ITO 23(2)(3), MUMBAI vs. INDIRA RASHTRIYA KAMGAR SAHAKARI SOCIETY LTD, MUMBAI

अपीलाथ� क� ओर से /By Appellant : Shri R. K. Sahu, D.R. ��यथ� क� ओर से/By Respondent : Shri Subodh Ratnaparkhi, A.R. सुनवाई क� तार�ख/Date of Hearing : 09.06.2016 घोषणा क� तार�ख/Date of Pronouncement : 24.06.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: This appeal has been filed by Revenue against the order of Commissioner of Income-Tax (Appeals)-33, Mumbai, dated 07.02.2014 for A.Y. 2010-11 on following grounds:

A.Y. 10-11 [ITO vs. Indira Rashtriya Kamgar Sahakari Society Ltd.] Page 2 “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.71,99,690/- made by the A.O. without appreciating the fact brought out by the A.O. in the assessment order wherein the A.O. has discussed the facts in detail for denying the claim of deduction u/s80P(2) to the assessee.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the assessee claim of deduction u/s 80P(2)(d) without appreciating the fact that the funds invested in Fixed Deposits with co-operative banks on which the interest of Rs.71,99,690/- was earned by the assessee is not out of any funds contributed by the members of the society, thereby rendering it outside the purview of mutuality concept.”

2.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised on behalf of assessee and having considered the same, CIT(A) granted relief to the assessee.

2.2 Same has been opposed on behalf of Revenue before us inter alia submitting that CIT(A) erred in deleting the addition of Rs.71,99,690/- made by the Assessing Officer. According to ld. Departmental Representative, funds invested in fixed deposits with co-operative bank on which interest in question was earned by assessee is not out of any funds contributed by the members of the society, thereby rendering it outside the purview of mutuality concept. So, the order of CIT(A) be set aside and that of Assessing Officer re restored. On the other hand, ld. Authorized Representative supported the order of CIT(A).

2.3 After going through rival submissions and material on record, we are inclined to interfere with the order of CIT(A) because assessee is a co-operative society and had earned interest on deposits and investments made with other co- operative banks and hence it has claimed deduction u/s.80P(2)(d) of the Act. However, Assessing Officer went on the principle of mutuality and stated that interest on bank deposits amounting to Rs.71,99,690/- was out of the purview of Section 80P(2)(i)(a) of the Act and taxed the same as A.Y. 10-11 [ITO vs. Indira Rashtriya Kamgar Sahakari Society Ltd.] Page 4 assessee’s income. The cases of CIT vs. Common Affluent Treatment Plant (Thane Belapur) (2010) 328 ITR 362 and Bangalore Club vs. CIT (Civil Appeal No.124 of 2007) relied upon by Assessing Officer are based on principle of mutuality and in both these cases assesses are not co-operative societies. So, the ratio of the same is not applicable to the facts of the case. Taking all these facts and circumstances of the case, CIT(A) was justified in holding that assessee is entitled to deduction claimed by it u/s.80P(2)(d) of the Act in respect of any income by way of interest derived by it from its investments with any other co-operative society and directed to allow the same. This view is fortified by the decision of ITAT, Mumbai Bench in case of ACIT vs. Maharashtra State Co-op. Marketing Federation Ltd. (2007) 15 SOT 83 (Mum), wherein it was held that whole of income derived by way of interest or dividend by a co-operative society from its investments with any other co-operative society is deductible u/s.80P(2)(d) of the Act.

Pronounced in the open Court on this the 24th day of June, 2016.