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TMI Blog2022 (10) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... ntent clear that the Co-operative Banks are not that specie of genus co-operative society, which are entitled to claim deduction under the special provisions of Chapter VIA in the form of Section 80P of the Act." 2. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in allowing deduction u/s. 80P(2)(d) of the Income Tax Act in respect of interest earned from deposits in cooperative bank ignoring firstly, the purpose of bringing on the statute book sub-section (4) in Section 80P of the Act to exclude the applicability of Section 80P of the Act altogether to any co-operative bank and secondly, ignoring the fact that words used in section 80P(4) are "in relation to" that can include within its ambit and scope even the interest income earned by the respondent assessee, a cooperative Society from a Co-operative Bank and this exclusion by Section 80P(4) of the Act even though without any amendment in Section 80P(2)(d) of the Act is sufficient to deny the claim of the assessee for deduction under Section 80P(2)(d) of the Act." 3. "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was correct in allowing deduction u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5. Considered the submissions of Ld. DR and material placed on record. We observe that identical issue i.e. whether the assessee a cooperative society is entitled for deduction u/s. 80P(2)(d) of the Act on the interest income earned from other cooperative banks/societies has been decided by various Coordinate Benches in favour of the assessee. In the case of Kshatriy Gadkari Maratha Cooperative Credit Society Ltd. v. ITO in ITA. No. 3646 & 3647/MUM/2018 dated 26.04.2019 it has been held as under:- "3. The Assessing Officer while completing the assessments u/s. 143(3) of the Act denied the deduction u/s. 80P(2)(a)(i) of the Act for the assessee, holding that the assessee is engaged in the banking activities and therefore assessee is not a cooperative society but is a cooperative bank. He also observed that in view of the provisions of Sec. 80P(4) of the Act since assessee is a cooperative bank assessee is not entitled for deduction u/s. 80P of the Act. However, Ld. CIT(A) considering the activities of the assessee and referring to various judicial pronouncements held that assessee cannot be treated as a cooperative bank. Ld. CIT(A) deleted the disallowance made by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produce of the members is assessable as "other income" and not as "business profits". Therefore, this decision has no application to the facts of the assessee case. 6. In the case before me, the issue is, whether the assessee is entitled for deduction u/s. 80P(2)(d) of the Act on the interest earned from investments in cooperative banks/cooperative societies. 7. Provisions of section 80P(2)(d) reads as under:- "(d) in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other cooperative society, the whole of such income." 8. As could be seen from the above, the provisions of section 80P(2)(d) of the Act are very clear and assessee is entitled for deduction u/s. 80P(2)(d) of the Act in respect of interest or dividends received from investments made with any other cooperative societies. The decision on which the Ld. CIT(A) placed reliance i.e. The Totgar Cooperative Sales Society Limited v. ITO (supra), is not on the issue of whether the assessee is entitled for exemption u/s. 80P(2)(d) of the Act vis-à-vis the interest income earned by the cooperative society from investments in other cooperative soci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel is untenable. For the issue that was before the ITAT, was a limited one, namely whether for the purpose of Section 80P(2)(d) of the Act, a Cooperative Bank should be considered as a Co-operative Society or not? For, if a Co-operative Bank is considered to be a Co-operative Society, then any interest earned by the Cooperative Society from a Cooperative Bank would necessarily be deductable under Section 80P(1) of the Act. 8. The issue whether a Co-operative Bank is considered to be a Cooperative Society is no longer res integra. For the said issue has been decided by the ITAT itself in different cases. Moreover, the word "Cooperative 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 Cooperative 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 Cooperative Societies. Thus the Cooperative Bank which is a species of the genus would necessarily be covered by the word "Co-operative Society". 9. Furthermore, even acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing 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. ITO 21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017 (iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO Range-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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 7. Facts being identical, respectfully following the above said decisions, we hold that the assessee a cooperative society is eligible for deduction u/s. 80P(2)(d) of the Act in respect of the interest income earned by the assessee from either any other cooperative society or from a cooperative bank. Thus, we do not find any infirmity in the order of the Ld. CIT(A) and accordingly, grounds raised by the revenue are dismissed. 8. In the result, appeal filed by the revenue is dismissed. Order pronounce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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