ACIT., CIRCLE-9(1), HYDERABAD V. RANGAREDDY DIST JUDL EMPLOYEE MUTUALLY AIDED COOPERATIVE SOCIETY, HYDERABAD

ITA 1264/HYD/2024

AI Insights

The case involves the Rangareddy Dist. Judl. Employee Mutually Aided Co-operative Society, which appealed against the disallowance of deductions under Section 80P of the Income Tax Act by the Assessing Officer. The primary issues revolved around the society's eligibility for deductions under Section 80P(2)(a)(i) and 80P(2)(d), despite the society accepting deposits from non-members and being categorized by the A.O. as a 'co-operative bank'. The CIT(A) reversed the A.O.'s decision, which was contested by the Revenue in the Tribunal. The Tribunal's decision was influenced by precedents and the interpretation of what constitutes a 'co-operative bank' under relevant laws.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312985 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Assessment Year: 2017-2018
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd and others Vs. CIT, Calicut & Ors., Solitaire CHS Ltd. Vs. Pr. CIT-26, Mumbai, K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr, Pr. Commissioner of Income Tax and Anr. Vs. Totagars Co-operative Sale Society, State Bank Of India Vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 263

Judgement Text

"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘बी’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B’ Bench, Hyderabad श्री रवीश सूद, माननीय न्याययक सदस्य एवं श्री मिुसूदन सावडिया, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आयकरअपीलसं./I.T.A.Nos.1264 and 1269/Hyd/2024 (निर्धारण वर्ा/ Assessment Years : 2017-18 and 2018-19) The Assistant Commissioner of Income Tax, Circle – 9(1), Hyderabad. Vs. Rangareddy Dist. Judl. Employee Mutually Aided Co-operative Society, Hyderabad. PAN : AAATR6558A. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri P. Prasad, C.A. राजस्व का प्रतततितित्व/ Department Represented by : Dr.Sachin Kumar, Sr.D.R सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 24.04.2025 घोर्णध की तधरीख/ Date of Pronouncement : 30.04.2025 O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The captioned appeals filed by the Revenue are directed against the respective orders passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), 2 ITA Nos.1264 and 1269/Hyd/2024 orders passed by the Assessing Officer (for short “A.O.”) u/s 143(3) of the Income Tax Act, 1961 (for short “the Act”) dated 31.12.2019 and 23.03.2021 for A.Ys. 2017-18 and 2018-19, respectively. 2. As common issues are involved in the captioned appeals, therefore, the same are being taken up and disposed of vide this consolidated order. 3. We shall first take up the appeal filed by the assessee for A.Y. 2017-18 in ITA No.1264/Hyd/2024 wherein the impugned order has been assailed on the following grounds of appeal before us: “1. The Ld. CIT(A), NFAC, Delhi erred in law and on facts of the case. 2. The Ld. CIT(A) erred in holding that the assessee is eligible for deduction u/s. 80P(2)(a)(i) of the Act, in view of the clear finding of the Assessing Officer that the assessee had violated the provisions of AP Mutually Aided Co-operative Societies Act, 1985. 3. The Ld. CIT(A) erred in holding that the society is eligible for deduction u/s. 80P(2)(a)(i) and 80P(2)(d) of the Act, in view of the fact that the assessee society is accepting loans and deposits from even non- members. 4. The Ld. CIT(A) is not correct in law by deleting the additions made u/s. 80P(2)(a)(i) and 80P(2)(d) of the Act relying on the decision of the Hon'ble ITAT in the assessee's own case for the assessment years 2008- 09 to 2010-11 wherein the case was restored to the file of the AO for quantification of loans given to the members. 5. The Ld. CIT(A) erred in allowing the interest paid on share capital despite the fact that the interest paid on share capital of Rs.13,46,051/- was more than the bank interest paid of Rs.4,34,493/- .” 3 ITA Nos.1264 and 1269/Hyd/2024 4. Succinctly stated, the assessee society which is a Credit Co- operative Society registered under the Andhra Pradesh Mutually Aided Co-operative Societies Act (APMACS-Act), had filed its return of income for A.Y. 2017-18 on 30.10.2017, declaring an income of Rs.21,18,480/-. Subsequently, the case of the assessee society was selected for scrutiny assessment under CASS and a notice was issued by the A.O. under Section 143(2) of the Act. 5. During the course of the assessment proceedings, it was observed by the A.O. that the assessee society had raised a double facet claim for deduction u/s 80P of the Act, viz., (i). U/s 80P(2)(a)(i): Rs.1,04,92,276/-; and (ii). U/s 80P(2)(d): Rs.1,20,81,643/-. The A.O., holding a conviction that as the assessee society was accepting deposits from the public at large and advancing the money so raised both to its members and non- members was a “Co-operative bank”, called upon it to explain its entitlement for deduction u/s 80P of the Act. In reply, it was claimed by the assessee society that it was not a co-operative bank. Elaborating on its contention, it was stated by the assessee society that it has three categories of members, viz., (i) Members; (ii) Associate Members; and (iii) Nominal Members. It was further 4 ITA Nos.1264 and 1269/Hyd/2024 stated that membership was given to the employees of Ranga Reddy Courts and they were covered under the first category, i.e. “Members”; their spouse/children were covered in the second category, i.e. “Associate Members”; and membership given to any other person who volunteered to become a member of the society was covered within the meaning of third category, i.e. “Nominal Members”. Apropos the declining of its claim for deduction u/s 80P(2)(a)(i) of the Act, it was stated by the assessee society that it had carried out the activities within the purview of the APMACS- Act and there was no embargo for admission of any person as a member of the assessee society. It was further stated by the assessee society that the Income-tax Act, 1961 referred to the advancing of credit/loans to the members of the society and deriving of income from the advancing of such loans, but was silent on the other issue, therefore, the A.O. was precluded from roping in any exterior matter for declining the deduction that it had sought u/s 80P(2)(a)(i) of the Act. 6. Apropos the assessee’s claim for deduction u/s 80P(2)(d) of the Act, it was the claim of the assessee society that it was a credit co-operative society that had advanced funds to its 5 ITA Nos.1264 and 1269/Hyd/2024 members, and had parked with the Regional Rural Banks (RRBs) which were categorized as co-operative banks by the CBDT, only those funds which were not immediately required, therefore, the interest on the said deposits was duly entitled for deduction u/s 80P(2)(d) of the Act. 7. Apropos the claim of the assessee society for deduction of interest payment of Rs.13,46,051/- that was paid on the share capital as per its bye-laws, the assessee society claimed that the same was allowable as a deduction in its hands. 8. However, the A.O. did not find favour with the aforesaid explanation of the assessee society and framed the assessment vide his order passed u/s 143(3) of the Act dated 31.12.2019, wherein he declined its claim for deduction u/s 80P of the Act, viz (i) U/s 80P(2)(a)(i); Rs.1,04,92,276/-; and (ii) U/s 80P(2)(d) of the Act: Rs.1,20,81,643/-. Also, the claim raised by the assessee society for deduction of interest paid on share capital of Rs.13,46,051/- was disallowed. 9. Aggrieved, the assessee society carried the matter in appeal before the CIT(A), who found favor with its contentions and 6 ITA Nos.1264 and 1269/Hyd/2024 vacated both the impugned disallowance of its claim for deduction u/s 80P of the Act as well as interest paid on share capital. For the sake of clarity, the observations of the CIT(A) are culled out as under: 7 ITA Nos.1264 and 1269/Hyd/2024 8 ITA Nos.1264 and 1269/Hyd/2024 9 ITA Nos.1264 and 1269/Hyd/2024 10 ITA Nos.1264 and 1269/Hyd/2024 11 ITA Nos.1264 and 1269/Hyd/2024 12 ITA Nos.1264 and 1269/Hyd/2024 10. The Revenue being aggrieved with the order of CIT(A), has carried the matter in appeal before us. 11. We have heard the learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 12. Apropos, the declining of the claim of the assessee society for deduction u/s 80P(2)(a)(i) of the interest received from advancing of funds to its members, we find that the issue is squarely covered by the order passed by the Tribunal in the assessee’s own case for the preceding years viz., (i) A.Y. 2012-13 in ITA No.1128/Hyd/2017 dated 27.03.2018; (ii) ITA Nos.348 and 1322/Hyd/2012 for A.Y. 2008-09 and 2009-10; (iii) ITA No.136/Hyd/2014 for A.Y. 2010-11, dated 04.03.2015. 13. Apropos the observation of the A.O. that as the primary business of the assessee society is to accept funds from members, 13 ITA Nos.1264 and 1269/Hyd/2024 non-members (categorized as nominal or associate members) to be utilized for giving loans to members and in practice to non- members also, it falls in the category of a primary co-operative bank under Section 56(c)/(ccv) of Part V of the Banking Regulation Act, 1949, and thus, being a co-operative bank it was disentitled from claiming deduction under Section 80P(2)(d) of the Act, we are unable to persuade ourselves to concur with the same. We though are in agreement with the observations of the A.O. that with the insertion of sub-section (4) of Section 80P vide the Finance Act, 2006 w.e.f. 01.04.2007, the provisions of Section 80P would no more be applicable in relation to any Co-operative Bank, other than a Primary Co-operative Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank, but are unable to concur with him that the assessee society falls within the meaning of a “Co-operative bank”. Our aforesaid view is supported by the Hon'ble Supreme Court in the case of in the case of Mavilayi Service Co-operative Bank Ltd and others Vs. CIT, Calicut & Ors.,, AIR 2021 Supreme Court 612, dated 12.01.2021. The Hon'ble Apex Court in its aforesaid order had observed that for being considered a “Co- 14 ITA Nos.1264 and 1269/Hyd/2024 operative Bank” license from RBI is a sine qua non. It was further observed that the assessee society in the absence of RBI license cannot be treated as Co-operative Bank. For the sake of clarity, the observations of the Hon’ble Apex Court are culled out as under: “22. With the insertion of sub-section (4) by the Finance Act, 2006, which is in the nature of a proviso to the aforesaid provision, it is made clear that such a deduction shall not be admissible to a cooperative bank. However, if it is a primary agricultural credit society or a primary cooperative agricultural and rural development bank, the deduction would still be provided. Thus, cooperative banks are now specifically excluded from the ambit of Section 80-P of the Act. 23. Undoubtedly, if one has to go by the aforesaid definition of “cooperative bank”, the appellant does not get covered thereby. It is also a matter of common knowledge that in order to do the business of a cooperative bank, it is imperative to have a licence from Reserve Bank of India, which the appellant does not possess. Not only this, as noticed above, Reserve Bank of India has itself clarified that the business of the appellant does not amount to that of a cooperative bank. The appellant, therefore, would not come within the mischief of sub-section (4) of Section 80-P.” (emphasis supplied by us) 14. At this stage, we may herein observe that just because the assessee society had received deposits from non-members, it would not be disentitled from raising claim of deduction u/s 80P(2)(a)(i) of the Act. As Section 80P(2)(a)(i) of the Act contemplates a claim of deduction of the income of the assessee society from carrying out the business of banking or providing 15 ITA Nos.1264 and 1269/Hyd/2024 credit facility to its members, but does not lay down any restriction as regards the source from which the funds are to be settled i.e., members or non-members, therefore, we find substance in the claim of the assessee society that the very basis for, inter alia, declining of its claim for deduction u/s 80P(2)(a)(i) of the Act was based on a misconstrued position of law by the A.O. We are of the view that once it is clear that the co-operative society is providing credit facilities to its members, the fact that it is providing credit facilities to non-members does not disentitle it from availing of the deduction. However, as the profits and gains from the credit facilities given to non-members cannot be said to be attributable to the activity of providing credit facilities to its members, such amount cannot be claimed as deduction u/s 80P(2)(a)(i) of the Act. Our aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd and others Vs. CIT, Calicut (supra), wherein it was, inter alia, observed as under: “24. So far so good. However, it is significant to point out that the main reason for disentitling the appellant from getting the deduction provided under Section 80-P of the Act is not sub-section (4) thereof. What has been noticed by the assessing officer, after discussing in detail the activities of the appellant, is that the activities of the appellant are in violation of the 16 ITA Nos.1264 and 1269/Hyd/2024 provisions of Macsa under which it is formed. It is pointed out by the assessing officer that the assessee is catering to two distinct categories of people. The first category is that of resident members or ordinary members. There may not be any difficulty as far as this category is concerned. However, the assessee had carved out another category of “nominal members”. These are those members who are making deposits with the assessee for the purpose of obtaining loans, etc. and, in fact, they are not members in real sense. Most of the business of the appellant was with this second category of persons who have been giving deposits which are kept in fixed deposits with a motive to earn maximum returns. A portion of these deposits is utilised to advance gold loans, etc. to the members of the first category. It is found, as a matter of fact, that the depositors and borrowers are quite distinct. In reality, such activity of the appellant is that of finance business and cannot be termed as cooperative society. It is also found that the appellant is engaged in the activity of granting loans to general public as well. All this is done without any approval from the Registrar of the Societies. With indulgence in such kind of activity by the appellant, it is remarked by the assessing officer that the activity of the appellant is in violation of the Cooperative Societies Act. Moreover, it is a cooperative credit society which is not entitled to deduction under Section 80- P(2)(a)(i) of the Act. *** ** *** *** ** *** *** ** *** 33. ……………………….Once it is clear that the co-operative society in question is providing credit facilities to its members, the fact that it is providing credit facilities to non-members does not disentitle the society in question from availing of the deduction. The distinction between eligibility for deduction and attributability of amount of profits and gains to an activity is a real one. Since profits and gains from credit facilities given to non-members cannot be said to be attributable to the activity of providing credit facilities to its members, such amount cannot be deducted.” (emphasis supplied by us) On a specific query by the Bench, the ld.AR for the assessee society, had clarified that the assessee society had raised the 17 ITA Nos.1264 and 1269/Hyd/2024 claim for deduction under Section 80P(2)(a)(i) of the Act only qua the interest income that it had received on the credit facilities provided to its members. 15. Considering the aforesaid facts, we find no infirmity in the observation of the CIT(A), who based on the fact that the aforesaid issue involved in the present appeal is squarely covered by the view taken by the Tribunal in the assessee’s own case for the preceding years, and is also in conformity with the judgment of the Hon'ble Apex Court, had rightly vacated the disallowance made by the A.O. u/s 80P(2)(a)(i) of the Act. The Grounds of appeal Nos. 2 & 3 raised by the revenue are dismissed in terms of our aforesaid observations. 16. Apropos the declining of the assessee’s claim for deduction of the interest income earned from investments made with Co- operative Banks u/s 80P(2)(d) of the Act, we find that the CIT(A) while setting aside the view taken by the A.O., had observed that as the said issue was squarely covered by the view taken by the Tribunal in the assessee’s own case for the preceding year and also is in conformity with the judicial pronouncements, thus, allowed the same. 18 ITA Nos.1264 and 1269/Hyd/2024 17. We have thoughtfully considered the contentions advanced by the Ld. Authorized Representatives of both the parties as regards the entitlement of the assessee society for the claim of deduction under Section 80P(2)(d) of the Act. On a perusal of Section 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investments held with any other co-operative society shall be deducted in computing its total income. We may herein observe, that what is relevant for the claim of deduction under Section 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co-operative society with any other co-operative society. We are of the considered view, that though the co-operative banks pursuant to the insertion of sub- section (4) to Section 80P would be no more entitled for claiming deduction under Section 80P of the Act, but as a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative 19 ITA Nos.1264 and 1269/Hyd/2024 bank would be entitled for claim of deduction under Section 80P(2)(d) of the Act. Our aforesaid view is supported by the order of a co-ordinate bench of the Tribunal, i.e ITAT, Mumbai in the case of Solitaire CHS Ltd. Vs. Pr. CIT-26, Mumbai, ITA No. 3155/Mum/2019, dated 29.11.2019, wherein it was held as under: “6. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. Our indulgence in the present appeal has been sought, for adjudicating, as to whether the claim of the assessee for deduction under section 80P(2)(d) in respect of interest income earned from the investments/deposits made with the co-operative banks is in order, or not. In our considered view, the issue involved in the present appeal revolves around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 01.04.2007. On a perusal of the order passed by the Pr. CIT under Sec. 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with co-operative banks, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. Observing, that the co-operative banks from where the assessee was in receipt of interest income were not co- operative societies, the Pr. CIT was of the view that the interest income earned on such investments/deposits would not be eligible for deduction under Sec. 80P(2)(d) of the Act. 7. After necessary deliberations, we are unable to persuade ourselves to be in agreement with the view taken by the A.O. Before proceeding any further, we may herein reproduce the relevant extract of the aforesaid statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. 20 ITA Nos.1264 and 1269/Hyd/2024 \"80P(2)(d) (1). Where in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub- section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (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;\" On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investments held with any other co-operative society shall be deducted in computing its total income. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co-operative society with any other co-operative society. We are in agreement with the view taken by the Pr. CIT, that with the insertion of sub-section (4) of Sec. 80P, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co- operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. However, at the same time, we are unable to subscribe to his view that the aforesaid amendment would jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of its interest income on investments/deposits parked with a co-operative bank. In our considered view, as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We find that the term „co- operative society‟ had been defined under Sec. 2(19) of the Act, as under:- 21 ITA Nos.1264 and 1269/Hyd/2024 \"(19) \"Co-operative society\" means a Co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of co- operative societies;\" We are of the considered view, that though the co-operative banks pursuant to the insertion of sub- section (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a co- operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. 8. We shall now advert to the judicial pronouncements that have been relied upon by the ld. A.R. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income derived from its investments held with a co-operative bank is covered in favour of the assessee in the following cases: (i) Land and Co-operative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum) (ii) M/s C. Green Co-operative Housing and Society Ltd. Vs. ITO- 21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017 (iii) Marvwanjee Cama Park Co-operative Housing Society Ltd. Vs. ITO- Range-20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. (iv). Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Co-operative Sale Society (2017) 392 ITR 74 (Karn) and Hon'ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had held, that the interest income earned by the assessee on its investments with a co-operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006, also makes it clear beyond any scope of doubt that the purpose behind enactment of sub- section (4) of Sec. 80P was that the co-operative banks which were functioning at par with other banks would no more be entitled for claim 22 ITA Nos.1264 and 1269/Hyd/2024 of deduction under Sec. 80P(4) of the Act. Although, in all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars co-operative Sale Society (2017) 395 ITR 611 (Karn), had concluded that a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same time, we find, that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Co-operative Sale Society (2017) 392 ITR 74 (Karn) and Hon'ble High Court P a g e |6 M/s Solitaire CHS Ltd. Vs. Pr. Commissioner of Income-tax-26 of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had observed, that the interest income earned by a co-operative society on its investments held with a co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. We find that as held by the Hon'ble High Court of Bombay in the case of K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court‟s, then a view which is in favour of the assessee is to be preferred as against that taken against him. Accordingly, taking support from the aforesaid judicial pronouncement of the Hon‟ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Co-operative Sale Society (2017) 392 ITR 74 (Karn) and Hon'ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), wherein it was observed that the interest income earned by a co- operative society on its investments held with a co- operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act.” 18. We thus, in terms of our aforesaid observations find no infirmity in the view taken by the CIT(A) who had rightly vacated the disallowance of the claim of the assessee society for the deduction u/s 80P(2)(d) of the interest income of Rs. 1,04,92,276/- on its deposits with the co-operative banks, viz. (i). Deccan Gramin Bank; and (ii). AP Grameen Vikas Bank. The 23 ITA Nos.1264 and 1269/Hyd/2024 Grounds of appeal Nos.3 and 4 are dismissed in terms of our aforesaid observations. 19. Apropos the disallowance of the assessee’s claim for deduction of interest payment of Rs.13,46,051/- on the share capital of the assessee society, we find that the aforesaid issue is covered by the order of ITAT, Hyderabad in the case of Bhavana Rishi Co-operative Urban Bank Limited Vs. DCIT, ITA No.418/Hyd/2016 dated 27.07.2016, wherein it was observed as under: 24 ITA Nos.1264 and 1269/Hyd/2024 20. Alternatively, even if the said interest is added back, the same would result in increase in the business profit which would again qualify u/s 80P of the Act and consequently, will have no change on the tax liability of the assessee society. We thus, finding no infirmity in the view taken by the CIT(A) who had rightly vacated the disallowance of the assessee’s claim for deduction of interest paid on share capital of Rs.13,46,051/- (supra) made by the A.O., uphold his order. The Ground of Appeal No.5 is dismissed. 21. The Grounds of appeal nos.1 and 6, being general in nature are dismissed as not pressed. 22. Resultantly, the appeal filed by the Revenue is dismissed. ITA No.1269/Hyd/2024 for A.Y. 2018-19 23. As the facts and the issue involved in the present appeal remain the same as were there before us in the assessee’s appeal for A.Y. 2017-18 in ITA No.1264/Hyd/2024, therefore, the order therein passed shall apply mutatis mutandis for disposing of the present appeal i.e ITA No.1269/Hyd/2024 for A.Y. 2018-19. 24. Resultantly, the appeal filed by the Revenue is dismissed in terms of our aforesaid observations. 25 ITA Nos.1264 and 1269/Hyd/2024 25. To sum up, both the appeals of Revenue are dismissed in terms of our aforesaid observations. Order pronounced in the Open Court on 30th April, 2025. Sd/- (श्री मिुसूदन सावडिया) (MADHUSUDAN SAWDIA) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (श्री रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Sd/- Sd Hyderabad, dated 30.04.2025. ##**TYNM/sps आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Ranga Reddy District Judicial Employee Mutually Aided Co-operative Society, Beside Advocate Society, Ranga Reddy District Court Complex, LB Nagar, Hyderabad – 500074. 2. रधजस्व/ The Revenue : The Assistant Commissioner of Income Tax, Circle – 9(1), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Hyderabad. "