THE HOOSEINI CO OPERATIVE CREDIT SOCIETY LTD,MUMBAI vs. ITO 15(1)(4), MUMBAI

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ITA 3556/MUM/2014Status: DisposedITAT Mumbai09 February 2016AY 2010-114 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that a co-operative society dealing primarily with its members is not a co-operative bank and is eligible for deduction under Section 80P. Interest income from fixed deposits should be treated as business income for allowing the deduction.

What were the facts?

The assessee, a Co-operative Society, claimed deduction under Section 80P. The AO rejected the claim, treating the assessee as a 'Co-operative Bank' and invoking Section 80P(4). The CIT(A) allowed the deduction.

What were the issues?

Whether a co-operative society is a co-operative bank for the purpose of Section 80P(4) and whether interest income from deposits is eligible for deduction under Section 80P.

Which sections of the Income-tax Act were involved?

Section 80P,Section 80P(4)

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Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Hearing: 9.2.2016Pronounced: 9.2.2016

Heard together (2 matters)

I.T.A. No.2965/Mum/ 2014
I.T.A. No.3556/Mum/ 2014

Read from the judgment's own cause title. This page is filed under one of them.

स्थधमी रेखध सं./जीआइआय सं./PAN. :AABAT4478P अऩीरधथी ओय से / Revenue by Shri B D Naik प्रत्मथी की ओय से/Assessee by Shri Vimal Punamiya सुनवधई की तधयीख / Date of Hearing : 9.2.2016 घोषणध की तधयीख /Date of Pronouncement: 9.2.2016 आदेश / O R D E R Per B R Baskaran, AM: These cross-appeals are directed against the order dated 24.2.2014 passed by the ld.CIT(A)-26, Mumbai and they relate to the assessment year 2010-11.

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2.

The assessee is a Co-operative Society and Registered under the Co- operative Societies Act, 1960. The object of the Society is to enable its members to sale their earning and to obtain loan from the Society.

3.

The issue contested by the revenue relates to the claim for deduction u/s 80P of the Act. The assessee claimed deduction u/s 80P((2)(a)(i) of the Act. The AO took the view that the assessee falls under the category of “Co-operative Bank” and accordingly by following the provisions of section 80P(4) rejected the claim for deduction u/s 80P of the Act. The ld. CIT(A), however, allowed the claim of the assessee and hence the revenue has filed this appeal before us.

4.

We have heard the parties on this issue and perused the record. The ld. AR placed reliance on the decision of the Hon’ble Bombay High Court in the case of Quepem Urban Co-operative Credit Society Ltd V/s ACIT reported in (2015) 377 ITR 272 (Bom) and submitted that a Co- operative Society transacting mainly with its members cannot be treated as Co-operative Bank. The ld. AR further submitted that in the case before the Hon’ble Bombay High Court, the assessee therein was providing credit mainly to its members and transaction with non-members was insignificant. Despite this fact, the Hon’ble Bombay High Court has held that the assessee therein could not be treated as Co-operative Bank and accordingly allowed the deduction u/s 80P of the Act to the said assessee. The ld. AR further submitted that the assessee before us was providing a credit only to its members and hence, the case of the assessee stands in stronger footing. The ld. AR further placed reliance on the decision rendered by the SMC Bench of Mumbai Tribunal, in M/s Jaoli Taluka Sahakari Patpedhi Maryadit V/s ITO in (AY-2010- 11) dated 10.8.2015, wherein the Tribunal, by following the decision of Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda

3 2 96 5 / M/ 2 01 4 an d 3 5 5 6/ Mu m /2 0 14 Credit Co-operative Ltd. (2015) (230 Taxman 309) and also the decision rendered by the Hon’ble Supreme Court in the case of Totgars Co- operative Sale Society Ltd (2010) (229 CTR (SC) 209) held that the deduction u/s 80P cannot be rejected to a co-operative society.

5.

On the contrary, the ld. DR placed strong reliance on the order o f AO.

6.

Having heard the rival contentions, we notice that the issue raised before us stands squarely covered by the decision of the Hon’ble Bombay High Court of Bombay rendered in the case of Quepem Urban Co- operative Credit Society Ltd (supra). Since the decision rendered by Ld CIT(A) on this issue is in accordance with the binding decision of Hon’ble Bombay High Court, we do not find any reason to interfere with his order passed on this issue.

7.

The appeal filed by the assessee relates to the decision of tax authorities in assessing the interest income received from fixed deposits under the head “Income From Other Sources”. This issue is squarely covered in favour of the assessee by the decision rendered by the Hon’ble Karnataka High Court rendered in the case of Tumkur Merchants Souharda Credit Co-operative Ltd. (supra), wherein the Hon’ble High Court has held that the interest income earned from deposits kept with bank shall form part of “Business Income”. Accordingly, the deduction u/s 80P of the Act is allowable to the interest income as per the decision passed by the Hon’ble Karnataka High Court. Accordingly, we set aside the order of the ld.CIT(A) on this issue and direct the AO to assess the interest income under the head “Income from business” and accordingly allow the deduction u/s 80P of the Act.

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