SHRIRAM SAHAKARI PATPEDHI LIMITED,MUMBAI vs. ITO-20(3)(3), MUMBAI

3 Shriram Sahakari Patpedhi Limited 5. The appellant craves leave to add, alter, modify, amend, or substitute all or any of the above grounds of appeal

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3. The facts of the case, in brief, as per the statement of notice submitted by the appellant that the appellant i.e. Shriram Sahakari Patpedhi Limited is a Co-Operative Credit Society registered under Maharashtra Co- Operative Society Act, 1960 and is wholly and exclusively engaged in providing credit facilities to its members and accepting various types of deposits from its members. No business is transacted with person other than the member of the society. The appellant society is managed, administered and governed as per its bye laws, the MCS Act 1960 and rules framed under the Act. The Banking Regulation Act 1949 is not applicable to it. As such subsection 4 of section 80P is not applicable to it and the whole of the income of appellant society is fully exempt u/s. 80P of the Income Tax Act, 1961. The return of income for the assessment year 2014-15 was e-filed by the appellant society on 29/10/2014 declaring this total income as NIL after claimed of deduction u/s. 80P of the Act for whole of its income of Rs.17,94,641/- derived from its business, though, has accepted the total income of the appellant as „NIL‟. However, the Ld. AO in its impugned order passed u/s. 143(3) of the Income Tax Act disallowed the deduction claimed u/s. 80P (2)(d) for gross amount of interest received from Co-operative Bank at 4 Shriram Sahakari Patpedhi Limited Rs.38,72,434/- and added to the total income of the appellant treating it as “income from other sources.”

4. Aggrieved by the order of the Ld. AO, the appellant filed appeal before the Ld. CIT (A). The Ld. CIT(A) partly allowed its appeal vide the impugned order and disallowed the claim of deduction made u/s. 80P (2) (d) for proportionate interest received at Rs.4,64,837/-. The Ld. CIT(A) while disallowing proportionate interest income, he first calculated proportionate interest income of Rs.27,83,460/- and then disallowed the proportionate interest income of Rs.4,64,837/-. The details of the conclusion of proportionate interest income has been given in the body of the Ld. CIT (A).

5. Aggrieved by the order of the Ld. CIT (A), this appeal has been preferred before us. In its written submission, the appellant contented that interest income received from statutory and temporary investment is not income from other sources, but the same is attributable to business income. The above interest income is received during the course of business and the same is attributable to carrying on the business of providing credit facilities to its members and therefore the same is liable to be deducted u/s. 80P (2)(a)(i) as business income.

6. It was further submitted by the appellant that otherwise also interest received from investments in other Co-Operative Societies (Co-Operative Banks) is eligible for deduction u/s. 80P (2) (d) of the Income Tax Act 5 ITA No.615/M/2024 Shriram Sahakari Patpedhi Limited 1961. The above deduction u/s. 80P also has been upheld by Hon'ble Supreme Court, Bombay High Court, various ITAT‟s including Mumbai ITAT, Ld. CIT(A) the details of which are given is under:- “A. Hon. Supreme Court:

1. 1. CIVIL APPEAL NO.8719/2022 IN CASE OF The PR. Commissioner of Income Tax-17, Mumbai vs. M/s. Annasaheb Patil Mathadi Kamgar Sahakari Patpedhi Maryadit. Order dr.20.04.2023. (Copy of the order is attached herewith).

2. The Mavilayi Service Co-Op. Bank Ltd., V/S CIT, Calicut. Civil Appeal No.8314 of 2019. B. Hon. Mumbai High Court: Jurisdictional High Court :- a. Commissioner of Income Tax-22 Vs. Shri Kulswami Co-op. Credit society Ltd.: b. M/s. Quepem Urban Co-Operative Credit Society Ltd. vs. Assistant commissioner of Income Tax, 377 ITR 272 and the decision in Principal Commissioner of Income Tax, Goa vs. Goa PWD Staff Co-op. Credit Society Ltd. (2016) 242 Taxman 422. C. Some ITAT Decisions allowing Deduction u/s 80P(2)(d) to Co- Operative Societies:

6 Shriram Sahakari Patpedhi Limited i. Vitthal Co-Operative Credit Society Ltd vs. CIT(A)-26, ITAT, Mumbai Bench 'SMC' Mumbai, ITA No.216/MUM/2015, ITAT vide its order dt.30.06.2016 as under: ii. Marathwada Krishi Vidyapeeth Karmachari Sahkari Patsanstha Ltd vs. PCIT (ITAT Pune) iii. Solitaire Co-Operative Hosing Society Ltd. vs. PCIT (2019) 76 ITR 59(SN) (MUM) (Trib.) iv. Lands' End Co-Operative Housing Society Ltd. vs. ITO in ITA No.3566/MUM/2014 dt. 15.01.2016. v. See Green Co-Operative Housing Society vs. ITO-ITA No. 1343/MUM/2017 dt.31.03.2017. vi. Rushi Heights co-operative Housing Society Ltd, Mumbai-NFAC order dt.09.09.2022 for AY 2017-18. Findings in the Rushi Heights Co-Op. Hsg. society case are as under: Identical issues came up before many Courts/ITATs and the recent decisions are all in favour of the appellant. The decisions cited by the appellant including the decisions of jurisdictional ITAT support the appellant's claim for deduction u/s 80P(2)(d) against interest earned from co-operative banks. Further, the Mumbai ITAT, in the above decisions various other reference of the other judicial judgment are also mentioned, particularly in the cases of Lands' End Co-operative Housing Society Ltd vs. ITO, in ITA No. 3566/Mum/2014 dated 15-01-2016 and Sea Green co-op. Hsg. Society Ld 7 ITA No.615/M/2024 Shriram Sahakari Patpedhi Limited vs. ITO-ITA No. 343/MUM/2017 dated 31-03-2017, held that deduction u/s. 80P(2)(d) is allowable with respect to interest earned from co-operative banks. The ITAT in the case of Lands' End (supra) held that for claiming deduction u/s.80P(2)(d), the co-operative society must have Income of interest and dividend on investments with Other co-operative society and it may or may not be engaged in the banking for providing credit facilities to its members and the head under which the income is assessable is not material for the claim of deduction under this section. This view continued to be held by 'ITAT Mumbai, Pune & Jaipur Benches in a number of recent decisions. Even ITAT Surat Bench, in the case of Bardoli Vibhag Gram Vikas Co-op. Credit Society Ltd vs. Pr. CIT-2, Surat reported at [2021] 127 taxmann.com 334, following the decision of Gujarat HC in the case of Surat Vankar Sahkari Sangh vs. ACIT [2016] 72 taxmann.com 169, held that a co- operative society is eligible for deduction in respect of interest received from a co-operative bank. The same ratio applies to even dividend income received from a co- operative bank. D. Some latest NFAC decisions allowing claim of the assessee u/s 80P(2)(a)(i) for whole of the income including interest received on investments with co-operative banks:

8 Shriram Sahakari Patpedhi Limited 1. BSNL Employees Co-Operative Credit Society Ltd, Mumbai: AY Date of Order DIN and Order No. 2018-19 31.07.2023 ITBA/NFAC/S/250/2023- 24/1054728604(1) 2020-21 31.07.2023 ITBA/NFAC/S/250/2023- 24/1054729186(1)

9 Shriram Sahakari Patpedhi Limited 8. We have considered the above submissions and the legal position on this issue and it is found that the coordinate benches of Hon'ble ITAT (Mumbai) have already considered this issue in detail and have come to the conclusion that the income, if any, earned by way of interest from the investments made with any other cooperative bank is eligible for deduction u/s. 80P (2) (d) of the Act. Thus, respectfully following the decision of the coordinate bench of ITAT (Mumbai), we also allow the claim of deduction made u/s. 80P (2) (d) of the Act.