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Facts
The assessee, a Co-operative Housing Society, filed its return of income claiming a deduction under Section 80P(2)(d) for interest earned from investments. The CPC disallowed this deduction, and the CIT(A) upheld the disallowance. The assessee appealed to the ITAT.
Held
The ITAT noted that previous decisions of the ITAT Mumbai Benches have allowed deduction under Section 80P(2)(d) for interest earned from investments in co-operative banks. The Tribunal referred to the case of Kaliandas Udyog Bhavan Premises Co-op. Society Ltd. where it was held that such interest income is eligible for deduction.
Key Issues
Whether interest income earned by a co-operative housing society from investments in other co-operative societies is eligible for deduction under Section 80P(2)(d) of the Income Tax Act.
Sections Cited
143(1), 80P, 80P(2)(d)
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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI AMARJIT SINGH,
आदेश / O R D E R
PER AMARJIT SINGH, AM:
This appeal filed by the assessee is directed against the order passed by the CIT(A), Gwalior, which in turn arises from the assessment order passed by the A.O u/s 143(1) of the Income Tax Act, 1961 (the Act), dated 25.11.2021 for A.Y. 2020-21. The assessee has assailed the impugned order on the following grounds before us: “Being aggrieved by the orders of the Centralized Processing Centre (CPC), Bengaluru and that of learned Joint Commissioner of Income- tax (Appeal), this appeal petition is filed on the following amongst other grounds of appeal, which it is prayed may be considered without prejudice to one another.
Monarch Co-operative Housing Society Ltd. v. ASST. DIT
On the facts, and in circumstances of the case, and in law, learned Joint Commissioner of Income-tax (Appeal) erred in upholding order of the Centralized Processing Centre (CPC). Bengaluru in disallowing the claim of deduction under Section 80P of the Income Tax Act, 1961 by without assigning any reason.
2. On the facts, and in circumstances of the case, and in law, learned Joint Commissioner of Income-tax (Appeal) erred in not appreciating that adjustment made by Centralized Processing Centre (CPC), Bengaluru with respect to denial of deduction under section 80P did not qualify to be an incorrect claim that was apparent from any information in the return in terms of provisions of section 143 (1) (a).
On the facts, and in circumstances of the case, and in law, learned Joint Commissioner of Income-tax (Appeal) erred in coming to unilateral conclusion that, a co-operative society neither can use word 'bank' in its name, nor it can involve in business of banking with non-members without getting a license from the RBI, and therefore any interest received from such a co- operative society is not eligible for deduction under section 80P (2) (d).”
The fact in brief is that the assessee, a Co-operative Housing Society, filed its return of income on 24th November, 2020, which was filed before the extended due date for filing of return of income, that was 15th February, 2021. The return filed was processed by CPC Bangalore u/s. 143(1) of the Act and deduction of Rs.1,96,365/- claimed u/s. 80P(2)(d) of the Act was disallowed by the CPC.
3. Aggrieved the assessee filed appeal before the CIT(A) and the ld. CIT(A) has dismissed the appeal of the assessee.
Monarch Co-operative Housing Society Ltd. v. ASST. DIT
We have heard both the parties and perused the material on record. The assessee is a co-operative housing society and derived income from interest/dividend from investment in the other co-operative societies. 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 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
Monarch Co-operative Housing Society Ltd. v. ASST. DIT 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 assesse in respect of interest earned from investment made with the cooperative bank, Therefore, the appeal of the assesse is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 06.05.2024.
Sd/- Sd/- (VIKAS AWASTHY) (AMARJIT SINGH) Judicial Member Accountant Member Place: Mumbai Date: 06.05.2024 n.p आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent. 2. आयकर आयु�(अपील) / The CIT(A)- 3. आयकर आयु� / CIT 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण DR, 5. ITAT, Mumbai गाड� फाईल / Guard file. 6. स�ािपत �ित //True Copy// आदेशानुसार/ BY ORDER,