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TMI Blog2023 (7) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under section 80P(2)(d) of the Act to the assessee. Deduction u/s 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) - See KALIANDAS UDYOG BHAVAN PREMISES CO-OP SOCIETY LTD., VERSUS ITO-21 (2) (1) , MUMBAI [ 2018 (4) TMI 1678 - ITAT MUMBAI] - Decided in favour of assessee. - ITA No. 1346/Mum./2023 And ITA No. 1347/Mum./2023 - - - Dated:- 27-7-2023 - Shri G.S. Pannu, President, And Shri Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Prashant Chapekar For the Revenue : Shri H.M. Bhatt ORDER The present appeals have been filed by the assessee challenging the impugned order dated 10/01/2023, for the assessment year 2018 19 and order dated 18/01/2023, for the assessment year 2017 18, passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. With the consent of the parties, the assessee s appeal for the assessment year 2018-19 is taken up as a lead case. In both appeals, the assessee has raised similar grounds. For reference, the grounds raised by the assessee in the appeal for the assessment year 2018-19 are reproduced as under:- 1. The learned CIT(A) erred in contending that the income received by the appellant is from co-operative banks and not co-operative societies, without appreciating the fact that the co-operative banks are in the first instance co-operative societies. 2. The learned CIT(A) erred in relying on the Supreme Court's decision in Totgar's Co-operative Sales Society Ltd. which judgment is delivered in the context of sec. 80P(2)(a)(i) and wherein it was held that interest on surplus funds deposited with banks bears the character of income from other sources and not business income, whereas the appellant has claimed deduction under sec. 80P(2)(d) which does not confine the deduction to business income only. 3. The learned CIT(A) failed to appreciate that the manda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed the appeal filed by the assessee. Being aggrieved, the assessee is in appeal before us. 8. We have considered the submissions of both sides and perused the material available on record. The only dispute raised by the assessee is against the disallowance of deduction under section 80P(2)(d) of the Act in respect of interest income received from the Co-operative Banks. The assessee is a registered Co-operative Housing Society and during the assessment year 2018-19 earned interest income of Rs. 50,39,861 from the investments made in various Co-operative Banks. 9. Before proceeding further, it is relevant to note the provisions of section 80P of the Act under which the assessee has claimed the deduction in the present case. As per the provisions of section 80P(1) of the Act, the income referred to in sub-section (2) to section 80P shall be allowed as a deduction to an assessee being a Co-operative Society. Further, section 80P(2)(d) of the Act, reads as under: 80P. Deduction in respect of income of co-operative societies. (1) ...... (2) The sums referred to in sub-section (1) shall be the following, namely: (a) ..... (b) ..... (c) ..... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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- -vis section 80P(4) of the Act, the coordinate bench of the Tribunal observed as under: 7. Thus, fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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