TMI Blog2020 (9) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... has raised the following grounds: - 1. Whether on the facts and in circumstances of the case and in law. the Ld. CIT(A) in allowing deduction u/s 80P(2)(d) of the I. T. Act. 1961, without appreciating legislative intent of the inserted provision of 80P) which specifically provides that section shall not apply in relation to any Co-operative bank other than a primary agricultural credit society or primary cooperative agricultural and rural developer bank. 2. On the facts and circumstances of the case and in law. the Ld CIT(A) erred in allow deduction 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 allowing deduction u/s 80P(2)(d) of the I. T. Act, 1961, without considering the decision of the Karnataka High Court in the case of Pr. CIT vs. Totagars Co-operative Society (395 ITR 611) that the interest income received from investment of idle funds with cooperative banks is not eligible for claiming deduction u/s 80(P)(2)(d) of the Act. 4 The appellant prays that the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso relied upon the case Kaliandas Udyog Bhavan Premises Co-op Society Ltd. Vs. ITO-21(2)(1) to substantiate its claim. Before going further, we deem it necessary to advert the finding of the CIT(A) on record: 4. DECISION: 1 have carefully gone through the facts of the case, the views taken by the Assessing Officer, alongwith the submissions made by the appellant and have arrived at the following view which is as under: The ground number I to 3 raised by the appellant relates to the disallowance u/s. 80P(2)(d) of the IT Act, 1961. For sake of convenience all the grounds are being adjudicated together. These grounds of the appeal pertain to disallowance of deduction claimed u/s 80P(2)(d) of the Act amounting to ₹ 1,57,80,440/- and interest on fixed deposits of ₹ 8,83,167/ aggregating to ₹ 1,66,63,607/-. The appellant is a Cooperative Housing Society. It has earned interest income on FDR from Co-operative Banks to the tune of ₹ 1,66,63,607/-. Section 80P(2)(d) of the Act reads as under: - in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other cooperative society, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther placed reliance on Lands End Cooperative Housing Society Ltd vs. I. LT.A. No. 3566/Mum/2014 (ITAT) dated 15-01-2016. The operative part of the above decision reads as under:- the provisions of section 80(P)(2)(d) of the Act provides for deduction in respect of income of a coop society by way of interest or dividend from its investments with other coop society if such income is included in the gross total income of the such coop society. In view these facts and circumstances we are of the considered view that the assessee is entitled to the deduction of ₹ 14,88.107/- in respect of interest received/derived by it on deposits with coop. banks and therefore the appeal of the assessee is allowed by reversing the order of the ClT(A). The AO is directed accordingly 4.1.4. In the ACIT vs. Ws. Jawala Cooperative Urban Thrift Credit Society Ltd., - it was held that:- We have heard rival parties and have gone through the material placed on record We find that total income earned by the assessee included income on fixed deposits placed with Bombay Mercantile Bank. interest income from a scheduled bank and dividend income from Delhi Cooperative Bank From the cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered to be a Co-operative Society is no longer res-integra. For the said issue has been decided by the Tribunal itself in different cases. Moreover, the word 'Co-operative Society' are the words of a large extent, and denotes a genus, whereas the word 'Co-operative Bank' is a word of limited extent, which merely demarcates and identifies a particular species of the genus Cooperative Societies. Cooperative Society can be of different nature, and can be involved in different activities; the Co-operative Society Bank is merely a variety of the Cooperative Societies. Thus, the Co-operative Batik which is a species of the genus Cooperative societies would necessarily be covered by the word 'Co-operative Society'. A Co-operative Bank is always registered under the relevant Cooperative Societies Act of the relevant State. In view of this and by respectfully following various judicial pronouncements. the appellant is entitled to claim deduction u1s 80P(2)(d) of the Act. Hence. AO is directed to allow ₹ 1,66,63,607/-as deduction U/s 80P(2)(d) of the Act. Thus grounds of appeal raised by appellant are allowed. 4.3 Ground number 4 5 refers to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the lower authorities. Before proceeding further, we may herein reproduce the relevant extract of the said statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. 80P(2)(d). Where in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2). The sums referred to in sub-section (1) shall bethefollowing,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 cooperative society, the whole of such income; Thus, from a perusal of the aforesaid Sec. 80P(2)(d) it can s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. 8. We shall now advert to the judicial pronouncements that had been relied upon by the authorized representatives for both the parties and the lower authorities. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) for the interest income derived from its investments held with a cooperative bank is covered in favour of the assessee in the following cases: (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum) (ii) M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017 (iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITORange-20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon‟ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had also held that the interest income earned by the assessee on its investments held with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Sale Society (2017) 395 ITR 611 (Karn), the High Court had concluded that a cooperative society would not be entitled to claim of deduction under Sec. 80P(2)(d). We however find that as held by the Hon'ble High Court of Bombay in the case of K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Courts, then a view which is in favour of the assessee is to be preferred as against that taken against him. Thus, taking support from the aforesaid judicial pronouncement of the Hon ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon ble High Court of Gujarat in the case of State Bank of India Vs. CIT (2016) 389 ITR 578 (Guj), wherein it was observed that the interest income earned by a co-operative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 9. We thus in the backdrop of our aforesaid observations are unab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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