RESERVE BANK COOPERATIVE SOCIETY LTD.,JAIPUR V. ITO, WARD-6(2), JAIPUR, JAIPUR

MA 18/JPR/2024

AI Insights

The case involves the Reserve Bank Cooperative Society Ltd., which filed a Miscellaneous Application against the order of the ITAT Jaipur Bench, challenging the assessment of income and the denial of deductions under section 80P of the Income Tax Act. The primary legal issue was whether the interest income from investments made with cooperative banks is eligible for deduction under section 80P(2)(d), despite the exclusionary provisions of section 80P(4). The Tribunal examined various precedents and statutory provisions, ultimately deciding in favor of the assessee by allowing the deduction.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 35446 (ITAT-JAIPUR)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2020-2021
• Other Referred Cases: Totgars Cooperative Sales Society Ltd. Vs. ITO, PCIT Vs. Totagars Co-operative Sale Society, Mavilayi Service Co-operative Bank Ltd. Vs. ITO, ITO Vs. Bhilwara Zila DugdhUtpadak Sahakari Sangh Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA RINES H
• Assessee Lawyers: P.C. PARWAL; HOLDING
• Keywords: Set aside; Business income; Question of law; Search and seizure; Benefit of exemption; Co-operative Credit Society
• Section: 250; 254(2); 22; 13; 80P; 2(19)

Judgement Text

"vk;djvihyh; vf/kdj.k] t;iqjU;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh]U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM Misc. Application No. 18/JP/2024 (Arising out of ITA No.10/JP/2024) fu/kZkj.ko\"kZ@ Assessment Year : 2020-21 Reserve Bank Cooperative Society Ltd. C/o RBI Building, Rambagh Circle Tonk Road, Jaipur- 302015 (Raj) cuke Vs. The ITO Ward 6(2) Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAATR 5829 A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri P.C. Parwal, CA jktLo dh vksjls@Revenue by: Mrs. Anita Rinesh, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing : 03/01/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 28 /01/2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This is a Miscellaneous Application filed by the assessee u/s 254(2) of the Act against the order of the ITAT Jaipur Bench dated 05-03-2024 praying therein following reason to suitably modify or recall its order. ‘’1. The applicant begs to submit that the order giving rise to the present Miscellaneous Application was received on 26.03.2024. 2. The assessee in Ground No.1 of appeal has challenged the assessment of income at Rs.1,00,66,166/- on the ground that Ld. CIT(A), NFAC has erred in not accepting the contention of assessee that (i) interest receipt from investment 2 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR made with other cooperative bank is attributable to the activity of providing credit facility to its members eligible for deduction u/s 80P(2)(a)(i) of the Act (ii) not accepting the contention of assessee that said interest receipt is otherwise eligible for deduction u/s 80P(2)(d) of the Act and (iii) not allowing proportionate claim of deduction of Rs.24,88,833/- u/s 80P(2)(a)(i) on the income assessed by AO at Rs.1,00,66,166/-. 3. Before the Hon’ble Bench assessee filed a written synopsis comprising of 15 pages where in Para 1 to 5 of the synopsis it relied on the various cases where interest receipt is considered to be attributable to the business of providing credit facility to its members and thus assessable as business income and not income from other sources, at Para 6 to 12 of the synopsis it relied on the various cases where such interest receipt is held eligible for deduction u/s 80P(2)(d) of the Act and at Para 13 it contended that Rs.24,88,785/- is the profit in relation to the interest income earned from credit facility to the members and thus to this extent assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act. 4. The Hon’ble ITAT only reproduced Para 1 to 3 of the written synopsis at Pg 11-13 of its order and without considering the various case laws relied by the assessee by referring to the decision of Hon’ble Supreme Court in case of Totgars Cooperative Sales Society Ltd. Vs. ITO 188 Taxman 282, decision of Hon’ble Karnataka High Court in case of PCIT Vs. Totagars Co-operative Sale Society 395 ITR 611, decision of Hon’ble Supreme Court in case of Mavilayi Service Co- operative Bank Ltd. 123 taxmann.com 161 and the decision of ITAT Jodhpur Bench in ITA No.134/Jodh/2023 in case of ITO Vs. Bhilwara Zila DugdhUtpadak Sahakari Sangh Ltd. order dt. 14.10.2023 dismissed the appeal of assessee. 5. In deciding the appeal, following mistakes apparent on record has crept in:- (i) The assessee at Para 4 of the synopsis has pointed out that the Hon’ble Supreme Court in case of Totgars Cooperative Sales Society Ltd. Vs. ITO 188 Taxman 282 has clarified that they are confining the said judgment to the facts of that case. Further at Para 5 of the synopsis it is pointed out that NFAC in assessee’s own case for AY 2018-19 has held that AO is not justified in disallowing the deduction u/s 80P(2)(a)(i) of the Act. The assessee also relied on the decision of ITAT Raipur Bench, Vishakhapatnam Bench and Pune Bench where it was held that interest received from cooperative society is eligible for deduction u/s 80P(2)(a)(i) of the Act. However, these decisions have not been considered/discussed/distinguished by the Hon’ble ITAT. (ii) The assessee at Para 6 to 12 of the synopsis has referred to various decisions including decisions of ITAT, Jaipur Bench where it was held that interest earned from cooperative bank is eligible for deduction u/s 80P(2)(d) of the Act. 3 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR However, none of these decisions were considered/distinguished by the Hon’ble ITAT. (iii) Hon’ble ITAT at Para 13 of the order has referred to the decision of ITAT Jodhpur Bench in case of ITO Vs. Bhilwara Zila DugdhUtpadak Sahakari Sangh Ltd. 233 DTR 65 to held that interest from cooperative bank is not eligible for deduction u/s 80P(2)(d) of the Act. However, in this decision it is held that Baroda Rajasthan Gramin Bank Ltd. being a regional rural bank is not a co-operative society and therefore interest received by the assessee-society from the said entity is not allowable as deduction u/s 80P(2)(d). However, interest received by the assessee from central co-operative bank is allowable as deduction u/s 80P(2)(d). The Hon’ble ITAT further failed to consider that Hon’ble Rajasthan High Court in case of PCIT Vs. Bhilwara Zila DugdhUtpadak Sahakari Sangh Ltd. order dt. 13.08.2019 has held that section 22 of Regional Rural Bank Act, 1976 has held Regional Rural Bank as deemed cooperative society and thus interest received from Baroda Rajasthan Regional Rural Bank is eligible for deduction u/s 80P(2)(d) of the Act. (iv) Hon’ble ITAT has also not decided the alternate ground of assessee for allowing proportionate claim of deduction of Rs.24,88,833/- u/s 80P(2)(a)(i) of the Act. (v) It is submitted that when there are decisions of Jaipur Bench in favour of assessee and there is no decision of the jurisdictional High Court against the assessee but there are decisions of other High Court against the assessee, then in case a view against the assessee is to be taken, the judicial proprietary demand that the matter be referred to Special Bench instead of dismissing the appeal of assessee. 2.1 On the other hand, the ld. DR supported the order of ITAT Jaipur Bench (supra) praying that the assessee wants to get the ITAT order reviewed in the garb of Misc. Application. 2.2 We have heard both the parties and perused the materials available on record. The Bench prima facie noted that the ITAT Jaipur Bench vide its order dated 05-03-2024 dismissed the appeal of the assessee by holding as under:- 4 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR ‘’12……..The ratio decidendi of the aforesaid decision is that a co-operative bank which is working under a license from the Reserve Bank of India falls within the mischief of section 80P(4). Thus, any income in the form of interest received from a co-operative bank would not be eligible for deduction u/s 80P(2)(d) as co- operative banks, functioning under a license from the RBI and lending and taking deposits from the public are specifically excluded from the provisions of section 80P by virtue of section 80P(4). Since the Rajasthan State Co-operative Bank is a scheduled bank working under the Banking Regulation Act, it falls within the mischief of section 80P(4) and it cannot be considered as a co-operative society for the purpose of section 80P. Thus, interest income from this bank cannot be considered as income from investments with any other 'co-operative society' and is, thus, not eligible for deduction u/s 80P(2)(d). Therefore, the appellant is not eligible to claim deduction either u/s 80P(2)(a)(i) or 80P(2)(d) of the IT Act on the interest income from co-operative banks of Rs. 5,17,43,725/- Thus, ground of appeal no. 1 is hereby dismissed.\" 13. Recently, the Coordinate Jodhpur Benchin ITA No. 134/Jodh/2023; in case of ITO v. Bhilwara Zila DugdhUtpadakSahkari Sang Ltd. vide order dated 14/10/2023 by following the latest judgement the Hon'ble Apex Court in the case of \"Kerala State Co-Operative Agricultural & Rural Development Bank Ltd. v. Assessing Officer\", [2023] 154 taxmann.com 305 (SC) has observed that the appellant was a co-operative society under Section 80P(2)(a)(i) of the Act whose primary object is to provide financial accommodation to its members who are all other cooperative societies and not member of the public. Thus, the interest received by the appellant amounting to Rs. 2,31,59,253/- from Baroda Rajasthan Gramin Bank Ltd, a Regional Rural Bank and not a co-operative bank would not be allowable deduction u/s 80P(2)(d) of the Act as this entity is not a cooperative society as provided u/s 80P(2)(d) of the Act, in the light of the latest judgement of the Apex Court in the case of \"Kerala State Co-Operative Agricultural & Rural Development Bank Ltd. v. Assessing Officer\", (Supra). We note that at para 13 of the order, ITAT by referring to the decision of coordinate jodhpur bench in ITA no. 134/JODH/2023 in case of ITO vs Bhilwara zila, Dudh Utpadak Sehkari Sang Ltd has held that interest received from Baroda Rajasthan Gramin Bank Ltd, a regional rural bank and not a cooperative bank would not be a allowable deduction u/s 80P(2)(d) of the Act and therefore since Rajasthan State Cooperative Bank 5 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR is a scheduled bank working under the banking regulation Act, it falls within the mischief of section 80P(4) and it can’t be considered as a cooperative society for the purpose of deduction u/s 80P(2)(d) of the Act. However we find that in case of ITO vs Bhilwara zila, Dudh Utpadak Sehkari Sang Ltd in para 9 of the order though it is held that interest received from Baroda Rajasthan Gramin Bank Ltd, a regional rural bank and not a cooperative bank would not be an allowable deductionu/s 80P(2)(d) of the Act but in the same decision it is held that interest received from central cooperative bank is eligible for deduction u/s 80P(2)(d) of the Act and Para 9 of this judgement is reproduced as under:- ‘’9. In the order of the Co-ordinate bench relied by the appellant, the Tribunal has followed its earlier order in the assessee's own case without taking into consideration the latest judgment of the apex Court (supra) in the present case, the appellant is a co-operative society whose primary object is to provide financial accommodation to its members who are all other co-operative societies and not members of the public. Thus, the interest received by the appellant amounting to Rs 2,31,59,253 from Baroda Rajasthan Gramin Bank Ltd a regional rural bank and not a co-operative bank would not be allowable deduction under s. 80P(2)(d) of the Act as this entity is not a co-operative society as provided under s. 80P(2)(d) of the Act in the light of the latest judgment of the apex Court in the case of Kerala State Co-operative Agricultural & Rural Development Bank Ltd vs AO (supra) However, addition of interest amounting to Rs. 18,12,954 received by the appellant from Central Co-operative Bank is held to nightly deleted by the CIT(A). Thus, addition made in the assessment order in respect of the interest received by the appellant amounting to Rs. 2,31,59,253 from Baroda Rajasthan Gramin Bank Ltd, a Regional Rural Bank which is not a co operative bank would be liable to be sustained.’’ We also note that Hon’ble Rajasthan High Court in DBIT appeal no. 2/2019 in case of PCIT vs Bhilwara zila, Dudh Utpadak Sehkari Sang Ltd vide 6 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR order dated 13/08/2019 has held that by virtue of Sec 22 of Regional Rural Bank Act 1976, Regional Rural Banks continue to be deemed cooperative society for the purpose of Income Tax Act and all the contingent consequences that flow from it. Thus we find that a mistake apparent on record has crept in the order in not allowing deduction u/s 80P(2)(d ) of the Act to the assessee in respect of interest income received from Rajasthan State Cooperative Bank Ltd. Hence the ITAT order dated 5/03/2024 in ITA no. 10/JPR/2024 is recalled and M.A. of the assessee is allowed. 3.1 Now after recalling the order, the case needs to be fixed for afresh hearing but in the present case since all the material is available on recordand we deem it proper to decide this issue in the interest of imparting justice. We note that in respect of claim of deduction u/s 80P(2)(d)in respect of interest received from Rajasthan State Cooperative Bank Ltd. and A.P. Mahesh Urban Cooperative Bank Ltd., assessee has filed the following submissions in the original appellate proceedings which is not considered in that order and the same is reproduced as under. ‘’6. Without prejudice to the claim of deduction u/s 80P(2)(a)(i), it is also submitted that u/s 80P(2)(d) any income by way of interest derived by the cooperative society from its investment with other cooperative society is eligible for deduction of whole of such interest income. In the present case, assessee has earned interest of Rs.5,17,43,725/- on FDRs made with Rajasthan State Cooperative Bank Ltd. and A.P. Mahesh Urban Cooperative Bank Ltd. Hon’ble Karnataka High Court in case of CIT Vs. Totagars Cooperative Sales Society 7 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR order dt. 05.01.2017 reported at 392 ITR 74 has held that cooperative banks is a cooperative society and therefore, interest earned from investment made in FDR of cooperative banks is eligible for deduction u/s 80P(2)(d). The relevant Para 8-11 of this order is reproduced as under:- “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 Tribunal 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-operative Society Bank is merely a variety of the Co-operative Societies. Thus the co- operative bank which is a species of the genus would necessarily be covered by the word \"co-operative society\". 9. Furthermore, even according to s. 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 s. 80P(2)(d) of the IT Act, the said amount of interest earned from a Co-operative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its total income. Therefore, the AO 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-operative Sale Society Ltd. vs. ITO (supra). However, the said case dealt with the interpretation, and the deduction, which would be applicable under s. 80P(2)(a)(i) of the IT Act. For, in the present case the interpretation that is required is of s. 80P(2)(d) of the IT Act and not s. 80P(2)(a)(i) of the IT 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.” 7. The AO has relied on the subsequent decision dt. 16.06.2017 of Hon’ble Karnataka High Court reported at 395 ITR 611/ 83 taxmann.com 140. However, it may be noted that both the decisions of Hon’ble Karnataka High Court are of Divisional Bench and therefore, the subsequent decision of Karnataka High Court without referring to the Full Bench is not as per the judicial discipline. Therefore, in view of the decision ofHon’ble Bombay High Court in case of K. Subramanian &Anr. Vs. Siemen’s India Ltd. &Anr. (1985) 156 ITR 11,where there is conflict 8 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR between the decisions of non jurisdictional High Courts, then a view which is in favour of the assessee is to be preferred as against that taken against him. TheHon’ble Supreme Court in case of CIT Vs. Vegetable Products Ltd. 88 ITR 192 has held that where two reasonable constructions of a taxing provision are possible, then the construction which favours the assessee must be adopted. However, the Ld. AO at Para 6.5, Pg 12-13 has referred to the decision of Ho’ble Supreme Court under the Custom Act in case of Commissioner of Customs Vs. Dilip Kumar & Co. where it was held that the exemption statutes have to be interpreted strictly and in case of ambiguity, it must be interpreted in favour of the revenue. This decision is under the Custom Act and further the case of assessee is for claim of deduction and not claim of exemption. Hence, this decision would not override the decision of Hon’ble Supreme Court under Income Tax Act. 8. The effect of both the decisions of Karnataka High Court has been considered byHon’ble ITAT Mumbai Bench in case of Kaliandas Udyog Bhavan Premises Cooperative Society Ltd. Vs. ITO ITA No.6547/Mum/2017 dt. 25.04.2018 (PB 101-112)wherein at Para 6 to 9 (PB 107-111) it is 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. We find that our indulgence in the present appeal has been sought to adjudicate as to whether the claim of the assessee for deduction under section 80P(2)(d), in respect of interest income earned from the investments made with the co-operative banks is in order or not. We find that the issue involved in the present appeal hinges around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P, as had been made available on the statute by the legislature vide the Finance Act 2006, with effect from 01.04.2007. We find that the lower authorities had taken a 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) of the interest income earned on the amounts parked as investments with co-operative banks, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. We find that the lower authorities had observed that as the co-operative bank with which the surplus funds of the assessee were parked as investments, were neither Primary Agricultural Credit Society nor a Primary Co- operative Agricultural and Rural Development Bank, therefore, the interest income earned on such investments would not be entitled for claim of deduction under Sec. 80P(2)(d) of the Act. 7. We have deliberated at length on the issue under consideration and are unable to persuade ourselves to be in agreement with the view taken by the lower authorities. Before proceeding further, we may herein reproduce the relevant extract of the said statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. 9 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR “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;” Thus, from a perusal of the aforesaid Sec. 80P(2)(d) it can safely be gathered that income by way of interest income derived by an assessee cooperative society from its investments held with any other cooperative society, shall be deducted in computing the total income of the assessee. 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 cooperative society. We though are in agreement with the observations of the lower authorities 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, but however, are unable to subscribe to their view that the same shall also jeopardise the claim of deduction of a co- operative society under Sec. 80P(2)(d) in respect of the interest income on their investments parked with a co-operative bank. We have given a thoughtful consideration to the issue before us and are of the considered view that 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 may herein observe that the term „co-operative society‟ had been defined under Sec. 2(19) of the Act, as under:- “(19) “Co-operative society” means a cooperative 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 cooperative societies;” We are of the considered view, that though the co-operative bank pursuant to the insertion of Sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but however, as a co-operative bank 10 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR 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 enforced in any state for the registration of cooperative 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 had been relied upon by the authorized representatives for both the parties and the lower authorities. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) for the interest income derived from its investments held with a cooperative bank is covered in favour of the assessee in the 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. ITO21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017 (iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITORange- 20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. 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. CIT (2016) 389 ITR 578 (Guj), had also held that the interest income earned by the assessee on its investments held 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, as had been relied upon by the ld. A.R, also makes it clear beyond any scope of doubt, that the purpose behind enactment of sub-section (4) of Sec. 80P was to provide that the cooperative banks which are functioning at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. We are of the considered view that the reliance placed by the CIT(A) on the judgment of the Hon‟ble Supreme Court in the case of Totgars Cooperative Sale Society Ltd. vs. ITO (2010) 322 ITR 283(S.C) being distinguishable on facts, thus, 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-operative society towards deduction under Sec. 80P(2)(d) on the interest income on the investments parked with a co-operative bank. We further find that the reliance place by the ld. D.R on the order of the ITAT “F” bench, Mumbai in the case of M/s Vaibhav Cooperative Credit Society Vs. ITO-15(3)(4) (ITA No. 5819/Mum/2014, dated 17.03.2017 is also distinguishable on facts. We find that the said order was passed by the Tribunal in context of adjudication of the entitlement of the assessee co-operative bank towards claim of deduction under Sec.80P(2)(a)(i) of the Act. We find that it was in the backdrop of the aforesaid 11 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR facts that the Tribunal after carrying out a conjoint reading of Sec. 80P(2)(a)(i) r.w. Sec. 80P(4) had adjudicated the issue before them. We are afraid that the reliance placed by the ld. D.R on the aforesaid order of the Tribunal being distinguishable on facts, thus, would be of no assistance for adjudication of the issue before us. Still further, the reliance placed by the Ld. D.R on the order of the ITAT „SMC‟ Bench, Mumbai in the case of Shri Sai Datta Co-operative Credit Society Ltd. Vs. ITO (ITA No. 2379/Mum/2015, dated 15.01.2016, would also not be of any assistance, for the reason that in the said matter the Tribunal had set aside the issue to the file of the assessing officer for fresh examination. That as regards the reliance placed by the ld. D.R on the judgment of the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars co-operative Sale Society (2017) 395 ITR 611 (Karn), the High Court had concluded that a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). We however 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. Thus, 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 co-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. 9. We thus in the backdrop of our aforesaid observations are unable to persuade ourselves to be in agreement with the view taken by the lower authorities that the assessee would not be entitled for claim of deduction under Sec. 80P(2)(d), in respect of the interest income on the investments made with the co-operative bank. We thus set aside the order of the lower authorities and conclude that the interest income of Rs.27,48,553/- earned by the assessee on the investments held with the co-operative bank would be entitled for claim of deduction under Sec. 80P(2)(d).” This decision has not been controverted by Ld. CIT(A). 9. It is submitted that by following the decision of Hon’ble Karnataka High Court reported in 395 ITR 611, Hon’ble Gujarat High Court in case of Katlary Kariyana Merchant SahkariSarafiMandali Ltd. Vs. ACIT (2022) 327 CTR 138 at para 13 after extracting para 16 & 17 of the decision of Gujarat High Court in case of State Bank of India Vs. CIT 389 ITR 578 and at para 14 referring to the amendment made in section 194A(3)(v) of the Act held that deduction of income derived by way of interest from the investment in the form of FDRs with other bank 12 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR is not correct. In this connection it may be noted that even the Gujarat High Court in case of State Bank of India Vs. CIT 389 ITR 578 in last 3 lines of Para 16 has held that ‘if the appellant wants to avail the benefit of deduction of such interest income, it is always open for it to deposit the surplus funds with a cooperative bank and avail of deduction u/s 80P(2)(d) of the Act.’ Thus, the decision of Hon’ble Gujarat High Court in 327 CTR 138 without referring the matter to the Full Bench is directly in conflict with that given in 389 ITR 578 and thus has no precedent value. Otherwise also, where there is conflict between the decisions of non jurisdictional High Courts, then a view which is in favour of the assessee is to be preferred. So far as amendment to section 194A(3)(v) requiring the cooperative bank to deduct income tax at source on income credited or paid to any other cooperative society is concerned, this amendment nowhere states that cooperative bank are not cooperative society. 10. It is submitted that Hon’ble Kerala High Court in case of PCIT Vs. Peroorkada Service Cooperative Bank Ltd. (2022) 442 ITR 141(PB 113-136) after considering the entire section 80P and the decision of Supreme Court in case of Totgars Co-operative Sale Society Ltd. Vs. ITO at Para 8.3 (PB 127-128) held as under:- 8.3 Further, clause (d) deals with interest in respect of any income by way of interest or dividends derived by the Co-operative Societies from its investments with any other Co-operative Society, the whole of such interest income is eligible for deduction. It is upon plain construction inferable that clause (d) deals with income derived by a Co-operative Society, other than the income covered by clauses (a) to (c) of Section 80P(2). Clause (d) deals with yet another type of income earned by the Co-operative Society which is deducted while computing the total income of the assessee. However, to merit acceptance of deduction under clause (d) of Section 80P(2) of the Act, the clause referring to interest or dividend derived from investments with any other Co-operative Society is satisfied. In the case on hand, the argument of assessee is that the interest earned by the assessee is from Co-operative Banks/Treasury. The Co-operative Banks are registered under the Kerala Co-operative Societies Act. Therefore, the interest earned could be treated as meriting consideration under clause (d) of Section 80P(2) of the Act. It is not in dispute that the District/State Co-operative Banks have licence from the Reserve Bank of India under the Banking Regulation Act and are registered Co-operative Societies under the Act. Suffice to observe that by being a Society doing banking business such society will stand on par with a Co- operative Society registered under the Kerala Co-operative Societies Act would come within the purview of clause (d) of Section 80P(2). 11. Further Hon’ble Madras High Court in case of Thorapadi Urban Cooperative Credit Society Ltd. Vs. ITO (2024) 296 Taxman 250 held that where a cooperative society made investment with cooperative bank which was registered under Tamil Nadu Cooperative Society Act, 1983, assessee society 13 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR would be entitled to claim benefit u/s 80P(2)(d) with respect to interest income received from said investments. 12. In various decisions of Tribunals including Jaipur Tribunal it has been held that interest earned on investment made with cooperative bank is eligible for deduction u/s 80P(2)(d). Reliance is placed on the following cases:- Gramin Sewa Sahakari Samiti Maryadit Vs. ITO (2022) 215 DTR 193 (Raipur) (Trib.) (PB 83-95) A co-operative bank falls within the realm of the definition of \"co-operative society\" as contemplated in sec. 2(19) and therefore, dividend income received by the assessee from a co-operative bank is eligible for deduction u/s 80P(2)(d). DCIT Vs. Rajasthan Cooperative Dairy Federation Ltd. ITA No.349, 200 & 350/JP/2022 order dt. 27.04.2023 (Jaipur) (Trib.) (PB 137-153) In this case the Hon’ble ITAT at Para 13.3 (PB 145-152) after relying on the decision of Mumbai Bench in case of Palm Court M Premises Cooperative Society Ltd. Vs. PCIT 145 taxmann.com 415 held that interest received by a cooperative society from investment made with a cooperative bank is eligible for deduction u/s 80P(2)(d). Pathare Prabhu Co-operative Housing Society Ltd. Vs. ITO (2023) 202 ITD 464 (Mumbai) (Trib.) (PB 154-158) The relevant Para 11-14 of the order is reproduced as under:- 11. In the present case, there is no dispute that the assessee is a Co- Operative Housing Society. Thus, if any income as referred to in sub-section (2) to section 80P of the Act is included in the gross total income of the assessee, the same shall be allowed as a deduction. It is pertinent to note that since the assessee is registered under the Maharashtra Co-operative Societies Act, 1960, it is required to invest or deposit its funds in one of the modes provided in section 70 of the aforesaid Act, which includes investment or deposit of funds in the District Central Co-operative Bank or the State Co- operative Bank. Accordingly, the assessee kept the deposits in Co-operative Banks registered under the Maharashtra Co- operative Societies Act and earned interest, which was claimed as a deduction under section 80P(2)(d) of the Act. The AO denied the deduction under section 80P(2)(d) of the Act on the basis that the Co-operative Bank is covered under the provisions of section 80P(4) of the Act. We find that the Hon’ble Supreme Court in Mavilayi Service Co- operative Bank Ltd. vs CIT, Calicut, [2021] 431 ITR 1 (SC) while analysing the provisions of section 80P(4) of the Act held that section 80P(4) is a proviso to the main provision contained in section 80P(1) and (2) and excludes only Co- operative Banks, which are Co-operative Societies and also possesses a licence from RBI to do banking business. The Hon’ble Supreme Court further held that the limited object of section 80P(4) is to exclude Co-operative Banks that 14 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR function at par with other commercial banks i.e. which lend money to members of the public. Thus, we are of the considered view that section 80P(4) of the Act is of relevance only in a case where the assessee, who is a Co-operative Bank, claims a deduction under section 80P of the Act which is not the facts of the present case. Therefore, we find no merits in the aforesaid reasoning adopted by the AO and upheld by the learned CIT(A) in denying deduction under section 80P(2)(d) of the Act to the assessee. 12. As regards the claim of deduction under section 80P(2)(d) of the Act, it is also pertinent to note that all Co-operative Banks are Co-operative Societies but vice versa is not true. We find that the coordinate benches of the Tribunal have consistently taken a view in favour of the assessee and held that even the interest earned from the Co-operative Banks is allowable as a deduction under section 80P(2)(d) of the Act. In Kaliandas Udyog Bhavan Premises Co-op Society Ltd vs ITO, in ITA No. 6547/Mum./2017, vide order dated 25/04/2018, while dealing with the provisions of section 80P(2)(d) vis-à-vis section 80P(4) of the Act, the coordinate bench of the Tribunal observed as under: …… 13. We find that the learned CIT(A) has placed reliance upon the decision of the Hon’ble Karnataka High Court in Pr.CIT v/s Totagars Co-operative Sales Society, [2017] 395 ITR 611 (Karn.), wherein it was held that interest earned by the assessee, a Co-operative Society, from surplus deposits kept with a Co- operative Bank, was not eligible for deduction under section 80P(2)(d) of the Act. We find that in an earlier decision the Hon’ble Karnataka High Court in Pr.CIT v/s Totagars Co-operative Sales Society, [2017] 392 ITR 74 (Karn.) held that according to section 80P(2)(d) of the Act, the amount of interest earned from a Co-operative Society Bank would be deductable from the gross income of the Co-operative Society in order to assess its total income. Thus, there are divergent views of the same Hon’ble High Court on the issue of eligibility of deduction under section 80P(2)(d) of the Act in respect of interest earned from Co-operative Bank. No decision of the Hon’ble jurisdictional High Court was brought to our notice on this aspect. We have to, with our highest respect to both the views of the Hon’ble High Court, adopt an objective criterion for deciding as to which decision of the Hon’ble High Court should be followed by us. We find guidance from the judgment of the Hon’ble Supreme Court in CIT v. Vegetable Products Ltd., [1972] 88 ITR 192. In the aforesaid decision, the Hon’ble Supreme Court has laid down a principle that “if two reasonable constructions of a taxing provisions are possible, that construction which favours the assessee must be adopted.” 14. Therefore, in view of the above, we uphold the plea of the assessee and direct the AO to grant the deduction under section 80P(2)(d) of the Act to the assessee in respect of interest income earned from investment with Co- operative Banks. Accordingly, we set aside the impugned order passed by the learned CIT(A) for 15 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR the assessment year 2018-19. As a result, grounds raised by the assessee are allowed. ITO Vs. Shree Keshorai Patan Sahakari Sugar Mill ITA No. 418 & 419/JP/2017 order dated 31.01.2018 (Jaipur) (Trib.) The only condition for availing deduction u/s 80P(2)(d) is that income is by way of interest or dividend derived by co-operative society from its investment with any other co-operative society. Co-operative bank is to be treated as co-operative society for the purpose of interest income on investment in such co-operative bank. Hence, assessee is eligible for deduction u/s 80P(2)(d) in respect of the interest income from investment made with the co-operative bank. M/s Jaipur Zila DugdhUtpadak Sahakari Sangh Ltd. Vs. DCIT ITA No. 512 & 513/JP/2019 order dt. 02.09.2019 (Jaipur) (Trib.) The Hon’ble ITAT after relying on the decision of Hon’ble ITAT Mumbai Bench in case of Kaliandas Udyog Bhavan Premises Cooperative Society Ltd. Vs. ITO held that by virtue of provisions of section 80P(4) of the Act, the claim of assessee u/s 80(P)(2)(d) cannot be denied to the assessee society and it is eligible for deduction in case of interest income on FDRs placed with Jaipur Central Cooperative Bank Ltd. Thus, in view of the above decisions, the assessee is otherwise eligible for deduction u/s 80P(2)(d) in respect of interest income earned from investment made with the cooperative banks.’’ We noted that ITAT Jaipur Bench in the subsequent order in case of ITO vs Hitkari Vidhyalaya Sehkari Sikhsha Samiti Ltd, Kota in ITA no. 645 and 646/JP/23 vide order dated 20/08/2024 after considering the decision of various Hon’ble High Courts and Tribunals and also by referring to the decision of Hon’ble Rajasthan High Court in DBIT appeal no. 2/2019 (supra) has held that deduction u/s 80P(2)(d) is available on the interest received from another cooperative society running as a cooperative bank as per Banking Regulation Act by giving following finding: 16 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR ‘’11. We have heard the rival contention and perused the materials placed on records by both the parties. Before us both the parties supported the orders of the lower authorities as favorable to them. In this appeal the solitary ground raised by the revenue is that the ld. CIT(A) is justified in directing the ld. AO to delete the disallowance of Rs. 1,45,12,666/- made by the ld. AO considering the provision of section 80P(2)(d) of the Act. The brief facts being not disputed by both the parties the same are not repeated and we directly deal with the allowability of deduction claimed by the assessee for an amount of Rs. 1,45,12,666/- as per provision of section 80P(2)(d) of the Act. The assessee in the assessment proceeding contended that they have received a sum of Rs. 6,68,98,489/-. Most of the amount so received is sourced from the co-operative society though the same are also running as co-operative bank. The ld. AO did not consider the interest income stating that though assessee claimed to have received the interest from the entity registered under Co-operative Societies Act but it also granted license to carry on banking business u/s. 22(1) read with section 56(o) of the Reserve Bank of India and thus considering the amendment made in section 80P(4) he did not considered these interest income as eligible for deduction u/s. 80P(2)(d) of the Act. Thus, the limited issue before us is that whether the assessee being co-operative society be denied benefit of section 80P(2)(d) of the Act on interest received from another cooperative Societies [ Running as co-operative bank as per banking regulations ]. The similar issue has been decided by the Hon’ble Rajasthan High court, Jodhpur while dealing with the Revenue’s appeal filed for the assessment year 2014-15 in the case of PCIT, Ajmer vs M/s Bhilwara Zila DugdhUtpadak Sahakari Sangh Ltd. in BD Income Tax Appeal No. 2/2019. The relevant observation made in the order by the Jurisdictional High Court has been reproduced as under: “The revenue cites a CBDT Circular (No. 6/2010 dated 20.09.2010) and contends that the Board categorically stated that interest income derived from deposits, made with non-cooperative institutions and more specifically Regional Rural Banks do not qualify for the benefit under Section 80P(2) of the Act of 1961. Section 22 of the Regional Rural Banks Act, 1976 states as follows” “22. Regional Rural Bank to be deemed to be a co- operative society for purpose of the Income Tax Act, 1961- For the purpose of the Income Tax Act, 1961 (43 of 1961), or any other enactment for the time being in force relating to any tax on income, profits, or gains, a Regional Rural Bank shall be deemed to be a cooperative society.\" The CBDT reasoning appears to be that Section 80P was amended w.e.f. 1.4.2007 introducing specifically that the benefit of exemption would not apply to any cooperative bank other than Primary Agricultural Credit Society or a Primary Cooperative Agricultural and Rural Development Bank. The circular then stated that in the light of this inclusion - to Section 80P by way of introduction of Section 80P(4), the exemption could not be availed of by the banks invested in Regional Rural Banks. This Court is of the opinion that the 17 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR revenue's contention is unsustainable. Section 22 in uncertain terms categorically deems Regional Rural Banks (of which description Baroda Rajasthan Regional Rural Banks answer to) as Cooperative Societies for the purposes of Income Tax Act. In the absence of non-obstante clause, the mere fact that a restrictive condition was imposed in relation to a Cooperative Bank for regulating the benefit of Section 80P, does not in any manner, alter the pre-existing situation. By virtue of Section 22, Regional Rural Banks continue to be deemed Cooperative Societies and all the contingent consequences that flow from it. For the above reasons, this court is of the opinion that there is no substantial question of law involved in the present appeal. The appeal is, therefore, dismissed.” 12. The revenue has challenged that order of the Jodhpur bench wherein the bench has dealt with that issue in detailed and the finding of the bench in that case being in detailed is reproduced herein below: “7. We have heard the both parties and perused the materials available on record. The Bench observed that the said appeal was filed on the basis of that addition of Rs. 2,23,46,187/- u/s 80P(2)(d) of the Act. We note that the department has preferred an appeal against the order of Id. CIT(A) for assessment year 2016- 17 wherein the disallowance of deduction claimed u/s 80P(2)(d) of the Act amount to Rs. 2,23,46,187/- was deleted. The issue before us is that whether the assessee being co-operative society be denied benefit of section 80P(2)(d) of the Act on interest received from another co- operative society engaged in banking activities. The similar issue has been decided by the Hon'ble Rajasthan High court, Jodhpur has decided in Revenue's appeal filed for the assessment year 2014-15 in the case of PCIT. Ajmer vs M/s Bhilwara Zila DugdhUtpadak Sahakari Sangh Ltd. in BD Income Tax Appeal No. 2/2019 vide its order dated 13.08.2019. The relevant observation made in the order by the Jurisdictional High Court has been reproduced as under:- \"The revenue cites a CBDT Circular (No. 6/2010 dated 20.09.2010) and contends that the Board categorically stated that interest income derived from deposits, made with non-cooperative institutions and more specifically Regional Rural Banks do not qualify for the benefit under Section 80P(2) of the Act of 1961. Section 22 of the Regional Rural Banks Act, 1976 states as follows\" \"22. Regional Rural Bank to be deemed to be a co- operative society for purpose of the Income Tax Act, 1961- For the purpose of the Income Tax Act, 1961 (43 of 1961), or any other enactment for the time being in force relating to any tax on 18 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR income, profits, or gains, a Regional Rural Bank shall be deemed to be a cooperative society. The CBDT reasoning appears to be that Section 80P was amended w.e.f. 1.4.2007 introducing specifically that the benefit of exemption would not apply to any cooperative bank other than Primary Agricultural Credit Society or a Primary Cooperative Agricultural and Rural Development Bank. The circular then stated that in the light of this inclusion to Section 80P by way of introduction of Section 80P(4), the exemption could not be availed of by the banks invested in Regional Rural Banks. This Court is of the opinion that the revenue's contention is unsustainable. Section 22 in uncertain terms categorically deems Regional Rural Banks (of which description Baroda Rajasthan Regional Rural Banks answer to) as Cooperative Societies for the purposes of Income Tax Act, In the absence of non-obstante clause, the mere fact that a restrictive condition was imposed in relation to a Cooperative Bank for regulating the benefit of Section 80P, does not in any manner, alter the pre-existing situation. By virtue of Section 22, Regional Rural Banks continue to be deemed Cooperative Societies and all the contingent consequences that flow from it. For the above reasons, this court is of the opinion that there is no substantial question of law involved in the present appeal. The appeal is, therefore, dismissed.\" Taking into consideration the present facts and circumstances of the case, we observed that the Ild. CIT(A) has rightly passed the order as the similar written submission filed by the assessee during the appellate proceeding and the identical issue which is in favour of the assessee's own case of the Coordinate Bench in case by the ITAT, Jodhpur's order dated 31.10.2018 in ITA No. 437/Jodh/2017, A.Y 2014-15) which have been confirmed by the Hon’ble Court. The relevant observations of ITAT is as under:- \"5. We have considered the rival submission of the parties and have gone through the assessment proceedings the AO noted that assessee has claimed exemption of interest income on FDR with Central Cooperative Bank Ltd., for Rs.76,43.562/- and interest on FDR with Baroda Rajasthan Kshetriya Gramin Bank of Rs.2,09,91,701 The AO allowed the exemption on interest received from Central 19 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR Co-operative Bank However, the AO disallowed the exemption on account of interest earned from Baroda Rajasthan Kshetriya Gramin Bank on his observation that Baroda Rajasthan Kshetriya Gramin Bank is not a Co-operative Society. The 40 also took the view that Baroda Rajasthan Kshetriya Gramin Bank is neither registered under Co-operative Society Act or under, other law for the time enforce any such state for registration of Co-operative Societies. Therefore, the interest of Rx 2,09,91,701/- received on FDR was not held eligible for deduction w/s 80P(2)(d). The Id. CIT(A) confirmed the action of AO holding that Baroda Rajasthan (supra) is not a Co-operative Society registered under the Co-operative Society Act or under any law for the time enforce in any state for the registration of Co-operative Society, therefore, the interest received by assessee on FDR made with Baroda Rajasthan (supra) is not eligible for deduction w/s 80P(2)(d). 6. The ld. AR of the assessee relied upon the decision of Mumbai Tribunal in Presidency Co- operative Society (supra) and in Shree Keshorai Patan Sahakari Sugar Mill. In our considered view the facts narrative is not applicable on the facts of the present case. In both the cases the assessee, (in those cases were held entitled for exemption of interest received on deposit with Co-operative Bank which were held as Co-operative Society. However, in the present case, the assessee has claimed that Rural Bank are also Co-operative We have examined the CBDT circular No. 6/2010 dated 16.09.2010, for appreciation of the contents the circular it is extracted below; CIRCULAR NO. 6/2010 IF NO. 173(3)/44/2009-IT (A-1)] DATED 20-9-2010. 1. Section 80P of the Income-tax Act, 1961 provides for a deduction from the income of cooperative societies referred to in that section. 2. As Regional Rural Banks (RRB) are basically corporate entities (and not cooperative societies), they were considered to be not eligible for deduction under section 80P when the section was originally introduced However, as section 22 of the Regional Rural Bank Act provides that a RRB shall be deemed to be cooperative society for the purposes of the Income-tax Act, 1961, in order to make such banks eligible for deduction under section 80P. CBDT issued a beneficial Circular No. 319 dated 11-1-1982, which stated that for the purpose of section 80P, a Regional Rural Bank shall be deemed to be a cooperative society. 3. Section 80P was amended by the Finance Act, 2006, with effect from 1-4-2007 introducing sub-section (4), which laid down specifically that the provisions of section 80P will not apply to any cooperative bank other than a Primary Agricultural Credit Society or a Primary Cooperative Agricultural and Rural Development Bank 20 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR Accordingly, deduction under section 80P was no more available to any Regional Rural Bank from assessment year 2007-08 onwards. An OM dated 25-8-2006 addressed to RBI was issued by the Board clarifying that Regional Rural Banks would not be eligible for deduction under section 80P of the Income-tax Act, 1961 from the assessment year 2007-08 onwards. 4. It has been bought to the notice of the Board that despite the amended provisions, some Regional Rural Banks continue to claim deduction under section 80P on the ground that they are cooperative societies covered by section 80P(1) read with Boards Circular No. 319 dated 11-1-1982. 5. It is, therefore, reiterated that Regional Rural Banks are not eligible for deduction under section 80P of the Income-tax Act, 1961 from the assessment year 2007-08 onwards. Furthermore, the Circular No. 319 dated 11-1- 1982 deeming any Regional Rural Bank to be cooperative society stands withdrawn for application with effect from assessment year 2007-08. The field officers may take note of this position and take remedial action, if required. 7. We have also perused the various provisions of Regiona Rural Bank Act 1976. Baroda Rajasthan KshetriyaGramina Bank was set up under the provisions of under the provisions of Regional Rural Bank Act. Section 22 of the Regional Rural Bank Act provides that Regional Rural Bank to be deemed to be a co-operative society for purpose of the Income-tax Act, 1961. In our considered view the the Circular of CBDT cannot override the provisions of the Act of Parliament. Even the careful reading of the Circular No. 6 of CBDT make it clear that exemption is withdrawn with respect to Regional Rural Banks are not eligible for deduction under section 80P of the Income-tax Act, 1961 from the assessment year 2007-08 onwards, and not the co-operative societies. The assessee before us is the cooperative society and not the Regional Rural Bank. Therefore, considering the provisions of section 22 of Regional Rural Bank Act, wherein the status of the banks established are of the co-operative societ the assessee is entitled for the exemption on the interest earned on the deposits. In the result the ground No. 1 & 2 of the appeal are allowed.\" As the facts of the A.Y. 2014-15 are similar to the facts of the assessment year under appeal (2016-17), therefore, following the decision of ITAT, Jodhpur referred above, the AO is directed to allow deduction of Rs. 2,23,46,187/- u/s 80P(2)(d). In the result, the appeal is allowed.” On being consistent to the finding so recorded herein above and the same is also confirmed by our High Court wherein the our High Court has dealt with the contention of the revenue relying the circular no. 06/2010 dated 20.09.2010. Thus, considering the above discussion and the detailed finding so recorded by the ld. CIT(A) we do not find any infirmity in the order of the ld. CIT(A). In terms of these observations, appeal of the revenue stands dismissed. ‘’ 21 MA NO.18/JP/2024 (ARISING OUT OF ITA NO. 10/JP/2024) RESERVE BANK COOPERATIVE SOCIETY LTD VS ITO, WARD 6(2), JAIPUR Hence in view of the above deliberation, the ground no. 1(b) of the assessee is allowed by directing the AO to allow deduction u/s 80P(2)(d) of the Act on the interest income received from Rajasthan State Cooperative Bank Ltd. Thus, the appeal of the assessee is allowed. 4. In the result, the Misc. Application as well as appeal of the assessee (supra) are allowed as indicated hereinabove. Pronounced in the Open Court on 28 /01/2025. Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼jkBksMdeys'kt;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 28/01/2025 *Mishra vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Reserve Bank Cooperative Society Ltd. Jaipur. 2. izR;FkhZ@ The Respondent- The ITO,Ward 6(2), Jaipur 3. vk;djvk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZQkbZy@ Guard File (MA No. 18/JP/2024) vkns'kkuqlkj@ By order, lgk;diathdkj@Asst. Registrar "