Mumbai Postal Employees Co-operative Credit Society Limited Vs ITO (ITAT Mumbai)
ITAT Mumbai held interest income earned by a cooperative society from its investment in cooperative bank is eligible for deduction u/s 80P(2)(d) of the Income Tax Act even after insertion of section 80P(4) of the Income Tax Act.
Facts- Assessee is a Credit Cooperative Society registered under the Maharashtra Cooperative Society Act 1960. During the course of assessment, AO observed that assessee has shown gross total income from business at Rs. 19,21,62,128/- and claimed the whole amount as deduction u/s 80P(2)(a)(i) of the Act. AO further observed that assessee has credited interest receipt of Rs. 152,42,308/- and dividend of Rs.45,37,500/- received from cooperative banks in its profit and loss account. AO observed that earning interest/dividend from investment in Cooperative Bank was not the object of the business of the assessee therefore, the same was no eligible for deduction in terms of provision of Sec. 80P(2) (a) (i) of the Act. AO also observed that assessee was not eligible for deduction u/s 80P(2)(d) of the Act in view of the provision of Sec. 80P(4) inserted by the Finance Act 2006 w.e.f 01.04.2007 which specifically excludes cooperative bank from the definition of cooperative societies for the purpose of benefit of Sec. 80P. Therefore, AO concluded that benefit of 80P cannot be given either u/s 80P(2)(d)(i) as claimed by the assessee or 80P(2)(d) of the Act, therefore, deduction u/s 80P(2)(a)(i) to the extent of Rs. 197,79,808/- being interest income/dividend received from cooperative bank was rejected and also not allowed as deduction u/s 80P(2)(d) of the Act.
