AI Insights
The case revolves around the disallowance of a deduction claimed by Rustomjee Aspiree Premises Co-op. Soc. Ltd. under section 80P(2)(d) of the Income Tax Act, 1961, for interest income of Rs. 24,71,186 earned from deposits with Saraswat Cooperative Bank. The Assessing Officer initially disallowed the claim, a decision upheld by the CIT(A). However, the Tribunal, referencing decisions from the Karnataka and Kerala High Courts, found that the interest income from a cooperative bank qualifies for deduction under section 80P(2)(d), leading to the setting aside of the CIT(A)'s and Assessing Officer's decisions.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 123777 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 month(s) 29 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
09-07-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Next Hearing Date
04-07-2023
Assessment Year
2017-2018
Appeal Filed On
10-04-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND MS. KAVITHA RAJAGOPAL (JUDICIAL MEMBER) ITA No. 1195/MUM/2023 Assessment Year: 2017-18 Rustomjee Aspiree Premises Co- op. Soc. Ltd., Ground Floor, Rustomjee Aspiree, CTS No. 628, AI, PT Kurla, Eatern Express Highway, Sion, Mumbai-400022. Vs. ITO Ward 26(2)(5), Room No. 319, 3 rd floor, Kautilya Bhavan, C-41 to C-43, ‘G’ Block Bandra Kurla Complex, Bandra (East), Mumbai-400051. PAN NO. AABAR 4001 L Appellant Respondent Assessee by : Mr. Dharan Gandhi Revenue by : Ms. Indira Adakil, DR Date of Hearing : 05/07/2023 Date of pronouncement : 10/07/2023 ORDER PER OM PRAKASH KANT, AM This appeal has been preferred by the assessee against order passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising sole ground of appeal as under: 1. The Ld. CIT(A) NFAC erred in confirming the action of the Ld. AO in disallowing the deduction u/s 80P(2)(d) of Rs.24,71,186/-. 2. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In the case the assessee co-operative soc the Income-tax Act, 1961 (in short ‘the Act’) in respect of interest income of Rs.24,71,186/ operative Bank. The Assessing Officer in the scrutiny assessment u/s 143(3) of the Act da earned from deposits with co deduction u/s 80P(2)(d) of the Act and accordingly he disall the claim of the assessee, f assessment order. The Ld. CIT(A) also upheld the disallowance of the deduction observing as under: “8. Thus, it is clear that in view of above discussion now the ruling of later decision of Karnataka High Court i.e. PCIT Vs Totagars Cooperative Sale Society(395 IT 611) 16.06.2017 and that of Gujarat High Court in case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. v. Assistant Commissioner of Income 602 (Gujarat) will be applicable in this cases specially keeping in view the fact that specifically held by the Assessing officer in Para No. 7.18 that the interest received by the assessee on surplus fund is to be assessed under head income from other sources. I therefore hold that the interest of Rs. 24,71, 186/ by the appellant from Saraswat Cooperative Bank as interest on saving bank and fixed deposit accounts is not eligible for deduction us 80P(2)(d) of the Act. The grounds of appeal are dismissed. 2.1 We find that section 80P(2)(d) of the Act provide in respect of income earned by way of interest or dividend derived by co-operative society from its investment with any other co Rustomjee Aspiree Premises Co ITA No. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In the case operative society claimed deduction u/s 80P(2)(d) of tax Act, 1961 (in short ‘the Act’) in respect of interest income of Rs.24,71,186/- from its deposits with Saswat co . The Assessing Officer in the scrutiny assessment u/s 143(3) of the Act dated 30.08.2019 held that interest income earned from deposits with co-operative bank was not eligible for deduction u/s 80P(2)(d) of the Act and accordingly he disall the claim of the assessee, following the various decision cited in the er. The Ld. CIT(A) also upheld the disallowance of the deduction observing as under: 8. Thus, it is clear that in view of above discussion now the ruling of later decision of Karnataka High Court i.e. PCIT Vs Totagars Cooperative Sale Society(395 IT 611) 16.06.2017 and that of Gujarat High Court in case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. v. Assistant Commissioner of Income-tax 140 taxmann.com 602 (Gujarat) will be applicable in this cases specially keeping in view the fact that the present case where was specifically held by the Assessing officer in Para No. 7.18 that the interest received by the assessee on surplus fund is to be assessed under head income from other sources. I therefore hold that the interest of Rs. 24,71, 186/ by the appellant from Saraswat Cooperative Bank as interest on saving bank and fixed deposit accounts is not eligible for deduction us 80P(2)(d) of the Act. The grounds of appeal are dismissed.” We find that section 80P(2)(d) of the Act provide in respect of income earned by way of interest or dividend derived operative society from its investment with any other co Rustomjee Aspiree Premises Co-op. Soc. Ltd. 2 ITA No. 1195/Mum/2023 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In the case, iety claimed deduction u/s 80P(2)(d) of tax Act, 1961 (in short ‘the Act’) in respect of interest from its deposits with Saswat co- . The Assessing Officer in the scrutiny assessment ted 30.08.2019 held that interest income operative bank was not eligible for deduction u/s 80P(2)(d) of the Act and accordingly he disallowed ollowing the various decision cited in the er. The Ld. CIT(A) also upheld the disallowance of 8. Thus, it is clear that in view of above discussion now the ruling of later decision of Karnataka High Court i.e. PCIT Vs Totagars Cooperative Sale Society(395 IT 611) dated 16.06.2017 and that of Gujarat High Court in case of Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. v. tax 140 taxmann.com 602 (Gujarat) will be applicable in this cases specially the present case where was specifically held by the Assessing officer in Para No. 7.18 that the interest received by the assessee on surplus fund is to be assessed under head income from other sources. I therefore hold that the interest of Rs. 24,71, 186/- earned by the appellant from Saraswat Cooperative Bank as interest on saving bank and fixed deposit accounts is not eligible for deduction us 80P(2)(d) of the Act. The grounds of We find that section 80P(2)(d) of the Act provide that deduction in respect of income earned by way of interest or dividend derived operative society from its investment with any other co- operative society. The assessee has claimed that the co bank is primarily a co earned on the investment made with the said co namely Saswat Co-operative Society bank is eligible for deduction. We find that the identical issue of the deduction u/s 80P(2)(d) came up before the Co-ordinate Bench of Premium Tower Co-operative Housing Society Ltd. v. CIT in ITA No. 1583/Mum/2023. The Tribunal the Hon’ble Karnataka High Court in the case of Totagares Co op. Sale Society (2017) 392 ITR 74 (K the Hon’ble Kerala High Court in the case of PCIT v. Percoorkada Services Company Bank Ltd. (Kerala) held that co society, the assessee is eligible for deduction in from co-operative bank. reproduced as under: 5. Section 80P provides that in case of assessee being a cooperative society, the gross total income which includes any income referred to sub-section 2 shall be deducted in accordance with subject to provision of this section. Sub- the case of cooperative society engaged in cooperative business of banking and providing credit facilities to its members or , the whole of amount of profit and gains of the business attributable to anyone or more or such activity.” Clause (d) of Sub as under:- (d) In respect of any income by way of interest or dividends Rustomjee Aspiree Premises Co ITA No. operative society. The assessee has claimed that the co co-operative society and therefore, the interest earned on the investment made with the said co- operative Society bank is eligible for deduction. We find that the identical issue of the deduction u/s 80P(2)(d) came ordinate Bench of the Tribunal in the case of operative Housing Society Ltd. v. CIT in ITA No. 1583/Mum/2023. The Tribunal (supra), following the decision of Hon’ble Karnataka High Court in the case of Totagares Co op. Sale Society (2017) 392 ITR 74 (Karnataka) and judgment of Hon’ble Kerala High Court in the case of PCIT v. Percoorkada Services Company Bank Ltd.. (2022) 442 ITR 141 held that co-operative bank being primarily a co he assessee is eligible for deduction interest income earned operative bank. The relevant finding of the Tribunal os reproduced as under: 5. Section 80P provides that in case of assessee being a cooperative society, the gross total income which includes any income referred to section 2 shall be deducted in accordance with subject to provision -section 2 of section 80P Clause (a) states that, “in the case of cooperative society engaged in cooperative business of banking and providing credit facilities to its members or , the whole of amount of profit and gains of the business attributable to anyone or ity.” Clause (d) of Sub-section 2 of Section 80P reads (d) In respect of any income by way of interest or dividends Rustomjee Aspiree Premises Co-op. Soc. Ltd. 3 ITA No. 1195/Mum/2023 operative society. The assessee has claimed that the co-operative therefore, the interest -operative bank operative Society bank is eligible for deduction. We find that the identical issue of the deduction u/s 80P(2)(d) came the Tribunal in the case of operative Housing Society Ltd. v. CIT in ITA No. following the decision of Hon’ble Karnataka High Court in the case of Totagares Co- and judgment of Hon’ble Kerala High Court in the case of PCIT v. . (2022) 442 ITR 141 imarily a co-operative terest income earned The relevant finding of the Tribunal os 5. Section 80P provides that in case of assessee being a cooperative society, the gross total income which includes any income referred to section 2 shall be deducted in accordance with subject to provision Clause (a) states that, “in the case of cooperative society engaged in cooperative business of banking and providing credit facilities to its members or , the whole of amount of profit and gains of the business attributable to anyone or section 2 of Section 80P reads (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; 6. Sub section 4 of section 80P carves out of exception that the provision of this section will not apply in relation to any cooperative bank. Further explanation provides that the definition of cooperative bank and primary cooperative bank. The said provision rea under:- (4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation. For the purposes of this bank” and “primary agricultural credit society” shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949) (b) “primary co and rural development bank operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities.] 7. Thus, assessee being a cooperative society cannot be reckoned as cooperative bank carrying out banking business. The Hon’ble Jurisdictional High court in the case of Quepem Urban Co Credit Society Ltd. vs. ACIT reported in (2015) 377 ITR 272 (Bom), after analyzing the relevant provision of Section 80P includi (4) had categorically held that cooperative banks are to be treated as cooperative society. In so far as deduction of interest earned on investment made in cooperative bank, Clause (d) of section 80P(2) provides that any income by way of int cooperative societies from its investment with any other cooperative societies, the whole of such income is deductable u/s 80P. The Rustomjee Aspiree Premises Co ITA No. operative society from its investments with any other operative society, the whole of such income; ection 4 of section 80P carves out of exception that the provision of this section will not apply in relation to any cooperative bank. Further explanation provides that the definition of cooperative bank and primary cooperative bank. The said provision rea (4) The provisions of this section shall not apply in relation to operative bank other than a primary agricultural credit society operative agricultural and rural development bank. Explanation. For the purposes of this sub-section- (a) co bank” and “primary agricultural credit society” shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949) (b) “primary co-operative agricultural and rural development bank” means a society having its area of operation confined to a taluk and the principal object of which is to term credit for agricultural and rural development 7. Thus, assessee being a cooperative society cannot be reckoned as cooperative bank carrying out banking business. The Hon’ble Jurisdictional High court in the case of Quepem Urban Co Credit Society Ltd. vs. ACIT reported in (2015) 377 ITR 272 (Bom), after analyzing the relevant provision of Section 80P including Sub (4) had categorically held that cooperative banks are to be treated as cooperative society. In so far as deduction of interest earned on investment made in cooperative bank, Clause (d) of section 80P(2) provides that any income by way of interest on dividend derived from cooperative societies from its investment with any other cooperative societies, the whole of such income is deductable u/s 80P. The Rustomjee Aspiree Premises Co-op. Soc. Ltd. 4 ITA No. 1195/Mum/2023 operative society from its investments with any other ection 4 of section 80P carves out of exception that the provision of this section will not apply in relation to any cooperative bank. Further explanation provides that the definition of cooperative bank and primary cooperative bank. The said provision reads as (4) The provisions of this section shall not apply in relation to operative bank other than a primary agricultural credit society operative agricultural and rural development bank. (a) co-operative bank” and “primary agricultural credit society” shall have the meanings respectively assigned to them in Part V of the Banking operative agricultural ” means a society having its area of operation confined to a taluk and the principal object of which is to term credit for agricultural and rural development 7. Thus, assessee being a cooperative society cannot be reckoned as cooperative bank carrying out banking business. The Hon’ble Jurisdictional High court in the case of Quepem Urban Co-operative Credit Society Ltd. vs. ACIT reported in (2015) 377 ITR 272 (Bom), after ng Sub-section (4) had categorically held that cooperative banks are to be treated as cooperative society. In so far as deduction of interest earned on investment made in cooperative bank, Clause (d) of section 80P(2) erest on dividend derived from cooperative societies from its investment with any other cooperative societies, the whole of such income is deductable u/s 80P. The cooperative bank has been defined in part 5 of the Banking Regulation Act 1949. Section 56(cc means cooperative societies other than a primary agriculture society. This view had come up for the Hon’ble Karnataka High Court in the case of PCIT vs. Totagars Co (Kar.) dated 5th Jan. 2017, wherein the Hon’ble High Court had observed as under:- 1. Whether the learned Tribunal was justified in deleting the additions made by the Assessing Authority being the disallowed deduction claimed u/S 80P(2)(d) of the Income Tax Act a light of the decision of the Supreme Court with regard to the same exact assessee as the present one, namely, The Totgars Co operative Sale Society Ltd., Vs. Income Tax Officer in Civil Appeal Nos. 1622 to 1629/2010 decided by the Apex Court on 08.02.2010 or not? 2. Whether, in the facts and circumstances of the case, the Tribunal is justified in not following the decision rendered by the Hon’ble Supreme Court in Civil Appeal No. 1622 of 2010, wherein the Apex Court has to be held that the words used in Section 80P “the whole of the amount of profits and gains of business” emphasise that the income in respect of which deduction is sought must constitute the operational income and not the other income which accrues to the society and as such interest earned on funds which are not required for business purposes falls under the category of “other income” taxable under the Income Tax Act? 6. According to the learned counsel, the present appeal should be admitted on these two substantial questions of law taken by the learned counsel is untenable. For the issue that was Rustomjee Aspiree Premises Co ITA No. cooperative bank has been defined in part 5 of the Banking Regulation Act 1949. Section 56(ccv) provides that primary cooperative bank means cooperative societies other than a primary agriculture society. This view had come up for the Hon’ble Karnataka High Court in the case of PCIT vs. Totagars Co-operative Sale Society (2017) 392 ITR 74 ated 5th Jan. 2017, wherein the Hon’ble High Court had 1. Whether the learned Tribunal was justified in deleting the additions made by the Assessing Authority being the disallowed deduction claimed u/S 80P(2)(d) of the Income Tax Act a light of the decision of the Supreme Court with regard to the same exact assessee as the present one, namely, The Totgars Co operative Sale Society Ltd., Vs. Income Tax Officer in Civil Appeal Nos. 1622 to 1629/2010 decided by the Apex Court on 8.02.2010 or not? 2. Whether, in the facts and circumstances of the case, the Tribunal is justified in not following the decision rendered by the Hon’ble Supreme Court in Civil Appeal No. 1622 of 2010, wherein the Apex Court has to be held that the words sed in Section 80P “the whole of the amount of profits and gains of business” emphasise that the income in respect of which deduction is sought must constitute the operational income and not the other income which accrues to the society and as such t earned on funds which are not required for purposes falls under the category of “other income” taxable under the Income Tax Act? 6. According to the learned counsel, the present appeal should be admitted on these two substantial questions of law. 7. However, the contention being taken by the learned counsel is untenable. For the issue that was Rustomjee Aspiree Premises Co-op. Soc. Ltd. 5 ITA No. 1195/Mum/2023 cooperative bank has been defined in part 5 of the Banking Regulation v) provides that primary cooperative bank means cooperative societies other than a primary agriculture society. This view had come up for the Hon’ble Karnataka High Court in the operative Sale Society (2017) 392 ITR 74 ated 5th Jan. 2017, wherein the Hon’ble High Court had 1. Whether the learned Tribunal was justified in deleting the additions made by the Assessing Authority being the disallowed deduction claimed u/S 80P(2)(d) of the Income Tax Act and in the light of the decision of the Supreme Court with regard to the same exact assessee as the present one, namely, The Totgars Co- operative Sale Society Ltd., Vs. Income Tax Officer in Civil Appeal Nos. 1622 to 1629/2010 decided by the Apex Court on 8.02.2010 or not? 2. Whether, in the facts and circumstances of the case, the Tribunal is justified in not following the decision rendered by the Hon’ble Supreme Court in Civil Appeal No. 1622 of 2010, wherein the Apex Court has to be held that the words sed in Section 80P “the whole of the amount of profits and gains of business” emphasise that the income in respect of which deduction is sought must constitute the operational income and not the other income which accrues to the society and as such t earned on funds which are not required for purposes falls under the category of “other income” taxable under the Income Tax Act? 6. According to the learned counsel, the present appeal should be admitted on these two . 7. However, the contention being taken by the learned counsel is untenable. For the issue that was before the ITAT, was a limited one, namely whether for the purpose of Section 80P(2)(d) of the Act, a Co should be considered as a Co Co-operative Bank is considered to be a Co any interest earned by the Co operative Bank would necessarily be deductable under Section 80P(1) of the Act. 8. The issue whethe considered to be a Co For the said issue has been decided by the ITAT itself in different cases. Moreover the word “Co a large extent, and denotes a g operative Bank” is a word of limited extent, which merely demarcates and identifies a particular species of the genus Co operative Societies. Co nature, and can be involved in different acti Society Bank is merely a variety of the Co Thus the Co- operative Bank which is a species of the genus would necessarily be covered by the word “Co 9. Furthermore, even according to Section Regulations Act, 1949, defines a primary Co bank as the meaning of Co operative Society Bank would be included in the words ‘Co operative Society’. 10. Admittedly, the interes respondent had earned was from a Co Therefore, according to Sec. 80P(2)(d) of the I. T. Act, the said amount of interest earned from a Co would be deductable from the gross income of the Society in order to assess its total income. Therefore, the Assessing Officer was not justified in denying the said deduction Rustomjee Aspiree Premises Co ITA No. before the ITAT, was a limited one, namely whether for the purpose of Section 80P(2)(d) of the Act, a Co- operative Bank should be considered as a Co-operative Society or not? For, if a operative Bank is considered to be a Co-operative Society, then any interest earned by the Co-operative Society from a Co operative Bank would necessarily be deductable under Section 80P(1) of the Act. 8. The issue whether a Co-operative Bank is considered to be a Co-operative Society is no longer res integra. For the said issue has been decided by the ITAT itself in different cases. Moreover the word “Co- operative Society” are the words of a large extent, and denotes a genus, whereas the word “Co operative Bank” is a word of limited extent, which merely demarcates and identifies a particular species of the genus Co operative Societies. Co-Operative Society can be of different nature, and can be involved in different activities; the Co Society Bank is merely a variety of the Co-operative Societies. operative Bank which is a species of the genus would necessarily be covered by the word “Co-operative Society”. 9. Furthermore, even according to Section 56(i) (ccv) of the Banking Regulations Act, 1949, defines a primary Co-Operative Society bank as the meaning of Co- Operative Society. Therefore, a Co operative Society Bank would be included in the words ‘Co operative Society’. 10. Admittedly, the interest which the assessee respondent had earned was from a Co-operative Society Bank. Therefore, according to Sec. 80P(2)(d) of the I. T. Act, the said amount of interest earned from a Co- operative Society Bank would be deductable from the gross income of the Society in order to assess its total income. Therefore, the Assessing Officer was not justified in denying the said deduction Rustomjee Aspiree Premises Co-op. Soc. Ltd. 6 ITA No. 1195/Mum/2023 before the ITAT, was a limited one, namely whether for the operative Bank tive Society or not? For, if a operative Society, then operative Society from a Co- operative Bank would necessarily be deductable under Section operative Bank is operative Society is no longer res integra. For the said issue has been decided by the ITAT itself in different operative Society” are the words of enus, whereas the word “Co- operative Bank” is a word of limited extent, which merely demarcates and identifies a particular species of the genus Co- Operative Society can be of different vities; the Co-operative operative Societies. operative Bank which is a species of the genus operative Society”. 56(i) (ccv) of the Banking Operative Society Operative Society. Therefore, a Co- operative Society Bank would be included in the words ‘Co- t which the assessee operative Society Bank. Therefore, according to Sec. 80P(2)(d) of the I. T. Act, the said operative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its total income. Therefore, the Assessing Officer was not justified in denying the said deduction to the assessee respondent. 11. The learned counsel has relied on the case of The Totgars Co Tax Officer, (supra). However, the said case dealt with the interpretation, and the deduction, which would be applicable under Section 80P(2)(a)(i) of the I. T. Act. For, in the present case the interpretation that is required is of Section Act and not Section 80P(2)(a)(i) of the I. T. Act. Therefore, the said judgment is inapplicable to the present case. Thus, neither of the two substantial questions of law canvassed by the learned counsel for the Revenue even arise in 8. This view has further been reiterated by the judgment of Hon’ble Kerala High Court in the case of PCIT vs. Percoorkada Service Co. Bank Ltd. (2022) 442 ITR 141 (Kerala) dated 01.11.2021, wherein one of the question before the Hon’bl income earned from deposits with the banks is eligible for deduction u/s 80P(2). The Hon’ble Kerala High Court has also considered the judgment of Hon’ble Supreme Court in the case of Totagars Cooperative Societies Ltd. 322 ITR 323, wherein the Hon’ble High Court has held that interest income earned from district cooperative bank or state cooperative bank, come within the ambit of section 80P (2)(d), therefore the income constitutes income from other sources and it is deduction covered u/s 80P(2)(d). Otherwise section 80P(2)(d) specifies any income by way of interest or dividend which is otherwise taxable under the head income from other sources, deduction is allowable if the same is derived from investment societies. 9. In contravention, section 80P (2)(a) provides income from carrying out various activities which is in the nature of business. Irrespective Rustomjee Aspiree Premises Co ITA No. to the assessee respondent. 11. The learned counsel has relied on the case of The Totgars Co-operative Sale Society Ltd. Vs. Income Tax Officer, (supra). However, the said case dealt with the interpretation, and the deduction, which would be applicable under Section 80P(2)(a)(i) of the I. T. Act. For, in the present case the interpretation that is required is of Section 80P(2)(d) of the I. T. Act and not Section 80P(2)(a)(i) of the I. T. Act. Therefore, the said judgment is inapplicable to the present case. Thus, neither of the two substantial questions of law canvassed by the learned counsel for the Revenue even arise in the present case. 8. This view has further been reiterated by the judgment of Hon’ble Kerala High Court in the case of PCIT vs. Percoorkada Service Co. Bank Ltd. (2022) 442 ITR 141 (Kerala) dated 01.11.2021, wherein one of the question before the Hon’ble High Court was, whether the interest income earned from deposits with the banks is eligible for deduction u/s 80P(2). The Hon’ble Kerala High Court has also considered the judgment of Hon’ble Supreme Court in the case of Totagars Cooperative d. 322 ITR 323, wherein the Hon’ble High Court has held that interest income earned from district cooperative bank or state cooperative bank, come within the ambit of section 80P (2)(d), therefore the income constitutes income from other sources and it is deduction covered u/s 80P(2)(d). Otherwise section 80P(2)(d) specifies any income by way of interest or dividend which is otherwise taxable under the head income from other sources, deduction is allowable if the same is derived from investment made with any other cooperative 9. In contravention, section 80P (2)(a) provides income from carrying out various activities which is in the nature of business. Irrespective Rustomjee Aspiree Premises Co-op. Soc. Ltd. 7 ITA No. 1195/Mum/2023 to the assessee respondent. 11. The learned counsel has relied on td. Vs. Income Tax Officer, (supra). However, the said case dealt with the interpretation, and the deduction, which would be applicable under Section 80P(2)(a)(i) of the I. T. Act. For, in the present case 80P(2)(d) of the I. T. Act and not Section 80P(2)(a)(i) of the I. T. Act. Therefore, the said judgment is inapplicable to the present case. Thus, neither of the two substantial questions of law canvassed by the learned the present case.” 8. This view has further been reiterated by the judgment of Hon’ble Kerala High Court in the case of PCIT vs. Percoorkada Service Co. Bank Ltd. (2022) 442 ITR 141 (Kerala) dated 01.11.2021, wherein one e High Court was, whether the interest income earned from deposits with the banks is eligible for deduction u/s 80P(2). The Hon’ble Kerala High Court has also considered the judgment of Hon’ble Supreme Court in the case of Totagars Cooperative d. 322 ITR 323, wherein the Hon’ble High Court has held that interest income earned from district cooperative bank or state cooperative bank, come within the ambit of section 80P (2)(d), therefore the income constitutes income from other sources and it is eligible for deduction covered u/s 80P(2)(d). Otherwise section 80P(2)(d) specifies any income by way of interest or dividend which is otherwise taxable under the head income from other sources, deduction is allowable if the made with any other cooperative 9. In contravention, section 80P (2)(a) provides income from carrying out various activities which is in the nature of business. Irrespective whether the interest income derived from activities as provided in section 80P (2)(a) which is otherwise the business income for which deduction is allowable, if there is any interest income which is earned on deposits or investment made with cooperative societies, the same must fall in the category activity or the business deduction under the specific provision of section 80P(2)(d). Thus, the interest derived by the assessee from cooperative bank is eligible for deduction u/s 80P(2)(d) because as noted above, cooperative are also cooperative societies for this purpose. This has been held so by the Hon’ble Karnataka High Court and latest judgment of Hon’ble Kerala High Court. 10. Lastly, in so far as judgment of Hon’ble Karnataka High Court in the case of Totagars Cooperative Sale Society (395 ITR been referred and relied upon by the Ld. CIT(A), the Hon’ble High Court has held against and observed by deposit or investment of idle or surplus funds does not change its character irrespective of the earned from a schedule bank or cooperative bank. Therefore, section 80P(2)(d) would not apply on the facts of that case. However, as noted above in one of the judgment, the Hon’ble Karnataka High Court has held the same issue in favour of the assessee. 11. Therefore, following the judgment of Hon’ble Karnataka High Court in the case of Totagars Cooperative Sale Society (2017) 392 ITR 74 (Kar.) dated 5th 2017 and judgment of Hon’ble Kerala High Court in the case of PCIT vs. Percoorkada Service Co. Bank Ltd. (supra), we hold that assessee is eligible for deduction of interest income earned from cooperative bank Rustomjee Aspiree Premises Co ITA No. whether the interest income derived from activities as provided in ction 80P (2)(a) which is otherwise the business income for which deduction is allowable, if there is any interest income which is earned on deposits or investment made with cooperative societies, the same must fall in the category activity or the business, but still is eligible for deduction under the specific provision of section 80P(2)(d). Thus, the interest derived by the assessee from cooperative bank is eligible for deduction u/s 80P(2)(d) because as noted above, cooperative are also ties for this purpose. This has been held so by the Hon’ble Karnataka High Court and latest judgment of Hon’ble Kerala 10. Lastly, in so far as judgment of Hon’ble Karnataka High Court in the case of Totagars Cooperative Sale Society (395 ITR 611), which has been referred and relied upon by the Ld. CIT(A), the Hon’ble High Court has held against and observed that income by way of interest earned by deposit or investment of idle or surplus funds does not change its character irrespective of the fact whether such income of interest is earned from a schedule bank or cooperative bank. Therefore, section 80P(2)(d) would not apply on the facts of that case. However, as noted above in one of the judgment, the Hon’ble Karnataka High Court has ame issue in favour of the assessee. 11. Therefore, following the judgment of Hon’ble Karnataka High Court in the case of Totagars Cooperative Sale Society (2017) 392 ITR 74 (Kar.) dated 5th 2017 and judgment of Hon’ble Kerala High Court in IT vs. Percoorkada Service Co. Bank Ltd. (supra), we hold that assessee is eligible for deduction of interest income earned from cooperative bank Rustomjee Aspiree Premises Co-op. Soc. Ltd. 8 ITA No. 1195/Mum/2023 whether the interest income derived from activities as provided in ction 80P (2)(a) which is otherwise the business income for which deduction is allowable, if there is any interest income which is earned on deposits or investment made with cooperative societies, the same , but still is eligible for deduction under the specific provision of section 80P(2)(d). Thus, the interest derived by the assessee from cooperative bank is eligible for deduction u/s 80P(2)(d) because as noted above, cooperative are also ties for this purpose. This has been held so by the Hon’ble Karnataka High Court and latest judgment of Hon’ble Kerala 10. Lastly, in so far as judgment of Hon’ble Karnataka High Court in 611), which has been referred and relied upon by the Ld. CIT(A), the Hon’ble High Court that income by way of interest earned by deposit or investment of idle or surplus funds does not change its fact whether such income of interest is earned from a schedule bank or cooperative bank. Therefore, section 80P(2)(d) would not apply on the facts of that case. However, as noted above in one of the judgment, the Hon’ble Karnataka High Court has 11. Therefore, following the judgment of Hon’ble Karnataka High Court in the case of Totagars Cooperative Sale Society (2017) 392 ITR 74 (Kar.) dated 5th 2017 and judgment of Hon’ble Kerala High Court in IT vs. Percoorkada Service Co. Bank Ltd. (supra), we hold that assessee is eligible for deduction of interest income earned from cooperative bank . 2.2 Similarly, the Tribunal in the case of Cooperative Society Limited rendered the same finding that investment made in co Bank would be exempt in the hands of the housing society. relevant observation are reproduced as under: 8. We have heard the rival submissions and perused the materials on record. It is evident that the assessee is a co registered under the Co assessee has earned interest income of Rs.12,90,210/ claimed as deduction under section 80P(2)(d). It is assessee has invested the surplus funds with co non co-operative banks for which the assessee has received interest income of Rs.10,39,909/ Rs.12,90,210/- from co revised the assessment order passed under section 143(3) of the I.T. Act dated 15/12/2017 on the ground that interest income received by the assessee by way of investment in co for deduction under sectio operative banks will not be classified under ‘Co and that the interest earned from co deduction under the provisions of section 80P(2)(d). The Ld.PCIT placed his reliance on the decision of PCIT vs Totagars Co Society (supra) wherein the Hon’ble High Court held that the amendment to section 194A(3)(v) of the Act excludes cooperative banks from the definition of co Rustomjee Aspiree Premises Co ITA No. Similarly, the Tribunal in the case of Palm Court M Premises Cooperative Society Limited in ITA No.561/Mum/2022 rendered the same finding that investment made in co Bank would be exempt in the hands of the housing society. relevant observation are reproduced as under: 8. We have heard the rival submissions and perused the materials on ord. It is evident that the assessee is a co-operative housing society registered under the Co-operative Housing Societies’ Act and that the assessee has earned interest income of Rs.12,90,210/ claimed as deduction under section 80P(2)(d). It is observed that the assessee has invested the surplus funds with co-operative banks and operative banks for which the assessee has received interest income of Rs.10,39,909/- from non cooperative banks and from co-operative banks, respectively. The Ld.PCIT revised the assessment order passed under section 143(3) of the I.T. Act dated 15/12/2017 on the ground that interest income received by the assessee by way of investment in co-operative banks is not eligible for deduction under section 80P(2)(d) on the ground that the co operative banks will not be classified under ‘Co-operative Societies’ and that the interest earned from co-operative banks are not eligible for deduction under the provisions of section 80P(2)(d). The Ld.PCIT placed s reliance on the decision of PCIT vs Totagars Co-operative Sale Society (supra) wherein the Hon’ble High Court held that the amendment to section 194A(3)(v) of the Act excludes cooperative banks from the definition of co-operative society by Finance Act, Rustomjee Aspiree Premises Co-op. Soc. Ltd. 9 ITA No. 1195/Mum/2023 Palm Court M Premises 561/Mum/2022 rendered the same finding that investment made in co-operative Bank would be exempt in the hands of the housing society. The 8. We have heard the rival submissions and perused the materials on operative housing society operative Housing Societies’ Act and that the assessee has earned interest income of Rs.12,90,210/- which was observed that the operative banks and operative banks for which the assessee has received interest from non cooperative banks and ctively. The Ld.PCIT revised the assessment order passed under section 143(3) of the I.T. Act dated 15/12/2017 on the ground that interest income received by operative banks is not eligible n 80P(2)(d) on the ground that the co- operative Societies’ operative banks are not eligible for deduction under the provisions of section 80P(2)(d). The Ld.PCIT placed operative Sale Society (supra) wherein the Hon’ble High Court held that the amendment to section 194A(3)(v) of the Act excludes cooperative banks operative society by Finance Act, 2015 thereby intending to deduct tax at source under 194A that the said cooperative banks are not speci of genus of co from exemption or deduction under the provisions of Chapter VIA by virtue of section 80P of the Act. Fol Hon’ble Karnataka High Court in the above said decision, the Ld.PCIT held that the assessee was not entitled to deduction under 80P(2)(d) thereby directing the Assessing 5 ITA No. 561/MUM/2021 Officer to frame assessment de decisions relied upon by the Ld.AR in the cases mentioned below: 1. M/s Petit Powers Co No.549/MUM/2021) 2. M/s Solitaire CHS Ltd Society Office, Solitaire CHS Ltd vs PCIT (ITA No.3155/Mum/2019) 3. Jai Hind Co Housing Society Ltd vs ACIT 4. M/s Vadasinor Pragati Samaj Co PCIT-18 (ITA No.2539/Mum/2019) 5. M/s Doshi Palace Co Hsg Soc. Ltd vs ACIT Catholic Co-operative Housing Ltd vs ACIT Circle 3871/Mum/2019 These decisions of the co that the interest income derived by a co investment made with a co deduction under section 80P(2)(d) of the Act. For this proposition, we would like to place our reliance on the decision of M/s Petit Towers Co op. Housing Society Ltd vs ITO (supra) wherein the co has observed as under: “8. We have given a thoughtful consideration to the contentions advanced by the ld. Authorized representatives for both the parties Rustomjee Aspiree Premises Co ITA No. intending to deduct tax at source under 194A that the said cooperative banks are not speci of genus of co-operative society excluding them from exemption or deduction under the provisions of Chapter VIA by virtue of section 80P of the Act. Following the interpretation of the Hon’ble Karnataka High Court in the above said decision, the Ld.PCIT held that the assessee was not entitled to deduction under 80P(2)(d) thereby directing the Assessing 5 ITA No. 561/MUM/2021 Officer to frame assessment de novo. We would like to place our reliance on the decisions relied upon by the Ld.AR in the cases mentioned below: 1. M/s Petit Powers Co-op. Housing Society Ltd vs ITO (ITA No.549/MUM/2021) 2. M/s Solitaire CHS Ltd Society Office, Solitaire CIT (ITA No.3155/Mum/2019) 3. Jai Hind Co Housing Society Ltd vs ACIT-25(2) (ITA No.1762 & 1763/Mum/2020) 4. M/s Vadasinor Pragati Samaj Co-operative Credit Society Ltd vs 18 (ITA No.2539/Mum/2019) 5. M/s Doshi Palace Co td vs ACIT-19(1) (ITA No.2510/MUM/2019) 6. The Salsette operative Housing Ltd vs ACIT Circle-23(3) (ITA No.3870 & These decisions of the co-ordinate benches have reiterated the principle that the interest income derived by a co-operative society by way of investment made with a co-operative bank would be entitled to claim of deduction under section 80P(2)(d) of the Act. For this proposition, we would like to place our reliance on the decision of M/s Petit Towers Co iety Ltd vs ITO (supra) wherein the co-ordinate bench has observed as under:- “8. We have given a thoughtful consideration to the contentions advanced by the ld. Authorized representatives for both the parties Rustomjee Aspiree Premises Co-op. Soc. Ltd. 10 ITA No. 1195/Mum/2023 intending to deduct tax at source under 194A that the said cooperative operative society excluding them from exemption or deduction under the provisions of Chapter VIA by lowing the interpretation of the Hon’ble Karnataka High Court in the above said decision, the Ld.PCIT held that the assessee was not entitled to deduction under 80P(2)(d) thereby directing the Assessing 5 ITA No. 561/MUM/2021 Officer to novo. We would like to place our reliance on the decisions relied upon by the Ld.AR in the cases mentioned below:- op. Housing Society Ltd vs ITO (ITA No.549/MUM/2021) 2. M/s Solitaire CHS Ltd Society Office, Solitaire CIT (ITA No.3155/Mum/2019) 3. Jai Hind Co-operative 25(2) (ITA No.1762 & 1763/Mum/2020) operative Credit Society Ltd vs 18 (ITA No.2539/Mum/2019) 5. M/s Doshi Palace Co-operative 19(1) (ITA No.2510/MUM/2019) 6. The Salsette 23(3) (ITA No.3870 & ordinate benches have reiterated the principle perative society by way of operative bank would be entitled to claim of deduction under section 80P(2)(d) of the Act. For this proposition, we would like to place our reliance on the decision of M/s Petit Towers Co- ordinate bench “8. We have given a thoughtful consideration to the contentions advanced by the ld. Authorized representatives for both the parties in context of the aforesaid issue under consi the ld. A.R, and rightly so, the issue that interest received by a co operative society on its deposits with co eligible for deduction u/s 80P(2)(d) of the Act is covered in assessee’s favour by orders of the Tribunal in the following cases : (i). M/s Solitaire CHS Ltd. Vs. Pr.CIT 3155/Mum/2019, dated 29.11.2019 (ii). Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum.) (iii). M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017. (iv). Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO Range 20(2)(2), Mumbai (ITA NO. 6139/Mum/2014, dated 27.09.2017. (v). Kaliandas Udyog Bhavan Pemises Co Ltd. Vs. ITO, 21(2)(1), Mumbai. 6 In the aforesaid orders, it has been held by the Tribunal that though the cooperative banks pursuant to the insertion of sub Sec. 80P of the Act would no more be entitled for claim of deduction u/s 80P of the Act, but operative society registered under the Co (2 of 1912) or under any other law for the time being in force in any State for the registration of co income derived by a cooperative society from its investments held with a co-operative bank would be entitled for claim of deduction u/s 80P(2)(d) of the Act. We find that the aforesaid issue had exhaustively been looked into by the ITAT, „G Solitaire CHS Ltd, Vs. Pr.CIT dated 29.11.2019, wherein the Tribunal had observed as under : Rustomjee Aspiree Premises Co ITA No. in context of the aforesaid issue under consideration. As stated by the ld. A.R, and rightly so, the issue that interest received by a co operative society on its deposits with co-operative banks would be eligible for deduction u/s 80P(2)(d) of the Act is covered in assessee’s favour by orders of the various coordinate benches of the Tribunal in the following cases : (i). M/s Solitaire CHS Ltd. Vs. Pr.CIT-26, Mumbai, ITA No. 3155/Mum/2019, dated 29.11.2019 (ii). Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum.) (iii). M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO A No. 1343/Mum/2017, dated 31.03.2017. (iv). Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO Range 20(2)(2), Mumbai (ITA NO. 6139/Mum/2014, dated 27.09.2017. (v). Kaliandas Udyog Bhavan Pemises Co Ltd. Vs. ITO, 21(2)(1), Mumbai. 6 ITA No. 561/MUM/2021 In the aforesaid orders, it has been held by the Tribunal that though the cooperative banks pursuant to the insertion of sub Sec. 80P of the Act would no more be entitled for claim of deduction u/s 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 i income derived by a cooperative society from its investments held with operative bank would be entitled for claim of deduction u/s 80P(2)(d) of the Act. We find that the aforesaid issue had exhaustively been looked into by the ITAT, „G‟ bench, Mumbai in the case of M/s Solitaire CHS Ltd, Vs. Pr.CIT-26, Mumbai ITA No.3155/Mum/2019, dated 29.11.2019, wherein the Tribunal had observed as under : Rustomjee Aspiree Premises Co-op. Soc. Ltd. 11 ITA No. 1195/Mum/2023 deration. As stated by the ld. A.R, and rightly so, the issue that interest received by a co- operative banks would be eligible for deduction u/s 80P(2)(d) of the Act is covered in various coordinate benches of the 26, Mumbai, ITA No. 3155/Mum/2019, dated 29.11.2019 (ii). Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum.) (iii). M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), A No. 1343/Mum/2017, dated 31.03.2017. (iv). Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO- Range 20(2)(2), Mumbai (ITA NO. 6139/Mum/2014, dated 27.09.2017. (v). Kaliandas Udyog Bhavan Pemises Co-op. Society ITA No. 561/MUM/2021 In the aforesaid orders, it has been held by the Tribunal that though the cooperative banks pursuant to the insertion of sub-section (4) to Sec. 80P of the Act would no more be entitled for claim of deduction u/s operative bank continues to be a co- operative Societies Act, 1912 (2 of 1912) or under any other law for the time being in force in any operative societies, therefore, the interest income derived by a cooperative society from its investments held with operative bank would be entitled for claim of deduction u/s 80P(2)(d) of the Act. We find that the aforesaid issue had exhaustively Mumbai in the case of M/s 26, Mumbai ITA No.3155/Mum/2019, dated 29.11.2019, wherein the Tribunal had observed as under : “6. We have heard the authorised representatives for both the parties, perused the orders of the lower 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 earned from the investments/deposits made with the co 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 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 a Primary Agricultural Credit Society or a Primary Co Agricultural and Rural Development Bank. Observing, that the co operative banks from where the assessee was in receipt of interest income were not co 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 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 Rustomjee Aspiree Premises Co ITA No. “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 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 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 tha a Primary Agricultural Credit Society or a Primary Co 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 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 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 Rustomjee Aspiree Premises Co-op. Soc. Ltd. 12 ITA No. 1195/Mum/2023 “6. We have heard the authorised representatives for both the 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 )(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 ction (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 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 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 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 Pr. CIT. 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. “80P(2)(d) (1). Where in the co-operative society, the gross total income includes any income referred to in sub with and subject to the provisions of this section, the sums specified in subsection (2), i The sums referred to in sub :- (a)............................................................................................ (b)................................ (c)............................................................................................ (d) in respect of any income by way of interest or dividends derived by the co-operative society fr society, the whole of such income;” 7 ITA No. 561/MUM/2021 On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co investments held w 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. We are in agreement with the view taken by the Pr. CIT, that with the insertion of sub Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co 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 vie 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 Rustomjee Aspiree Premises Co ITA No. before us. “80P(2)(d) (1). Where in the case of an assessee being a 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 subsection (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 operative society from its investments with any other co society, the whole of such income;” 7 ITA No. 561/MUM/2021 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 he 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 bank, other than a primary agricultural credit society or a primary operative agricultural and rural development bank. However, at the same time, we are unable to subscribe to his vie aforesaid amendment would jeopardise the claim of deduction of a operative society under Sec. 80P(2)(d) in respect of its interest income on investments/deposits parked with a co-operative bank. In Rustomjee Aspiree Premises Co-op. Soc. Ltd. 13 ITA No. 1195/Mum/2023 case of an assessee being a operative society, the gross total income includes any income section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified n computing the total income of the assessee. (2). section (1) shall be the following, namely (a)............................................................................................ ............................................................ (c)............................................................................................ (d) in respect of any income by way of interest or dividends derived by the om its investments with any other co-operative society, the whole of such income;” 7 ITA No. 561/MUM/2021 On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest operative society from its 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 operative society with any other co- operative society. We are in agreement with the view taken by the 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 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 operative society under Sec. 80P(2)(d) in respect of its interest operative bank. In our considered view, as long as it is proved is being derived by a co with any other co aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We find that th defined under Sec. 2(19) of the Act, as under: society” means a cooperative society registered under the Cooperative Societies Act, 1912 (2 of 1912), or under any other law for the time being in fo operative societies;” We are of the considered view, that though the co-operative banks pursuant to the insertion of subsection (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a co society registered under the Co 1912), or under any other law for the time being in force in any State for the registration of co income derived by a co 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 asses following cases: (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum) (ii) M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated Rustomjee Aspiree Premises Co ITA No. 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 „cooperative society defined under Sec. 2(19) of the Act, as under:- “(19) “Co society” means a cooperative society registered under the Cooperative 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 operative banks pursuant to the insertion of subsection (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P he Act, but as a co-operative bank continues to be a co 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 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 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 operative bank is covered in favour of the asses (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum) (ii) M/s C. Green Cooperative Housing and Society 21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated Rustomjee Aspiree Premises Co-op. Soc. Ltd. 14 ITA No. 1195/Mum/2023 that the interest income operative society from its investments made operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly e term „cooperative society‟ had been “(19) “Co-operative society” means a cooperative society registered under the Cooperative Societies Act, 1912 (2 of 1912), or under any other law rce in any state for the registration of co- operative societies;” We are of the considered view, that though the operative banks pursuant to the insertion of subsection (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P operative bank continues to be a co-operative operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State refore, the interest operative society from its investments held operative bank would be entitled for claim of deduction 8. We shall now advert to the judicial pronouncements that have 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 operative bank is covered in favour of the assessee in the (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum) (ii) M/s C. Green Cooperative Housing and Society 21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017 (iii) Marvwanjee Cama Park Co Ltd. Vs. ITO-Range dated 27.09.2017. (iv). Kaliandas Udyog Bhavan Pemises Co Society Ltd. Vs. ITO, 21(2)(1), Mumbai. We further find that the Hon'ble High Court of Karnataka in the case Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon State Bank Of India Vs. 8 ITA No. 561/MUM/2021 CIT (2016) 389 ITR 578 (Guj), had held, that the inte assessee on its investments with a co 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 behind enactment of sub operative banks which were functioning at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. Insofar the relian the Hon‟ble Supreme Court in the case of Totgars Co Society Ltd. vs. ITO (2010) 322 ITR 283 (SC) is concerned, we are of the considered view that the same being distinguishable on facts had wrongly been relied upon by him. The adjudication by the Hon‟ble Apex Court in the aforesaid case was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a co towards deduction under Sec. 80P(2)(d) on the interest income on the investments/deposits parked with a co all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars co Society (2017) 395 ITR 611 (Karn), had concluded that a co society would not be entitled to claim of deduction under Sec. Rustomjee Aspiree Premises Co ITA No. 31.03.2017 (iii) Marvwanjee Cama Park Cooperative Housing Society Range-20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. (iv). Kaliandas Udyog Bhavan Pemises Co 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 Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon‟ble High Court of Gujarat in the case of State Bank Of India Vs. 8 ITA No. 561/MUM/2021 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 of deduction under Sec. 80P(4) of the Act. Insofar the reliance placed by the Pr. CIT on the judgment of ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO (2010) 322 ITR 283 (SC) is concerned, we are of the considered view that the same being distinguishable on facts been relied upon by him. The adjudication by the ble Apex Court in the aforesaid case was in context of Sec. 80P(2)(a)(i), and not on the entitlement of a co-operative society towards deduction under Sec. 80P(2)(d) on the interest income on the ments/deposits parked with a co-operative bank. 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 society would not be entitled to claim of deduction under Sec. Rustomjee Aspiree Premises Co-op. Soc. Ltd. 15 ITA No. 1195/Mum/2023 operative Housing Society 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 of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) ble High Court of Gujarat in the case of State Bank Of India Vs. 8 ITA No. 561/MUM/2021 CIT (2016) 389 rest income earned by the 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, scope of doubt that the purpose 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 of deduction under Sec. 80P(4) of ce placed by the Pr. CIT on the judgment of operative Sale Society Ltd. vs. ITO (2010) 322 ITR 283 (SC) is concerned, we are of the considered view that the same being distinguishable on facts been relied upon by him. The adjudication by the ble Apex Court in the aforesaid case was in context of Sec. operative society towards deduction under Sec. 80P(2)(d) on the interest income on the operative bank. Although, in all fairness, we may herein observe that the Hon'ble High Court of 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 Cooperative Sale Society (2017) 392 ITR 7 Hon‟ble High Court 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 cooperative bank would be eligible for cl 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 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 jurisdiction, we respectful High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon Bank Of India Vs. C observed that the interest income earned by a cooperative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 9. Be that as it may, in framing the assessment had taken a possible view, and therein concluded that the assessee would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co was in error in exercising his revisional jurisdiction u/s 263 for Rustomjee Aspiree Premises Co ITA No. 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 Cooperative Sale Society (2017) 392 ITR 7 ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had observed, that the interest income operative society on its investments held with a cooperative 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 Cooperative 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 cooperative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 9. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and therein concluded that the assessee would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with cooperative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 for Rustomjee Aspiree Premises Co-op. Soc. Ltd. 16 ITA No. 1195/Mum/2023 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 Cooperative Sale Society (2017) 392 ITR 74 (Karn) and ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had observed, that the interest income operative society on its investments held with a aim 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 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 ble High Court of ly 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 Cooperative Sale Society (2017) 392 ITR ble High Court of Gujarat in the case of State IT (2016) 389 ITR 578 (Guj), wherein it was observed that the interest income earned by a cooperative society on its investments held with a cooperative bank would be eligible for our considered view, as the A.O while framing the assessment had taken a possible view, and therein concluded that the assessee would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income earned on its operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 for dislodging the same. In fact, as observed by us hereinabove, the aforesaid view taken by the A.O at the time of framing of the assessment was clearly Tribunal in the case of Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum). Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we “set aside” his order and restore the order passed by the A.O under Sec. 143(3), date 14.09.2016.” 9 As the facts and the issue involved in the present case before us remains the same as were there before the Tribunal in the case of M/s Solitaire CHS Ltd. (supra), wherein the order passed by the Pr. CIT u/s 263 of the Act was quashed, we, thus, respectfully follow Backed by our aforesaid deliberations, we are unable to uphold the view taken by the Pr. CIT that the failure on the part of the A.O to be disallow the assessee’s claim for deduction u/s 80P(2)(d) had rendered the assessment order passed by him u 31.08.2017 as erroneous in so far it was prejudicial to the interest of the revenue. 9. Accordingly, on the basis of our aforesaid observations, we herein not finding favor with the view taken by the Pr. CIT that the order passed by the A.O u/s 143(3), dated 31.08.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act set passed by the A.O u/s 143(3) of the Act, dated 31.08.2017 Rustomjee Aspiree Premises Co ITA No. dislodging the same. In fact, as observed by us hereinabove, the aforesaid view taken by the A.O at the time of framing of the assessment was clearly supported by the order of the jurisdictional Tribunal in the case of Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum). Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we “set aside” his order and restore the order passed by the A.O under Sec. 143(3), date 14.09.2016.” ts and the issue involved in the present case before us remains the same as were there before the Tribunal in the case of M/s Solitaire CHS Ltd. (supra), wherein the order passed by the Pr. CIT u/s 263 of the Act was quashed, we, thus, respectfully follow Backed by our aforesaid deliberations, we are unable to uphold the view taken by the Pr. CIT that the failure on the part of the A.O to be disallow the assessee’s claim for deduction u/s 80P(2)(d) had rendered the assessment order passed by him u/s 143(3) of the Act, dated 31.08.2017 as erroneous in so far it was prejudicial to the interest of the revenue. 9. Accordingly, on the basis of our aforesaid observations, we herein not finding favor with the view taken by the Pr. CIT that the d by the A.O u/s 143(3), dated 31.08.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the meaning of Sec. 263 of the Act set-aside the same and restore the order passed by the A.O u/s 143(3) of the Act, dated 31.08.2017 Rustomjee Aspiree Premises Co-op. Soc. Ltd. 17 ITA No. 1195/Mum/2023 dislodging the same. In fact, as observed by us hereinabove, the aforesaid view taken by the A.O at the time of framing of the supported by the order of the jurisdictional Tribunal in the case of Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum). Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we “set aside” his order and restore the order passed by the A.O under Sec. 143(3), date 14.09.2016.” ts and the issue involved in the present case before us remains the same as were there before the Tribunal in the case of M/s Solitaire CHS Ltd. (supra), wherein the order passed by the Pr. CIT u/s 263 of the Act was quashed, we, thus, respectfully follow the same. Backed by our aforesaid deliberations, we are unable to uphold the view taken by the Pr. CIT that the failure on the part of the A.O to be disallow the assessee’s claim for deduction u/s 80P(2)(d) had rendered /s 143(3) of the Act, dated 31.08.2017 as erroneous in so far it was prejudicial to the interest of the revenue. 9. Accordingly, on the basis of our aforesaid observations, we herein not finding favor with the view taken by the Pr. CIT that the d by the A.O u/s 143(3), dated 31.08.2017 was erroneous in so far it was prejudicial to the interest of the revenue within the aside the same and restore the order passed by the A.O u/s 143(3) of the Act, dated 31.08.2017.” 2.3 In view of the binding precedents, we set aside the finding of the Ld. CIT(A) and the Assessing Officer on the issue in dispute and delete the disallowance made by the Assessing Officer. of the assessee is accordingly allowed. 3. In the result the appeal filed by the assessee is allowed. Order pronounced in the open Court on Sd/ (KAVITHA RAJAGOPAL JUDICIAL MEMBER Mumbai; Dated: 10/07/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Rustomjee Aspiree Premises Co ITA No. In view of the binding precedents, we set aside the finding of the Ld. CIT(A) and the Assessing Officer on the issue in dispute and delete the disallowance made by the Assessing Officer. of the assessee is accordingly allowed. In the result the appeal filed by the assessee is allowed. nounced in the open Court on 10/07/2023. Sd/- KAVITHA RAJAGOPAL) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Rustomjee Aspiree Premises Co-op. Soc. Ltd. 18 ITA No. 1195/Mum/2023 In view of the binding precedents, we set aside the finding of the Ld. CIT(A) and the Assessing Officer on the issue in dispute and delete the disallowance made by the Assessing Officer. The ground In the result the appeal filed by the assessee is allowed. /07/2023. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai
Other Referred Cases
PCIT Vs Totagars Cooperative Sale Society, Katlary Kariyana Merchant Sahkari Sarafi Mandali Ltd. v. Assistant Commissioner of Income-tax, Premium Tower Co-operative Housing Society Ltd. v. CIT, Quepem Urban Co-operative Credit Society Ltd. vs. ACIT, The Totgars Cooperative Sale Society Ltd. Vs. Income Tax Officer, PCIT vs. Percoorkada Service Co. Bank Ltd.
Laws Referred To
Income Tax Act, 1961
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1:1 Consultation on Business Development
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Assignment of Registered Trademark
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CRM Implementation Plan
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