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TMI Blog2024 (6) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... ct held that section 80P(4) is a proviso to the main provision contained in section 80P(1) and (2) and excludes only Co-operative Banks, which are Co-operative Societies and also possesses a licence from RBI to do banking business - the limited object of section 80P(4) is to exclude Co-operative Banks that function at par with other 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 in denying deduction under section 80P(2)(d) of the Act to the assessee. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 80P(2)(d) of the I. T. Act, 1961 without appreciating the facts that assessee has earned interest income from investment of idle funds with cooperative bank. 3. On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in allowing deduction u/s 80P(2)(d) of the I. T. Act, 1961, without considering the decision of the Hon ble Supreme Court in the case of Citizen Co-operative Society Ltd. Vs. ACIT vide its order dated 08/08/2017 [(2017) 84 taxmann.COM 114 (SC)] which was further affirmed in its order dated 21/11/2017 in response to a review petition [(2017) 88 taxmann. Com 279 (SC)]. 3. While, the assessee has raised the following grounds in its appeal:- 1. The learned Commissioner of Income Tax (Appeals) erred in facts and in law in sustaining the addition to the extent of Rs. 30,19,574. 2. The learned Commissioner of Income Tax (Appeals) erred in facts and in law in not appreciating that interest of Rs. 30,19,574/- was also received from co-operative banks and therefore deduction under section 80P(2)(d) of the Income Tax Act, 1961 (the Act) should have been granted in respect of the same. 3. The learned Commissioner of Income Tax (Appeals) erred in facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under section 80P(2)(d) of the Act. 5. The Assessing Officer ( AO ) vide order dated 20/09/2022 passed under section 143(3) read with section 144B of the Act noted that out of interest income of Rs. 6,00,99,147, the assessee has claimed deduction of Rs. 5,70,79,573 under section 80P(2)(d) of the Act and the remaining interest income of Rs. 30,19,574, which was earned from the term deposit, has been reported in the financial statements under the head Repair and Maintenance Fund and Sinking Fund and is not offered as income in the Profit and Loss account. The AO held that the Co-operative Bank cannot be considered as Co-operative Society, and therefore the Co-operative Bank has rightly been excluded from availing the benefits of deduction under section 80P of the Act. The AO further held that if the assessee Co-operative Society parks funds as investment in Co-operative Banks and earns interest receipts and dividends thereon, it cannot be considered to be same as the income earned by way of interest from investments with any other Co-operative Society. Thus, the AO held that the interest income received by the assessee from investments in Co-operative Banks will not be available as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, out of the total interest income of Rs. 6,00,99,147 earned by the assessee, it considered interest income of Rs. 5,70,79,573 as income from other sources and claimed deduction under section 80P(2)(d) of the Act. The remaining interest income of Rs. 30,19,574 was directly credited to Repair and Maintenance Fund and Sinking Fund and was not offered as income in the profit and loss account. 8. 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) ..... (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; 9. Thus, for the purpose of provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 in denying deduction under section 80P(2)(d) of the Act to the assessee. 11. 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. 12. We find that the AO 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.) in support of its conclusion that interest derived from fixed deposits in Co-operative Banks is not eligible for deduction under section 80P(2)(d) of the Act and should be treated as income from other sources under section 56 of the Act. We find that the coordinate bench of the Tribunal in Pathare Prabhu Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions by the AO is completely misplaced. In this regard, following observations of Hon ble Supreme Court in CIT v/s Sun Engineering Private Limited, [1992] 198 ITR 297 (SC), becomes relevant: It is neither desirable nor permissible to pick out a word or a sentence from the judgment of the Court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by the Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before the Court. A decision of the Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a latter case, the Courts must carefully try to ascertain the true principle laid down by the decision of the Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by the Court, to support their proceedings. 14. We are further of the considered opinion that if Revenue s plea is accepted then section 80P(2)(d) of the Act would be rendered completely otiose. 15. Therefore, in view of the above, we uph ..... X X X X Extracts X X X X X X X X Extracts X X X X
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