Samarth Raghuveer SahakariPatsanstha Ltd. Vs ITO (ITAT Mumbai)
In the matter abovementioned ITAT allowed appeal of the assessee by holding that assessee is eligible for claim of deduction u/s.80P(2)(a)(i) that all its income is from members.
Assessee is a co-operative credit society which does not hold any license from Reserve Bank of India and therefore, cannot be classified as ‘co-operative bank’. During the year under consideration assessee carrying on business of accepting deposits and lending money to the members of the society. Assessee has filed its return at Rs.1,43,97,970/- and the entire income was claimed as deduction u/s.80P(2)(a)(i). Assessee has also claimed deduction u/s. 80P (2)(d) of Rs.50,000/- from the interest received from co-operative banks. AO disallowed entire claim of the assessee by holding that IT Act clearly distinguish co-operative bank from co-operative societies and no deduction is to be allowed to co-operative banks u/s.80P. He further held that the interest income from co-operative bank is not business income and therefore, he is required to be taxed under the head ‘income from other sources. CIT(A) confirmed the claim of deduction.
Aon further appeal ITAT held that law is now well settled that any co-operative credit society is not holding banking license is eligible for deduction u/s. 80P(2)(d) in view of the Hon’ble Supreme Court Judgment in the case of Citizen Co-operative Society Ltd. vs ACIT in Appeal No.10245 of 2017 and The Mavilayi Service Cooperative vs. Commissioner of Income Tax in Civil Appeal No.8315 of 2019. All income is earned from its members and not from deposits made in the co-operative banks.
