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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 ..... being the facts, it is ostensible that the assessee is engaged in activities which is other than those specified in clause (a) or clause (b) of section 80P(2) of the Act.
Assessee rightly claimed the deduction of INR 50,000 under section 80P(2)(c) of the Act. AO is directed to grant a deduction under section 80P(2)(c) of the Act to the assessee. As a result, the impugned order is set aside and sole ground raised by the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Banks, and the same was claimed as a deduction under section 80P(2)(d) of the Act, which was denied by the lower authorities. Further, the assessee claimed standard deduction of INR 50,000 under section 80P(2)(c) of the Act, which was also denied to the assessee. 6. We find that while deciding the issue pertaining to the claim of deduction under section 80P(2)(d) of the Act with respect to the interest income earned from investment with Co-operative Bank, the coordinate bench of the Tribunal in Pathare Prabhu Co-operative Housing Society v/s ITO, (2023) 202 ITD 464 (Mum-Trib), held that interest income is eligible for deduction under section 80P(2)(d) of the Act. The relevant findings of the coordinate bench, in the aforesaid decision, are reproduced as follows: - "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. 50,39,86 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Co-operative Bank is covered under the provisions of section 80P(4) of the Act. We find that the Hon'ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 123 taxmann.com 161/279 Taxman 75/431 ITR 1 while analysing the provisions of section 80P(4) of the Act 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 Hon'ble Supreme Court further held that 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 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 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of co-operative societies;' We are of the considered view, that though the co-operative bank pursuant to the insertion of Sub-section (4) of sec. 80P would no more be entitled for claim of deduction under sec. 80P of the Act, but however, as a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being enforced in any state for the registration of cooperative societies, therefore, the interest income derived by a co-operative society from its investments held with a cooperative 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. Totagars Co-operative Sales Society [2017] 83 taxmann.com 140/395 ITR 611, wherein it was held that interest earned by the assessee, a Cooperative Society, from surplus deposits kept with a Co-operative Bank, was not eligible for deduction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saving accounts and fixed deposits maintained with Co-operative Banks. 8. Therefore, respectfully following the decision of the coordinate bench of the cited supra, we direct the AO to grant a deduction under section 80P(2)(d) of the Act to the assessee in respect of the interest income earned from deposits made with the Co-operative Banks. 9. Further, we find that the decision of the Hon'ble Jurisdictional High Court in Sind Co-op. Hsg. Society v/s Income-tax Officer, reported in [2009] 317 ITR 47 (Bom.), relied upon in the impugned order for denying the deduction under section 80P(2)(c) of the Act, is also not applicable to the facts of the present case as the issue before the Hon'ble Court was whether any part of transfer fees received by the assessee societies - whether from outgoing or incoming members - is not liable to tax on the ground of mutuality. Further, as is evident from para-26 of the judgment, the Hon'ble High Court did not examine the applicability of provisions of section 80P of the Act in the facts of the case. 10. Insofar as the provisions of section 80P(2)(c) of the Act are concerned, the same provides for a standard deduction, inter-alia, of INR 50,000 in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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