Case Law Details
Mahapalika Kshetra Madhyamik Shikshak Sahakari Pat Sanstha Maryadit Vs CIT(A) (ITAT Mumbai)
Dividend which is earned by the Society registered under Maharashtra Co-operative Society Act, 1960 from shares of the co-operative banks and co-operative credit society is also eligible for deduction under section 80P(2)(d) of IOncome Tax Act, 1961
The brief facts of the case are that the assessee is a registered Society under Maharashtra Co-operative Society Act, 1960. The said society is a society of municipal secondary teachers and other municipal employees. The said Society registration No. is BOM/W/GS/BNK/0/435/91-92 dated 16/01/1992. As per the assessee, the assessee-society is a credit society and not a co-operative bank. The assessee co-operative credit society is engaged in the business of accepting deposits from its members and providing credit facilities to its members, which are repayable on demand, for the purpose of lending to members. Further, on account of statutory guidelines and as required by the regulations of the societies under the Maharashtra Cooperative Societies Act, 1960, the appellant society has invested in the fixed deposits with Mumbai District Central Cooperative (MDCC) bank from the deposits accepted from its members. Since the deposits from members are repayable on demand, investments in deposits with MDCC bank have to be made as per the statutory regulations of the societies and credit facilities are to be provided to the members, the appellant society needs to maintain sufficient liquidity and therefore, the appellant society has taken an overdraft facility from the MDCC bank against the fixed deposits with MDCC Bank which are given as security to MDCC bank. The above overdraft facility is further utilized to provide credit facilities to the members of the appellant society. Thus, society is required to lend/invest its funds prudently in such a manner which is beneficial to its members. During the impugned assessment year, the entire deduction U/s 80P(2)(d) was disallowed related to earning of interest & dividend amount to Rs. 43,67,004/-. The aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) upheld the assessment year. Being dissatisfied with the appeal order, the assessee filed appeal before us.
We heard the rival submissions and considered the documents available on the record. The assessee claimed the deduction under section 80P(2)(d) where the interest related to co-operative bank and co-operate credit societies duly rejected by the Ld.AO and was upheld by the Ld.CIT(A). The issue is well settled by the co-ordinate bench of ITAT, Mumbai and the dividend which is earned by the assessee from shares of the co-operative banks and co-operative credit society is also eligible for deduction under section 80P(2)(d) of the Act. The appeal order is duly set aside and the addition of Rs.43,67,004/- is quashed. So, in our considered view, the interest earned from cooperative credit society and dividend earned from share of cooperative bank are allowable deduction U/s 80P(2)(d). Accordingly, the appeal of the assessee is allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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