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TMI Blog2024 (2) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... d of any merits. Interest income received from MNGB - claim of the assesse was not allowed by CIT(A) for want of necessary details - assessee has stated that the assesse shall produce the necessary details before the AO to show that the said Co-operative Bank is a Co-operative Society and therefore, the interest received from the said bank is eligible for deduction u/s 80P(2)(d) - HELD THAT:- We are of the considered view that this issue required a proper verification and examination at the level of the AO. Accordingly the issue of deduction u/s 80P(2)(d) of the Act in respect of the interest received from MNGB is remanded to the record of the AO for fresh adjudication after verification and examination of the necessary record on the point whether the said Bank is Co-operative Society or not. In case the said bank is found to be a Co-operative Society registered under Co-operative Societies Act then the claim of the assesse u/s 80P(2)(d) of the Act is directed to be allowed. Appeal of the revenue is dismissed and CO of the assesse is allowed for statistical purposes. - SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER For the Assessee : Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Cooperative Bank is a Co-operative society and only because of nature of business of an Cooperative Society it is called an Cooperative Bank. Thus, the Co-operative bank is primarily a Cooperative Society and therefore, basic character of Co-operative Bank as an entity is a Co-operative Society. In support of his contention he has relied upon the decision of Pune Bench of the Tribunal dated 07.01.2022 in case of Rena Sahakari Sakhar Karkhana vs. Pr. CIT in ITANo.1249/Pun/2018. Ld. AR has also referred to the registration certificate under Cooperative Society Act of Bhopal Co-operative Central Bank to show that the said Cooperative Bank is basically a Cooperative Society and doing banking business. Therefore, the Ld. AR has submitted that the CIT(A) has rightly allowed the claim of the assessee in respect of the interest received from the Bhopal Cooperative Central Bank. 5. We have considered rival submissions as well as relevant material on record. The AO has disallowed the claim of deduction u/s 80P(2)(d) of the Act in respect of the interest income received by the assessee on the fixed deposit made with Bhopal Co-operative Central Bank on the ground that the only intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, 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 cooperative society from its investments with any other co-operative society, the whole of such income; On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investments held with any other co-operative society shall be deducted in computing its total income. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ryadit vs. ITO in ITANo. 317/Ind/2023 vide order dated 10.01.2024 has considered and decided this issue in para 9 to 12 as under: 9. We have considered the facts, rival submissions and perused the record placed before us. The assessee is a Credit Cooperative Society and during the year under consideration, it has earned interest income of Rs. 10,77,910/- on FDRs. The assessee has shown the interest income on FDR under the head income from other sources and against such interest income has claimed incidental expenses including interest paid to depositors at Rs. 5,38,955/-, commissioner paid to Collection Agent at Rs. 4,71,586/- and stationery and printing expenses at Rs. 28,450/-. Both the lower authorities have held that the incidental expenses claimed are in the nature of business expenditure and needs to be allowed against business receipts and have also observed that FDR interest being income from other sources is not eligible for deduction u/s 80-P of the Act. 10. We, however, on perusal of computation of income filed in the paper book at page no.11 noticed that the alleged FDR interest income has been received by the assessee from deposits made with Indore Premier Coo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... co-operative society from its investments with any other co-operative society, the whole of such income; (e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income; (f) in the case of a co-operative society, not being a housing society or an urban consumers' society, or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on securities chargeable under section 18 or any income from house property chargeable under section 22. Explanation. For the purposes of this section, an urban consumers' cooperative society means a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area, or cantonment. (3) In a case where the assessee is entitled also to the deduction under section 80H or section 80J, the deduction under sub-section (1) of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is held that interest income earned by the Co-operative Society on its investment made with co-operative bank would be eligible for claim of deduction under section 80P(2)(d) of the Act by returning following findings: 8. We have given a thoughtful consideration to the contentions advanced by the Id. Authorized representatives for both the parties in context of the aforesaid issue under consideration. As stated by the ld. A.R, and rightly so, the issue that interest received by a co-operative society on its deposits with co-operative banks would be eligible for deduction w/s 80P(2)(d) of the Act is covered in assessee s favour by orders of the various coordinate benches of the Tribunal in the following cases: (i). M/s Solitaire CHS Ltd. Vs. Pr.CIT-26, Mumbai, ITA No. 3155/Mum/2019, dated 29.11.2019 (ii) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum.) (iii) M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO- 21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017. (iv) Marvwanjee Cama Park Cooperative Housing Society Ltd. V s. ITO-Range 20(2)(2), Mumbai (ITA NO. 6139/Mum/2014, dated 27.09.2017. (v) Kaliandas Udyog Bhavan Pemise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osits would not be eligible for deduction under Sec. 80P(2)(d) of the Act. 7. After necessary deliberations, we are unable to persuade ourselves to be in agreement with the view taken by the Pr. CIT. Before proceeding any further, we may herein reproduce the relevant extract of the aforesaid statutory provision, viz. Sec. 80P(2) (d), as the same would have a strong bearing on the adjudication of the issue before us. 80P(2) (d) (1). Where in the case of an assessee being a cooperative society, the gross total income includes any income referred to in sub- section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in subsection (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; On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income derived from its investments held with a cooperative bank is covered in favour of the assessee in the following cases: (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH $2 (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. (iv). Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai. 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 held, that the interest income earned by the assessee on its investments 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interest income earned by a cooperative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 9. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and therein concluded that the assessee would be entitled for claim of deduction under Sec. 80P(2) (d) on the interest income earned on its investments/deposits with cooperative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 for dislodging the same. In fact, as observed by us hereinabove, the aforesaid view taken by the A.O at the time of framing of the assessment was clearly supported by the order of the jurisdictional Tribunal in the case of Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum). Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we set aside his order and restore the order passed by the A.O under Sec. 143(3), date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is eligible for deduction u/s 80P(2)(d) of the Act at Rs. 10,77,910/- in respect of FDR interest received from Cooperative Bank. Thus, the finding of the Ld. CIT(A) is set-aside and the impugned addition/disallowance stands deleted. Ground nos. 1, 2 3 of the assesse s appeal stand allowed. 7. Accordingly in view of the decision of this Tribunal referred above we do not find any error or illegality in the impugned order of the CIT(A) in allowing deduction u/s 80P(2)(d) of the Act on the interest received by the assessee from the deposit made in Bhopal Co-operative Central Bank. The revenue is devoid of any merits. 8. Ground no.2 regarding dividend income from Co-operative Bank. In view of our findings on Ground no.1 of Revenue ground no.2 stand dismissed. 9. In the CO the solitary issue raised by the assessee regarding disallowance made by the AO and confirmed by the CIT(A) in respect of the interest income received from MNGB. The Ld. AR has submitted that the CIT(A) has confirmed the disallowance for want of necessary details of the said bank to show that it is Co-operative Society. He has pointed out that due to merger of the said Cooperative Bank was in process ..... X X X X Extracts X X X X X X X X Extracts X X X X
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