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2023 (1) TMI 825 - AT - Income TaxDeduction u/s 80P(2)(d) - interest income earned by the Co-operative Society on its investment made with co-operative bank - HELD THAT:- The co-ordinate Bench of the Tribunal in case of Palm Court M Premises Co-operative Society Ltd. [2022 (9) TMI 650 - ITAT MUMBAI] decided the issue in favour of the assessee by distinguishing the judgment rendered by Hon'ble Supreme Court in case of Totgar's Co-operative Sale Society Ltd. [2010 (2) TMI 3 - SUPREME COURT] wherein it 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). Hon'ble High Court of Karnataka in case of Pr. CIT & Anr.Vs. Totgar's Co-operative Sale Society Ltd. [2017 (1) TMI 1100 - KARNATAKA HIGH COURT] and State Bank of India [2016 (7) TMI 516 - GUJARAT HIGH COURT] had held that interest income earned by a co-operative society on its investment held with co-operative bank would be eligible for claim of deduction under section 80P(2)(d) of the Act. Thus assessee society who has earned an amount from its investment of surplus fund deposited with co-operative banks is entitled for deduction under section 80P(2)(d) of the Act. Resultantly, the Ld. CIT(A) has erred in upholding the denial of deduction by the AO to the assessee under section 80P(2)(d). Deduction u/s. 80P (2)(a)(i) - Claim disallowed on the ground that since the Assessee is not undertaken banking business activities it’s not entitle for the deduction and also on the ground that section 80P(4) is applicable only to Co-Operative Banks and not to the credit Co-Operative Societies - HELD THAT:- This issue is also no longer Res-Integra having been decided by the Co-Ordinate Bench of Tribunal in case of The KEM Hospital & Sheth GSM College Employees Co-Operative Credit Society Ltd. [2018 (6) TMI 1746 - ITAT MUMBAI]. Assessee Co-Operative Credit Society being not a primary Co-operative Bank is not hit by the provision of section 80P(4), made available on the statute vide Finance Act at 2006 with effect from 01.04.2007. More over it is also Mandatory for a Co-Operative Society to seek license from the Reserve Bank of India to form and operate as Co-Operative Bank. Since the Assessee Society has only provided Financial Assistance/Credit to its Member it cannot be treated as a Co-Operative Bank, hence entitled for deduction u/s. 80P (2)(a)(i). See QUEPEM URBAN CO-OPERATIVE CREDIT SOCIETY LTD [2015 (6) TMI 573 - BOMBAY HIGH COURT] Assessee appeal allowed.
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