have the meaning assigned to it in part V of the Banking Regulation Act, 1949.
In part V of the Banking Regulation Act, "Co-operative Bank" means a State Co-operative bank, a Central Co- operative Bank and a primary Co-operative bank.
4. Thus, if the Delhi Co-op Urban T & C Society Ltd. does not fall within the meaning of "Co-operative Bank" as defined in part V of the Banking Regulation Act, 1949, sub-section(4) of section 80P will not apply in this case.
5. Issued with the approval of Chairman, Central Board of Direct Taxes."
The above material would clearly indicate that the limited object of section 80P(4) is to exclude co-operative banks that function at par with & 3433/Mum/2024 Assessment Years 2018-19, 2020-2021 other commercial banks i.e. which lend money to members of the public. Thus, if the Banking Regulation Act, 1949 is now to be seen, what is clear from section 3 read with section 56 is that a primary co- operative bank cannot be a primary agricultural credit society, as such co-operative bank must be engaged in the business of banking as defined by section 5(b) of the Banking Regulation Act, 1949, which means the accepting, for the purpose of lending or investment, of deposits of money from the public. Likewise, under section 22(1)(b) of the Banking Regulation Act, 1949 as applicable to co-operative societies, no co-operative society shall carry on banking business in India, unless it is a co-operative bank and holds a licence issued in that behalf by the RBI. As opposed to this, a primary agricultural credit society is a co- operative society, the primary object of which is to provide financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities.
As a matter of fact, some primary agricultural credit societies applied for a banking licence to the RBI, as their bye-laws also contain as one of the objects of the Society the carrying on of the business of banking. This was turned down by the RBI in a letter dated 25-10- 2013 as follows: "Application for license Please refer to your application dated April 10, 2013 requesting for a banking license. On a scrutiny of the application, we observe that you are registered as a Primary Agricultural Credit Society (PACS). In this connection, we have advised RCS vide letter dated UBD (T) No. 401/10.00/16A/2013-14 dated October 18, 2013 that in terms of Section 3 of the Banking Regulation Act, 1949 (AACS), PACS are not entitled for obtaining a banking license. Hence, your society does not come under the purview of Reserve Bank of India. RCS will issue the necessary guidelines in this regard xx xx 45. To sum up, therefore, the ratio decidendi of Citizen Co- operative Society Ltd. (supra), must be given effect to. Section 80P of the IT Act, being a benevolent provision enacted by Parliament to encourage and promote the credit of the co-operative sector in general must be read liberally and reasonably, and if there is ambiguity, in & 3433/Mum/2024 Assessment Years 2018-19, 2020-2021
favour of the assessee. A deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication, as is sought to be done by the Revenue in the present case by adding the word "agriculture" into section 80P(2)(a)(i) when it is not there. Further, section 80P(4) is to be read as a proviso, which proviso now specifically excludes co-operative banks which are co- operative societies engaged in banking business i.e. engaged in lending money to members of the public, which have a licence in this behalf from the RBI. Judged by this touchstone, it is clear that the impugned Full Bench judgment is wholly incorrect in its reading of Citizen Cooperative Society Ltd. (supra). Clearly, therefore, once section 80P(4) is out of harm's way, all the assessees in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i), notwithstanding that they may also be giving loans to their members which are not related to agriculture. Also, in case it is found that there are instances of loans being given to non-members, profits attributable to such loans obviously cannot be deducted.” (Emphasis Supplied)
On perusal of the above extract of the judgment in the case of Mavilayi Service Co-operative Bank Ltd (supra), it is clear that the provision of Section 80P(4) are attracted only in case of co-operative society holding a banking license issued by the Reserve Bank of India (RBI). The Assessee is not registered with RBI under Banking Regulation Act, 1949 and does not hold any license issued by RBI. Accordingly, we hold that provisions of Section 80P(4) are not attached in the case of the Assessee and that Assessee’s claim for deduction under Section 80P(2)(d) of the Act cannot be denied on account of applicability of Section 80P(4) of the Act. Identical view has been taken by the Hon’ble Supreme Court in the case of Pr.CIT-17, Mumbai Vs. M/s. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd.: Civil Appeal No.8719/2022 which was followed by the CIT(A).
During the course of hearing it was contended on behalf of the & 3433/Mum/2024 Assessment Years 2018-19, 2020-2021
Revenue is that (a) the interest/dividend income is in the nature of ‘Income from Other Sources’ and (b) a co-operative bank is not a co- operative society, and therefore, deduction under Section 80P(2)(d) of the Act would not be available in respect of interest/dividend income received from a co-operative bank. We do not find any merit in the aforesaid contentions of the Revenue in view of the following. The judgment of the Hon’ble Supreme Court in the case of Totgars Cooperative Sale Society Ltd. vs. ITO (2010) 322 ITR 283 (SC), on which reliance was placed by the Revenue, was rendered in the context of Section 80P(2)(a) of the Act which uses the expression ‘the whole of the amount of profits and gains of business attributable to any one or more of such activities’, whereas in Section 80P(2)(d) of the Act expression used is ‘any income by way of interest or dividend’. Thus, the interest income derived by a co-operative society from a co- operative bank would continue to be eligible for deduction under Section 80P(2)(d) of the Act irrespective of the fact that such interest income is in the nature of ‘profits and gains of business’ or ‘income from other sources’ as Section 80P(2)(d) uses the expression ‘any income’ and not ‘profits & gains of business’. Further, the Impact of insertion of Section 80P(4) of the Act is that a co-operative bank would no more be entitled for claim of deduction under Section 80P of the Act. However, a co-operative society would be able to claim deduction under Section 80P(2)(d) of the Act in respect of interest/dividend income from investment in a co-operative bank as the same continues to be a co-operative society. Identical view was taken by the Mumbai Bench of the Tribunal in the case of Reserve Bank Staff and Officers Co-operative Credit Society Ltd.: to 3118/Mum/2023 on which reliance was placed by the CIT(A).
We note that the CIT(A) has allowed the appeal of the Assessee holding as under:
& 3433/Mum/2024 Assessment Years 2018-19, 2020-2021
“7.7 Subsequently, the Hon'ble Supreme Court, Civil Appellate Jurisdiction in Civil Appeal No.8719/2022, in the case of The Pr.CIT-17, Mumbai Vs. M/s. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd. held as under: "Feeling aggrieved and dissatisfied with the impugned order dated 14-10-2019 passed by the High Court of Judicature at Bombay in by which the High Court has dismissed the said appeal preferred by the Revenue, relying upon its earlier decision in the case of M/s. Quepem Urban Co- operative Credit Society Ltd. Vs. Assistant Commissioner of Income Tax, 377 ITR 272, the Revenue has preferred the present appeal. The High Court considered the following question of law- "Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified as claimed by the assessee on the ground that the assessee, a co-operative credit society and is not a bank for the purpose of Section 80P(4) of the Act?" Apart from the fact that against the relied upon decision in the case of M/s. Quepem Urban Co-operative Credit Society Ltd (supra), the Special Leave Petition has been dismissed, having leaned counsel appearing on behalf of the respective parties, the issue involved in the present appeal is squarely covered against the Revenue in view of the decision of this Court in Mavilayi Service Cooperative Bank Limited and Others Vs. Commissioner of Income Tax Calicut and Another (2021) 7 SCC 90 This Court, in the aforesaid decision has specifically observed and held that primary Agricultural Credit Societies cannot be termed as Co- operative Banks under the Banking Regulation Act and, therefore, such credit societies shall be entitled to exemption under Section 80P)(2) of the Income Tax Act, 1961 …………, learned counsel appearing on behalf of the appellant/ Revenue has tried to submit that the respondent/Assessee will fall under the definition of Co-operative Bank as their activity is to give credit/loan. However, it is required to be noted that merely giving credit to its members only cannot be said to be the Co-operative Banks/Banks under the Banking Regulation Act. The banking activities under the Banking Regulation Act are altogether different activities There is a vast 12 & 3433/Mum/2024 Assessment Years 2018-19, 2020-2021 difference between the credit societies giving credit to their own members only and the Banks providing banking services including the credit to the public at large also There are concurrent findings recorded by CIT(A), ITAT and the High Court that the respondent Assessee cannot be termed as Banks/Cooperative Banks and that being a credit society, they are entitled to exemption under Section 80P(2) of the Income Tax Act Such finding of fact is not required to be interfered with by this Court in exercise of powers under Article 136 of the Constitution of India. Even otherwise, on merits also and taking into consideration the CBDT Circulars and even the definition of Bank under the Banking Regulation Act, the respondent/Assessee cannot be said to be Co- operative Bank Bank and therefore, Section 80P(4) shall not be applicable and that the respondent Assessee shall be entitled to exemption/benefit under Section 80P(2) of the Income Tax Act. In view of the above and for the reasons stated hereinabove, the present appeal deserves to be dismissed and is accordingly dismissed, answering the question against the Revenue and in favour of the Assessee.” 7.8 Respectfully following the Hon'ble Supreme Court judgement to the appellant's case as the facts of appellant case is similar and therefore covered by the Hon'ble Supreme Court judgement, it is held that the appellant registered under Maharastra Cooperative Society Act, 1960 is eligible to claim exemption u/s. 80P of the I.T. Act. 7.9 Further, with respect to the grounds of appeal claiming deduction u/s. 80P towards its interest income earned from the Bank (Cooperative bank), reliance is also placed on the judgement in the case of Reserve Bank Staff and Officers Co-operative Credit Society Ltd. by the Hon'ble ITAT 'D' Bench Mumbai, vide to 3118/Mum/2023 wherein at para 9 and 10, it is held that:
09. Even on the merits as the assessee is a co-operative society engaged in carrying on the business of providing credit facilities to its members. The whole of the amount profits and gains of such business attributable to such activities is deductible under & 3433/Mum/2024 Assessment Years 2018-19, 2020-2021 Section 80P(2)(a) of the Act. Even otherwise, in respect of any income by way of interest or dividend derived by the cooperative society from its investment with any other cooperative society is also allowable as deduction fully under Section 80P(2)(d) of the Act, the facts are clear that assessee is a co-operative society and co-operative banks are also cooperative societies. The provisions of Section 80P (4) of the Act specifically denies deduction only to co-operative banks. The assessee is admittedly not a co-operative bank. The learned Assessing Officer instead of treating the assessee as credit cooperative society considered the assessee as primary cooperative bank without any basis. In view of the above facts, we hold that interest income earned by the assessee on fixed deposits with the co-operative banks are eligible for deduction under Section 80P(2)(d) of the Act.
10. We also find that honourable supreme court in case of Kerala State Co-Operative Agricultural & Rural Development Bank Ltd. [2023] 154 taxmann.com 305 (SC) where in decision of Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 123 taxmann.com 161/279 Taxman 75 has also allowed the claim of assesses u/s 80P (2)(d) of the Act. Thus, now the issue is squarely covered in favour of the assessee." 7.10 Applying the ratio of the above relied upon Honble ITAT Mumbai bench judgement to the case of the appellant, wherein the appellant has also earned interest income and dividend amounting to Rs.2,19,69,175/-(FDR interest Rs.1,13,83,749/-, SB &CD interest Rs. 18,95,476/- and dividend Rs.86,89,950/-) from investment in Thane District Central Cooperative Bank Ltd. being earned from 'District Central Cooperative Bank Ltd.' which are also treated as Cooperative Society is eligible to claim deduction u/s.80P(2)(d) of the I.T. Act. As this issue is identical to that one decided by Hon' ITAT 'D' Bench, Mumbai in the case of Reserve Bank staff and Officers Co-operative Credit Society Ltd, referred above, it is squarely covered by the decision of the Hon’ble ITAT Mumbai Bench. 7.11 Respectfully following the Hon'ble ITAT, Mumbai decision in the case of Reserve Bank staff and Officers Co-operative Credit Society Ltd., this ground of appeal of the appellant that the interest income & 3433/Mum/2024 Assessment Years 2018-19, 2020-2021 and dividend earned from Cooperative Bank deductible u/s 20 80P(2)(d) of the I.T. Act is fully allowed. Accordingly, AO is directed to delete the addition of Rs 2,19,69,175/- made u/s 56 of the LT. Act. This ground is allowed.”
14. On perusal of the above it can be seen that the CIT(A) has accepted Assessee’s claim of deduction under Section 80P(2)(d) of the Act by following judgment of the Hon’ble Supreme Court in the case of The Pr.CIT-17, Mumbai Vs. M/s. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd. (supra) and the decision of the Tribunal in the case of Reserve Bank Staff and Officers Co-operative Credit Society Ltd. (supra). Therefore, we do not find any infirmity in the order passed by the CIT(A). Accordingly, the all the grounds raised by the Revenue are dismissed.
(Assessment Year: 2020-2021)
We would now take up appeal for the Assessment Year 2020-2021 which has been preferred by the Revenue challenging the order, dated 30/04/2024, passed by the CIT(A) whereby the CIT(A) has allowed the appeal of the Assessee against the Assessment Order, dated 23/09/2022, passed under Section 143(3) read with section 144B of the Act.
We note that grounds identical to appeal for the Assessment Year 2018-19 have been raised in the appeal for the Assessment Year 2020-2021 challenging the order of CIT(A) allowing the Assessee’s claim for deduction under Section 80P(2)(d) of the Act in respect of interest/dividend income of INR 2,56,48,714/- received by the Assessee from Co-operative Banks. Both the sides agreed that there being no change in facts and circumstances of the case and the applicable legal position. Therefore, our reasoning, findings and adjudication in appeal for the Assessment Year 2018-19 shall apply & 3433/Mum/2024 Assessment Years 2018-19, 2020-2021
mutatis mutandis to corresponding grounds raised in appeal for the Assessment Year 2020-2021. Accordingly, in view of paragraph 8 to 14 above, we do not find any infirmity in the order passed by the CIT(A). Accordingly, all the ground raised by the Revenue in appeal for the Assessment Year 2020-21 are dismissed.
In result, appeal pertaining to the Assessment Year 2018-19 [ITA No. 3434/Mum/2023] and Assessment Year 2020-21 [ITA No. 3433/Mum/2023] preferred by the Revenue are dismissed.
Order pronounced on 21.08.2024.