GOLD COIN APARTMENTS CO-OPERATIVE HOUSING SOCIETY LTD , MUMBAI V. ITO 22(1)(5), MUMBAI

ITA 1875/MUM/2023

AI Insights

The case involves the Gold Coin Apartments Cooperative Housing Society, which appealed against the order of the CIT(A) that upheld the disallowance of a deduction claimed on interest income from cooperative banks. The interest income of Rs. 444,281 was earned from deposits with Shamrao Vittal Cooperative Bank Ltd and Maharashtra State Cooperative Bank. The Assessing Officer disallowed the deduction citing the amendment in Section 80P(4) of the Income Tax Act, 1961, effective from April 1, 2007, which restricts deductions for income from cooperative banks. However, the Tribunal referenced several precedents where it was held that cooperative societies are entitled to deductions for interest income from cooperative banks under Section 80P(2)(d).

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130157 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-09-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 23-05-2023
• Other Referred Cases: Mittal Park Cooperative Housing Society Ltd. Vs. Asst. Director of Income Tax, Kaliandas Udyog Bhavan Premises Coop Society Ltd. Vs. ITO, Aqua Cooperative Housing Society Limited Vs ITO, Sea Green Cooperative Housing Society Ltd. Vs. ITO, lands' End Cooperative Housing Society Ltd. Vs. ITO, The Nutan Laxmi Chs Ltd. Mumbai Vs. ITO, M/s Palmera Cooperative Housing Society Ltd. Vs. ACIT
• Laws Referred To: Income Tax Act, 1961, Maharashtra Cooperative Societies Act, 1960
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH KISHINCHANDANI
• Assessee Lawyers: VIDHYADHAR KHANDEKAR
• Section: 143(3); 80P; 143(2)

Judgement Text

P a g e | 1 ITA No.1875/Mum/2023 Gold Coin Apartments Cooperative Housing Society Vs. ITO 22(1)(5) IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No.1875/Mum/2023 (A.Y. 2014-15) Gold Coin Apartments Co- operative Housing Society Limited, Vakola Pipe Line, Nehru Road, Santacruz (E) Mumbai – 400 055 Vs. ITO 22(1)(5) Mumbai – 400 013 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAAAG1535H Appellant .. Respondent [ Appellant by : Vidhyadhar Khandekar Respondent by : Prakash Kishinchandani Date of Hearing 05.09.2023 Date of Pronouncement 26.09.2023 आदेश / O R D E R Per Amarjit Singh (AM): This appeal filed by the assesse is directed against the order passed by the ld. CIT(A) NFAC, dated 10.04.2023 for A.Y. 2014- 15. The assessee has raised the following grounds before me: “1. The ld C.I.T. (Appeals) erred in upholding the Order u/s 143 (3) dated 23/12/2016 disallowing a sum of Rs. 4,44,280/- being Interest Income derived from Co-operative Banks without appreciating the fact that Co-operative Banks registered under Maharashtra Cooperative Societies Act, 1960 is a Co-operative Society and as such Interest Income derived by the Appellant is eligible for deduction U/s 80P(2)(d) of the Act. and therefore disallowance ought to be deleted. 2. The learned ITO 22(1)(5) has clearly accepted as can be seen from the order passed u/s 143(3) of the IT Act, 1961 that amount P a g e | 2 ITA No.1875/Mum/2023 Gold Coin Apartments Cooperative Housing Society Vs. ITO 22(1)(5) disallowed is interest income from Co-operative Banks as summed up in Point no 5(vi) on page 5 of the order u/s 143(3) of the Act 3. The Appellant craves leave to add, amend, alter, vary and/or rescind or withdraw any or all the above grounds of Appeal.” 2. The fact in brief is that return of income declaring total income at Rs.444,281/- was filed on 29.11.2015. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 29.07.2016. During the course of assessment proceedings the assessing officer noticed that assessee has earned interest income of Rs.444,281 on the deposit kept with the cooperative bank and claimed deduction u/s 80P(2)(d) of the Act. On query, the assessee explained that assessee is a cooperative housing society and it has earned interest income from the Shamrao Vittal Co-operative Bank Ltd and the Maharashtra State Co-operative Bank which are registered under Maharashtra Cooperative Society Act 1961 as a cooperative society therefore, the assessee is entitled for deduction u/s 80P(2)(d) in respect of interest income earned from the cooperative bank. The assessing officer has not agreed with the submission of the assessee society. The assessing officer stated that vide Finance Act 2006, deduction of income for Income cooperative banks as per the provision of Sec. 80P of the Act has been withdrawn by way of insertion of Sec.80P(4) of the Act w.e.f 1.04.2007. The assessing officer was of the view that a cooperative bank is a commercial bank and does not fall under the purview of a cooperative society as referred in Sec. 80P(2)(d) of the Act. Therefore, claim of deduction u/s 80P(2)(d) on the interest income of Rs.444,281/- earned from the cooperative bank was disallowed and added to the total income of the assessee. P a g e | 3 ITA No.1875/Mum/2023 Gold Coin Apartments Cooperative Housing Society Vs. ITO 22(1)(5) 3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. 4. Heard both the sides and perused the material on record. The assessee is a cooperative society formed with the object of maintaining and protecting the building occupied by its members. The AO has disallowed the claim of deduction stating that Co.op Banks are not cooperative societies. The observation of the AO is not correct as after amendment in the Finance Act 2006, the Cooperative banks still continued to be a cooperative society but not entitled for claiming deduction u/s 80P(4) of the Act. However, the interest income derived by a cooperative Society from its investment with the cooperative bank is entitled for claim of deduction u/s 80P(2)(d) of the Act. On similar issues and identical facts the coordinate benches of the ITAT have held that interest derived by a cooperative society from its investment with a cooperative Bank is entitled for claim of deduction u/s 80P(2)(d) of the Act. Some of the decision of the ITAT wherein the claim of deduction u/s 80P(2)(d) was allowed on the interest income earned from deposit with cooperative bank are as under: (i) Mittal Park Cooperative Housing Society Ltd. Vs. Asst. Director of Income Tax, Mum, W(125) (95) CPC, Bengaluru, (Ld. ADIT). (ii) Mittal Park Cooperative Housing Society Vs. ITO, Ward 25 (3)(1), Mumbai (iii) Kaliandas Udyog Bhavan Premises Coop Society Ltd. Vs. ITO 21(1)(2). (iv) Aqua Cooperative Housing Society Limited Vs ITO 21(1)(2) (v) Sea Green Cooperative Housing Society Ltd. Vs. ITO 21(3)(2) (vi) lands’ End Cooperative Housing Society Ltd. Vs. ITO 16(1)(3) (vii) The Nutan Laxmi Chs Ltd. Mumbai Vs. ITO 19(2)(4) (viii) M/s Palmera Cooperative Housing Society Ltd. Vs. ACIT, 19(2) In the case of Kaliandas Udyog Bhavan Premises Coop. Society Ltd. Vs. ITO vide ITA No. 6547/Mum/2017 dated 25.04.2018 it is held that though the cooperative bank pursuant to the insertion of subsection (4) of Sec. 80P is no more be entitled for claim of P a g e | 4 ITA No.1875/Mum/2023 Gold Coin Apartments Cooperative Housing Society Vs. ITO 22(1)(5) deduction u/s 80P of the Act, but however, as a cooperative bank continued to be a cooperative society registered under the Cooperative Society Act, therefore, the interest income earned by a cooperative society from its investment held that cooperative bank would be entitled for claim of deduction u/s 80P(2)(d). In view of the above facts and findings therefore, we direct the AO to allow the claim of deduction to the assesse in respect of interest earned from investment made with the cooperative bank, Therefore, the appeal of the assesse is allowed. 5. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 26.09.2023 Sd/- (Amarjit Singh) Accountant Member Place: Mumbai Date 26.09.2023 Rohit: PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.