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TMI Blog2017 (9) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... operative Bank is known as Primary Co-operative Bank. It is a bigger entity and fall under the ‘Banking Regulation Act’. It is also regulated by State Government and RBI. Primary Co-operative Banks, popularly called Urban Co-operative Banks, whose net worth is ₹ 1,00,000/- and above, who are recognized as banks, are members of payment system and also enjoy deposit insurance. Also some Urban Co-operative Banks are conferred with ‘Scheduled’ status by the RBI. The above factual aspects have not been examined either by the AO or the Ld. CIT(A). Therefore, we deem it proper to set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make a fresh assessment after examining the facts mentioned at para 7.1 her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / AO erred in law and facts in holding that co-operative banks are not co-operative society as defined u/s 2(19) of the Act 4. The Ld. CIT(A)/ AO ought to have appreciated that co-operative bank registered under Maharashtra / Bombay co-operative societies Act is a co-operative society as defined u/s 2(19) of the Act hence interest received by assessee from cooperative bank is eligible for deduction u/s 80P (2) (d) of the Act. 5. The Ld. AO erred in law and facts in holding that income of the assessee is not tax exempt under the principle of mutuality even when the assessee's objects are and its existence is for service to its members (Flat owners - members of the Society). 3. Briefly stated, the facts of the case are that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see from the co-operative bank. The AO also has relied on the judgment of the Hon ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO (2010) 188 Taxman 282 wherein it has been held that interest earned on deposits with other banks would fall under the head income from other sources u/s 56 and not u/s 28 of the Act. Reliance was also placed by the AO on the decision in the case of Common Effluent Treatment Plant (Thane Belapur) Association (2010) 192 Taxman 238 (Bom), wherein it has been held that interest income earned by the assessee on money invested in fixed deposits of bank could not possess same character of mutuality as surplus fund derived by assessee from contribution of the members and the same could b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Bombay/ Maharashtra Co-operative Act, hence co-operative banks are co-operative societies as defined u/s 2(19) of the Act. The Ld. counsel thus submits that the interest received by the assessee (co-operative housing society) from co-operative bank (co-operative society registered under MCS Act) is interest received by one co-operative society from other co-operative society and eligible for deduction u/s 80P(2)(d) of the Act. 5.1 The Ld. Counsel of the assessee also relies on the decision in the case of Principal CIT vs. Totagars Co-operative Sale Society (2017) 78 taxmann.com 169 (Karnataka), Sindhudurgh Zila Madhyamik Adhyapak vs. ITO (ITA No. 1825/PN/2013) for the AY 2010-11, Lands End Co-operative Housing Society Ltd. vs. ITO ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulated by State Government and RBI. Primary Co-operative Banks, popularly called Urban Co-operative Banks, whose net worth is ₹ 1,00,000/- and above, who are recognized as banks, are members of payment system and also enjoy deposit insurance. Also some Urban Co-operative Banks are conferred with Scheduled status by the RBI. 7.2 We find that the above factual aspects have not been examined either by the AO or the Ld. CIT(A). Therefore, we deem it proper to set aside the order of the Ld. CIT(A) and restore the matter to the file of the AO to make a fresh assessment after examining the facts mentioned at para 7.1 here-in-above. Needless to say, the AO would give a reasonable opportunity of being heard to the assessee before finalizi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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