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TMI Blog2016 (6) TMI 1294X X X X Extracts X X X X X X X X Extracts X X X X ..... come of Rs. 3,75,003/- received by the assessee co-operative society on investments made in bank account and shares of Sindhudurg Central Co-operative Bank. 2] The learned CIT(A) erred in holding that the assessee was not eligible to claim the deduction u/s 80P(2)(a)(ia) / 80P(2)(d) in respect of the income earned by way of interest on bank account and dividend income o n investments made in Sindhudurg Central Co-operative Bank. 3] The learned CIT(A) failed to appreciate that the assessee was a credit co-operative society engaged in the business of providing credit facility to its members and hence, the investments made in bank account and shares of Sindhudurg Central Co-operative Bank Ltd. were made in the course of the assessee's business and thus, there was no reason to deny the deduction u/s 80P(2)(a)(i) in respect of the income derived from the above investments. 4] Without prejudice to the above grounds, the assessee submits that Sindhudurg Central Co-op. Bank Ltd. was registered under the Maharashtra Co-op. Societies Act, 1960 and hence, the assessee was eligible to claim the deduction u/s 80P(2)(d) in respect of the income derived by way of interest and dividend on i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The main object of the assessee society was to provide credit facilities to its members and interest on the said loan advanced to its members out of its working / circulating capital. The assessee for the year under consideration had declared interest income and dividend received on investment made with Sindhudurg Central Co-operative Bank and had claimed deduction under section 80P(2)(d) of the Act on the said income. Since the investments were made with co-operative bank and not with the co-operative society as provided in section 80P(2)(d) of the Act, the assessee was show caused to justify its claim. The Assessing Officer did not accept the explanation of assessee in this regard and rejected the claim of assessee that co-operative banks were akin to co-operative societies, since the co-operative societies were governed by the provisions of Maharashtra Co-operative Societies Act and the Banks were governed by the provisions of Banking Regulation Act, 1949, in addition to the provisions of Maharashtra Co-operative Societies Act, 1960. Further, after insertion of section 80P(4) of the Act by the Finance Act, 2006 w.e.f. 01.04.2007, the co-operative banks have been deprived of be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been received from a cooperative bank which is distinct from a cooperative society, therefore, the assessee is not entitled to the same for which he disallowed the claim of deduction u/s.80P(2)(d). The same has been upheld by the CIT(A). 7.1 It is the case of the ld. Counsel for the assessee that even though the assessee has received interest on deposits with Sindhudurg Central Cooperative Bank and received dividend on shares of the said cooperative bank, however, the fact remains that Sindhudurg Central Cooperative Bank is also a cooperative society. 7.2 We find an identical issue had come up before the Tribunal in the case of M/s. Janata Grahak Madhyavarti Sahakari Sangh Maryadit (Supra). We find the Tribunal, following the decision of the Tribunal in the case of Bajaj Auto Ltd. Employees Credit Cooperative Society Ltd. vide ITA No.1047/PN/2012 decided the issue in favour of the assessee and allowed the claim of deduction u/s.80P(2)(d) for interest received on the deposits with the Aurangabad District Central Cooperative Bank. The relevant observation of the Tribunal reads as under : "2. At the outset of hearing, learned Authorized Representative pointed out that this issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on deposits with Aurangabad District Central Co-operative Bank cannot be said to be the income derived from providing credit facilities to its members. We, accordingly, answer the ground taken by the revenue. But, finally we have confirmed order of Ld. CIT(A) giving relief to the assessee u/s. 80P(2)(d)." 2.1 Facts being similar, so following the same reasoning, the assessee is entitled to deduction u/s.80P(2)(d). In view of above, assessee is eligible for claiming deduction u/s.80P(2)(d) of I.T Act, which is available for income earned from business and not from other sources as rightly held by CIT(A). We uphold the same. 3. In the result, appeal filed by revenue is dismissed." 7.3 Respectfully following the above decision, we hold that the interest income of Rs. 31,77,452/- and dividend income of Rs. 5,41,667/- received by the assessee cooperative society is eligible for deduction/s.80P(2)(d) of the I.T. Act. Ground of appeal on this issue by the assessee are accordingly allowed." 9. Further, the Pune Bench of Tribunal in Sindhudurg District Primary Teachers Co -operative Credit Society Ltd. Vs. ITO (supra) also allowed the claim of assessee in respect of both the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Income Tax Officer 2 ITD 617 (Chd.). There is no ambiguity in the language of Sec. 80P(2)(d). Sindhudurg District Central Co-operative Bank Ltd. is a Cooperative Society though engaged in the business of banking and hence, the assessee is entitled to claim the deduction in respect of the interest earned or received from the Sindhudurg District Central Co-operative Bank Ltd. On the plain reading of the language used in Sec. 80P(2)(d) in our opinion it is an independent deduction other than that of Sec. 80P(2)(a)(i). We, therefore, hold that the interest income earned on the fixed deposit or any other bank account with Sindhudurg District Central Co-operative Bank Ltd. is allowable as a deduction on gross basis u/s. 80P(2)(d) of the Act. Accordingly, this issue is decide in favour of the assessee." 10. The issue arising in the present appeal is identical to the issue before Pune Bench of Tribunal in Sindhudurg Zilla Madhyamik Adhyapak Sahakari Patpedhi Maryadit (supra) and Sindhudurg District Primary Teachers Co - operative Credit Society Ltd. Vs. ITO (supra). The assessee being a credit cooperative society had made investment in a co-operative bank by way of deposits and also sha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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