BOB EMPL MAYURESH CO-OP. HSG.SOC.LTD,MUMBAI vs. ITO WARD 41(4)(1), MUMBAI

The learned Commissioner of Income Tax (Appeals) has erred in making disallowance of claim of deduction under section 80P(2)(d) of Rs. 4,58,251/- in respect of income earned by the Appellant from deposit kept with co-operative bank in the facts and circumstances of the Appellant's case. The learned Commissioner of Income Tax (Appeals) ought to have allowed the various contentions of appellant under the facts and circumstances of the case The Appellant craves leave to add, to alter or to amend all or any of the grounds above at any time before or during the hearing of the above appeal.”

The facts in brief are that return of income claiming deduction u/s. 80P(2)(d) of the Act of Rs.4,58,251/- in respect of interest earned on deposit kept with the co-operative bank was filed on 01.10.2021. The CPC Bangalore has processed this return u/s. 143(1) of the Act on 19.10.2022 and disallowed the claim of deduction u/s. 80P(2)(d) of the Act.

The assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) held that introduction of sub-section 4 was to exclude the co-operative banks from availing benefit of deduction u/s. 80P and s. 80P(4) is in the nature of proviso to the main provision contained in s. 80P(1) & (2),consequently, the exclusion of co-operative banks extends to s. 80P(2)(d) as well. The ld. CIT(A) also stated that the income by way of interest from deposit or investment of surplus fund does not change the character irrespective of the fact that whether the said income is earned from a scheduled bank or a co-operative bank and thus, the clause (d) of s. 80P(2) of the Act would not apply in the facts and circumstances of the present case.

Heard both the sides and perused the material on record. The assessee is a co-operative housing society providing various services related to upkeep and maintenance of property for an on behalf of its 3 BOB Empl Mayuresh Co-operative Housing Society Ltd. v. ITO members and it is registered under the Maharashtra Co-operative Societies Act, 1960, During the year under consideration the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) held that co-operative society has received interest income from Saraswat Co-operative Bank Ltd. Mumbai of Rs.6,16,256/-. The ld. CIT(A) was of the view that the benefit of s. 80P of the Act cannot be allowed in respect of income earned by way of interest or dividend from that other co-operative society under the name ‘Co-operative Bank’.

We have considered that in various decisions of the ITAT Mumbai Benches wherein it was held that the claim of deduction u/s. 80P(2)(d) in respect of interest earned from investments made in the co-operative bank is an allowable deduction. Some of the decisions of the ITAT where the claim of deduction u/s. 80P(2)(d) was allowed on the interest earned from deposit with co-operative bank are as under: - (i) Mittal Park Cooperative Housing Society Ltd. Vs. Asst. Director of Income Tax, Mum, W(125) (95) CPC, Bengaluru, (Ld. ADIT). (ii) Mittal Park Cooperative Housing Society Vs. ITO, Ward 25 (3)(1), Mumbai. (iii) Kaliandas Udyog Bhavan Premises Coop Society Ltd. Vs ITO 21(1)(2). (iv) Aqua Cooperative Housing Society Limited Vs ITO 21(1)(2). (v) Sea Green Cooperative Housing Society Ltd. Vs. ITO 21(3)(2). (vi) Lands’ End Cooperative Housing Society Ltd. Vs. ΙΤΟ 16(1)(3). (vii) The Nutan Laxmi Chs Ltd. Mumbai Vs. ITO 19(2)(4). (viii) M/s Palmera Cooperative Housing Society Ltd. Vs. ACIT, 19(2).

In the case of Kaliandas Udyog Bhavan Premises Co-op. Society Ltd. vs. ITO vide dated 25.04.2018 it is held that though the cooperative bank pursuant to the insertion of subsection (4) of 4 BOB Empl Mayuresh Co-operative Housing Society Ltd. v. ITO Sec. 80P is no more be entitled for claim of deduction u/s 80P of the Act, but however, as a cooperative bank continued to be a cooperative society registered under the Cooperative Society Act, therefore, the interest income earned by a cooperative society from its investment held that cooperative bank would be entitled for claim of deduction u/s 80P(2)(d), therefore, we direct the AO to allow the claim of deduction to the assessee in respect of interest earned from investment made with the cooperative bank, Therefore, the appeal of the assessee is allowed.

In the result, the appeal of the assessee is allowed.