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TMI Blog2018 (12) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Act in respect of interest received on deposits kept with Cooperative Banks. 3. The assessee is a registered Co-operative Housing Society. It earned interest income of Rs. 1,82,77,027 out of deposits kept with Co-operative Banks. The assessee claimed the same as deduction u/s 80P(2)(d) of the Act. The said section reads as under:- "80P(2)(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; 4. The Assessing Officer took the view that the Co-operative Banks cannot be considered as Co-operative Societies within the meaning of section 80P(2)(d) of the Act and accordingly denied the deduction claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing the decision rendered by the co-ordinate Bench in the case of Land End Cooperative Housing Society Ltd. v. ITO [ITA No.2379/Mum/2015 dated 15.01.2016] has held that the interest income earned by a Co-operative Society from deposits kept with Co-operative Banks is eligible for deduction u/s 80P(2)(d) of the Act. 6. On the contrary, the learned Departmental Representative supported the order passed by the learned CIT(A). 7. Having heard the rival contentions, we noticed that there is merit in the contentions of the assessee as it is supported by the order passed by the SMC Bench in the case of Citiscape Co-operative Housing Society Ltd. (supra) and also the decision rendered by the Division Bench in the case of Sea Grean Co-operativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the section 80P(2)(a)(i) of the Act held that surplus funds not immediately required in the business and invested in the short term deposit would be assessable under the head "income from other sources" where the Cooperative society is engaged in carrying on business of banking or providing credit facilities to its members and consequently no deduction is allowable u/s 80P(2)(a)(i) of the Act. Whereas in the case before us the issue is whether a co-operative society which has derived income on investment with cooperative banks is entitled to deduction u/s 80P(2)(d). The provisions of Section 80P(2)(d) of the Act provide deduction in respect of income by way of interest or dividend on investments made with other Cooperative society. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her cooperative society. Thus it is amply clear that a cooperative society can only avail deduction u/s 80P(2)(d)(i) in respect of its income assessable as business income and not as income from other sources if it carries on business of the banking or providing credit facilities to its members and has income assessable under the head business whereas for claiming u/s 80P(2)(d) it must have income of interest and dividend on investments with other Co-operative society may or may not be engaged in the banking for providing credit facilities to its members and the head under which the income is assessable is not material for the claim of deduction under this section. Now will evaluate the assessee's case in the light of the decision of the Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hmedabad Bench of the Tribunal in the case of State Bank of India Employees Co-operative Credit Society Ltd 57 taxman.com 367. It is further noted by the CIT(A) that the said decision of the Ahmedabad Bench of the Tribunal has been referred to by the SMC Bench of Mumbai Tribunal in the case of Shri Saidatta Cooperative Credit Society Ltd. (supra). In our view, the reliance placed by the CIT(A) on the judgment of the Ahmedabad Bench of the Tribunal is quite untenable, inasmuch as, in the said case the interest income in question was earned from deposits kept with State Bank of India. Obviously, State Bank of India is not a Co-operative society so as to justify the claim that such interest earnings fall within the scope of section 80P(2)(d) o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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