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TMI Blog2025 (5) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... t 'the Act') for the A.Y. 2020-21. 2. The Assessee during the assessment year under consideration had earned the interest income of Rs. 17,75,190/- in total from the following banks: Sl.no. Name of the Bank Interest amount 1 M/s. Maharashtra State Co-operative Bank Rs.2,92,715/- 2 Saraswat Co-operative Bank Rs.10,78,112/- 3 SVC Co-operative Bank Rs.4,03,536/- 4 M/s. Bombay Mercantile Bank Rs.827/- Total Rs.17,75,190/- 3. The Assessee claimed the said amount of Rs. 17,75,190/- (interest income) as exempt/deduction u/s 80P(2)(d) of the Act. The Assessing Officer (AO) vide intimation dated 26.12.2021 u/s 143(1) of the Act, by considering the aforesaid claim of the Assessee though allowed the deduction of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nks. 9. Before proceeding further, it is relevant to note the provisions of section 80P of the Act under which 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) ..... (b) ..... (c) ..... (d) in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other co-opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80P(2)(d) of the Act. The AO denied the deduction under section 80P(2)(d) of the Act on the basis that the 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 Cooperative Bank Ltd. vs CIT, Calicut, [2021] 431 ITR 1 (SC) while analyzing 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 Cooperative 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 comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank, but however, are unable to subscribe to their view that the same shall also jeopardize the claim of deduction of a cooperative society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the learned CIT(A) has placed reliance upon the decision of the Hon‟ble Karnataka High Court in Pr.CIT v/s Totagars Co-operative Sales Society, [2017] 395 ITR 611 (Karn.), wherein it was held that interest earned by the Assessee, a Cooperative Society, from surplus deposits kept with a Cooperative Bank, was not eligible for deduction under section 80P(2)(d) of the Act. We find that in an earlier decision the Hon'ble Karnataka High Court in Pr.CIT v/s Totagars Co-operative Sales Society, [2017] 392 ITR 74 (Karn.) held that according to section 80P(2)(d) of the Act, the amount of interest earned from a Co-operative Society Bank would be deductible from the gross income of the Co-operative Society in order to assess its total income. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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