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TMI Blog2025 (2) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... ritten submissions and case law relied upon at the time of the hearing. 3. The sole grievance of the assessee is against the denial of deduction claimed under section 80P(2)(c) section 80P(2)(d) of the Act on the interest income earned on saving accounts and fixed deposits maintained with Cooperative Banks. 4. The brief facts of the case are that the assessee is a co-operative housing society duly registered under the Maharashtra State Co-operative Society Act. For the year under consideration, the assessee filed its return of income on 01/10/2019, declaring a total income of INR 4,24,090. The return filed by the assessee was processed vide intimation dated 06/03/2020 issued under section 143(1) of the Act, determining the total income of the assessee at INR 28,93,330 after disallowing the deduction of INR 24,19,242 claimed under section 80P(2)(d) of the Act and deduction of INR 50,000 claimed under section 80P(2)(c) of the Act. The learned Addl./Joint CIT(A), vide impugned order, dismissed the appeal filed by the assessee and upheld the disallowance of deduction claimed under section 80P(2)(c)and section 80P(2)(d) of the Act on the basis that the interest earned from the Coopera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich 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) to (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;" 10. Thus, for the purpose of provisions of section 80P(2)(d) of the Act, two conditions are required to be cumulatively satisfied- (i) income by way of interest or dividend is earned by the Co-operative Society from the investments, and (ii) such investments should be with any other Co-operative Society. Further, the term "co-operative society" is defined under section 2(19) of the Act as under: "(19) "co-operative society" means a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ches 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 Udyag Bhavan Premises Co-op Society Ltd. v. ITO [2018] 94 taxmann.com 15 (Mum.)/[ITA No. 6547/Mum./2017, dated 25-4-2018], while dealing with the provisions of section 80P(2)(d) vis-à-vis section 80P(4) of the Act, the coordinate bench of the Tribunal observed as under: "7. ......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 co-operative 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 agreement with the observations of the lower authorities that with the insertion of sub-section (4) of sec. 80P, vide the Finance Act, 2006, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mann.com 169/392 ITR 74 held that according to section 80P(2)(d) of the Act, the amount of interest earned from a Cooperative 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. We have to, with our highest respect to both the views of the Hon'ble High Court, adopt an objective criterion for deciding as to which decision of the Hon'ble High Court should be followed by us. We find guidance from the judgment of the Hon'ble Supreme Court in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192. In the aforesaid decision, the Hon'ble Supreme Court has laid down a principle that "if two reasonable constructions of a taxing provisions are possible, that construction which favours the assessee must be adopted". 14. Therefore, in view of the above, we uphold the plea of the assessee and direct the AO to grant the deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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