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2023 (7) TMI 741 - AT - Income TaxDeduction u/s 80P(2)(d) - interest income received on fixed deposits and saving bank accounts maintained with Co-operative Banks - assessee is a registered Co-operative Housing Society - AO denied the deduction on the basis that the Co-operative Bank is covered under the provisions of section 80P(4) - HELD THAT - We find that in Mavilayi Service Co-operative Bank Ltd. 2021 (1) TMI 488 - SUPREME COURT 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 limited object of section 80P(4) is to exclude Co-operative Banks that function at par with other commercial banks i.e. which lend money to members of the public. Thus, 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 are not the facts of the present case. No merits in the aforesaid reasoning adopted by the AO in denying deduction under section 80P(2)(d) of the Act to the assessee. Claim of deduction u/s 80P(2)(d) - 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). Even in assessee s own case for the assessment year 2016-17 2021 (3) TMI 1425 - ITAT MUMBAI allowed the deduction claimed by the assessee under section 80P(2)(d) of the Act, by following the decision rendered in assessee s own case for the assessment year 2015-16 - Decided against revenue.
Issues:
The judgment involves a dispute regarding the deduction under section 80P(2)(d) of the Income Tax Act, 1961 for interest income received from investments made with Co-operative Banks. Deduction under Section 80P(2)(d) of the Act: The appeal was filed by the Revenue challenging the order passed by the Commissioner of Income Tax (Appeals) regarding the deduction under section 80P(2)(d) of the Act for the assessment year 2018-19. The Revenue contended that the legislative intent of the inserted provision of 80(P) specifically excludes certain cooperative banks from the applicability of the deduction. The assessee, a Co-operative Housing Society, earned interest income from fixed deposits and saving bank accounts maintained in Co-operative Banks, which was claimed as a deduction under section 80P(2)(d) of the Act. Interpretation of Section 80P(2)(d) and Relevant Case Law: The Tribunal analyzed the provisions of section 80P(2)(d) of the Act, which allow a deduction for income by way of interest derived from investments with other Co-operative Societies. The term "co-operative society" was defined under section 2(19) of the Act. The Tribunal noted that the assessee satisfied the conditions for claiming the deduction under section 80P(2)(d) as a registered Co-operative Housing Society. The Tribunal referred to the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. vs CIT, which clarified the scope of section 80P(4) of the Act, emphasizing that it excludes only Co-operative Banks that function similarly to commercial banks. Consistent Tribunal Decisions and Dismissal of Appeal: The Tribunal highlighted previous decisions where coordinate benches consistently allowed deductions under section 80P(2)(d) for interest income earned from Co-operative Banks. The Tribunal cited a specific case involving the same assessee for the assessment year 2016-17 where the deduction was allowed. Based on these precedents and the interpretation of relevant provisions, the Tribunal found no merit in the Revenue's arguments and dismissed the appeal, upholding the deduction under section 80P(2)(d) for the interest income derived from investments with Co-operative Banks. Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the order passed by the Commissioner of Income Tax (Appeals), allowing the deduction under section 80P(2)(d) of the Act for the interest income received from investments made with Co-operative Banks.
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