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Facts
The assessee, a cooperative housing society, claimed deduction under Section 80P(2)(d) of the Income Tax Act on interest income earned from fixed deposits and savings accounts held with other cooperative banks. The assessing officer denied this deduction, a decision upheld by the lower authorities.
Held
The Tribunal held that cooperative banks are also cooperative societies engaged in banking business. Therefore, interest income earned by the assessee from such banks qualifies for deduction under Section 80P(2)(d). The Supreme Court's decision cited by the lower authorities pertained to Section 80P(2)(a) and was not applicable.
Key Issues
Whether interest income earned by a cooperative society from other cooperative banks is eligible for deduction under Section 80P(2)(d) of the Income Tax Act.
Sections Cited
Section 80P(2)(d), Section 143(1), Section 80P(2)(a), Section 2(29), Section 2(10)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “K (SMC
Before: SHRI PRASHANT MAHARISHI, AM & SHRI SUNIL KUMAR SINGH, JM
ITA number 2331 and 2332/MUM/2024 Assessment year 2020 – 21 and 2021 – 22 Mahim Davida cooperative housing society Ltd versus the income tax officer, Mumbai 1. These are the two appeals filed by the assessee for assessment year 2020 – 21 and 2021 – 22 against the order passed by the additional CIT (joint Commissioner of income tax (appeals) – 1, Lucknow (the learned CIT – A) dated 14/3/2024 for assessment year 2020 – 21 and dated 28/3/2024 for assessment year 2021 – 22 wherein the appeal filed by the assessee against the intimation passed under section 143 (1) of the income tax act, 1961 (the act) dated 25th number 2021 and 30 8 September 2022 by the central processing Centre Bangalore was dismissed.
For both the years the solitary issue involved in this appeal is that assessee is a cooperative housing society which has been denied deduction under section 80 P (2) (d) of the income tax act on interest income received by it from another cooperative banks who are in turn the cooperative societies. For assessment year 2020 – 21 such interest income is Rs. 174,100 and for assessment year 2021 – 22 is Rs. 130,752.
Assessee is a cooperative was in society wherein it has earned interest on fixed deposits on saving banks with citizen credit cooperative bank, Maharashtra state cooperative bank and Mumbai District cooperative bank. For assessment year 2020 – 21 such interest income is Rs. 174,100/– and for assessment year 2021 – 22 it is Rs. 130,752. When the assessee filed return of income, such deduction was claimed under section 80 P (2) (d) of the act. When the return was processed under section 143 (1) of the act, such deduction was denied for both the assessment years. Identically appeal was filed before the learned CIT – A which was dismissed on the ground that honourable Supreme Court in case of Totgar cooperative society Ltd versus ITO has held that assessee is not entitled to deduction under section 80 P (2) (a) of the act.
ITA number 2331 and 2332/MUM/2024 Assessment year 2020 – 21 and 2021 – 22 Mahim Davida cooperative housing society Ltd versus the income tax officer, Mumbai 4. We have heard the rival contentions. Undisputed fact shows that assessee is a cooperative was in society. It has placed fixed deposit receipts and savings bank balances with another cooperative banks. The investment of the assessee is in the form of fixed deposit receipts and savings bank deposits. The assessee has earned interest on such an investment. Section 80 P (1) provides that Where, in the case of an 5. assessee being a co-operative society, the 72gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub- section (2), in computing the total income of the assessee.
According to the provisions of section 80 P (2)(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co- operative society, the whole of such income.
According to section 2 (29) "co-operative society"97 means a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies.
According to section 2 (10) of the Maharashtra State cooperative societies act 1860 provides “Co-operative bank” means a Co-operative society which is doing the business of banking as defined in clause (b) of sub-sections (1) of section 5 of the Banking Companies Act, 1949 and includes any society which is functioning or is to function as an Agricultural and Rural Development Bank under Chapter XI; ITA number 2331 and 2332/MUM/2024 Assessment year 2020 – 21 and 2021 – 22 Mahim Davida cooperative housing society Ltd versus the income tax officer, Mumbai 9. Therefore, even the cooperative banks are also the cooperative societies which are doing the banking business. In view of this it cannot be said that the interest income earned by the assessee on account of fixed deposit receipt is in savings bank account is not received from a co-operative society. It may be an altogether another thing that such cooperative societies are carrying on the banking business. Therefore, these banks are accepting fixed deposit receipts from the assessee. In view of the above analysis, it is clear- cut that cooperative banks are also co-operative society and interest income earned by the assessee on fixed deposit as well as savings bank account is an investment income of the assessee and therefore it qualifies for deduction under section 80P (2) (d) of the act.
The decision of the honourable Supreme Court cited by the learned CIT – A relates to the deduction under section 80 P (2) (a) of the act and not under section 80 P (2) (d) of the act.
Number of decisions of the coordinate benches are cited wherein it has been held that a co-operative society is eligible for deduction of investment income if it is placed with other co-operative banks which is also a co-operative society.
The learned departmental representative has failed to show that the cooperative banks are not registered under the cooperative societies.
In view of the above facts the learned assessing officer is directed to grant deduction to the assessee under section 80 P (2) (d) of the act on interest on fixed deposit receipt and 4 ITA number 2331 and 2332/MUM/2024 Assessment year 2020 – 21 and 2021 – 22 Mahim Davida cooperative housing society Ltd versus the income tax officer, Mumbai savings bank account received by the assessee from the cooperative banks for both the years.
Thus, the orders of the learned lower authorities are reversed and appeal of the assessee for both the years are allowed.