MAKER TOWER F PREMISES CO-OP SOC. LTD.,MUMBAI vs. ASSISTANT DIRECTOR OF INCOME TAX - CPC, BENGALURU

Maker Tower F Premises Co-Op Soc, Ltd. ITA no.1362/Mum/2024 on saving accounts maintained with the Co-operative Banks. Agreeing with the submissions of the assessee, the learned JCIT(A), vide impugned order, held that the Co-operative Bank is also the Co-operative Society registered under the Co-operative Societies Act, 1972 or under any other law in force in the State Government/Central Government. Accordingly, the learned JCIT(A), held that every Co-operative Bank is a Co-operative Society for the purpose of section 80P(2)(d) of the Act and the Co-operative Banks from which the assessee has received interest are also Co-operative Societies for the purpose of section 80P(2)(d) of the Act. However, the learned JCIT(A), only granted relief to the assessee under section 80P(2)(d) of the Act in respect of interest income of Rs.12,34,905/- received from fixed deposits in the Co-operative Banks, and disallowed the interest income of Rs.4,84,525/- received on saving accounts maintained with the Co-operative Bank. As per the learned JCIT(A), the provisions of section 80P(2)(d) of the Act are only applicable in respect of interest income received on investments made with the Co-operative Banks and the interest on saving bank accounts maintained with the Co-operative Banks cannot be considered to be interest on investment with the Co-operative Banks. Thus, it was held that the amount kept in the saving accounts maintained with the Co-operative Banks is not an investment for the purpose of section 80P(2)(d) of the Act. Being aggrieved by the disallowance upheld by the learned JCIT(A), the assessee is in appeal before us.

Maker Tower F Premises Co-Op Soc, Ltd. ITA no.1362/Mum/2024 respect to interest income total amounting to Rs.17,19,430/- received from the Co-operative Banks. Vide intimation issued under section 143(1) of the Act, the entire deduction claimed under section 80P(2)(d) of the Act was disallowed, however, the learned JCIT(A) restricted the disallowance to Rs.4,84,525/- being the interest income received on saving accounts maintained with the Co-operative Banks. As per the learned JCIT(A), section 80P(2)(d) of the Act only covers the interest received from investments with the Co-operative Societies, and interest income from saving accounts is not an investment for the purpose of section 80P(2)(d) of the Act.

“80P. Deduction in respect of income of co-operative societies. (1) ...... (2) The sums referred to in sub-section (1) shall be the following, namely:– (a) ..... (b) ..... (c) ..... (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;”

Maker Tower F Premises Co-Op Soc, Ltd. ITA no.1362/Mum/2024 investments, and (ii) such investments should be with any other Co-operative Society.

Maker Tower F Premises Co-Op Soc, Ltd. ITA no.1362/Mum/2024 has not been qualified to be only the investment in the fixed deposits. Thus, from the provisions of section 80P(2)(d) of the Act, it is evident that the same includes interest derived from all investments with any other Co-operative Society, including Co-operative Banks. We find that while dealing with a similar issue, the Co-ordinate Bench of the Tribunal in Punjab State Federation of Co- operative House Building Societies Ltd Vs. ITO, [1982] 2 ITD 617 (Chd.), after considering the meaning of the word “investment” held that the section 80P(2)(d) of the Act also covers interest income from saving accounts. The relevant findings of the Co-ordinate Bench, in the aforesaid decision, are reproduced as follows: -

“4. We have heard the parties and we are inclined to accept the claim of the assessee for the following reasons. 5. The fact that the assessee as well as the bank with which the deposits were placed are co-operative societies is not controverted. Insofar as the meaning of the word 'investment' is concerned, we do not have any help from the definitions given in the statute itself. The learned counsel for the assessee has relied upon the meaning of the word 'investment' found in the Chambers Twentieth Century Dictionary as any placing of money to secure income or profit. We also find that the word 'invest' (in the invest-ment clause in a will) has been interpreted to mean, inter alia, to apply money in the purchase of some property from which interest or profile is expected, and which property is purchased in order to be held for the sake of the income which it will yield : Stroud's Dictionary, 4th edition, p. 1419. 6. The savings bank account which the assessee had opened has to be understood in contrast to what the assessee could have done by placing the money in the current account. In the savings bank account, there are restrictions on withdrawals. For example, rule 6 of the Savings Bank Rule regarding deposits, stipulates that a depositor may withdraw money from his account not more than 12 times a month. The very name of the account is savings account and, therefore, by implication it is for the pur-pose of earning interest on savings. In our opinion. the narrow interpreta-tion given by the authorities below to deny the assessee deduction under section 80P(2)(d) is not justified. We, therefore, reverse their orders and direct that the said amount of interest be treated as exempt under section 8OP(2)(d) for the year under appeal.”

Maker Tower F Premises Co-Op Soc, Ltd. ITA no.1362/Mum/2024 11. We find that the learned JCIT(A), though referred to the aforesaid decision, however, disregarded the same on the basis that the same is very old, without distinguishing the same on facts or on law. Further, we find no merits in the reliance placed by the learned JCIT(A) upon the provisions of section 194A of the Act, in order to hold that the provisions of the Act differentiate interest on investment and interest on saving accounts, as the provisions of section 194A of the Act does not create any such distinction, and requires TDS to be deducted at the time of payment/credit of interest to the account of the payee, provided other conditions as laid down in the section are satisfied. Therefore, we are of the considered view that the assessee is also entitled to claim deduction under section 80P(2)(d) of the Act on the interest income received on saving accounts maintained with the Co-operative Banks. Accordingly, to this extent the impugned order passed by the learned JCIT(A) is set aside, and the Assessing Officer (“AO”) is directed to allow deduction of Rs.4,84,525/- being the interest income received on saving accounts maintained with the Co-operative Banks under section 80P(2)(d) of the Act. As a result, the sole ground raised by the assessee is allowed.

Sd/- Sd/- B.R. BASKARAN SANDEEP SINGH KARHAIL ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 25/07/2024

Vijay Pal Singh, (Sr. PS)

Maker Tower F Premises Co-Op Soc, Ltd. ITA no.1362/Mum/2024

Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. True Copy By Order

Assistant Registrar ITAT, Mumbai