Case Law Details
Premium Tower Co-operative Housing Society Ltd Vs Commissioner (Appeals) of Income Tax (ITAT Mumbai)
ITAT Mumbai held that deduction under section 80P(2)(d) of the Income Tax Act duly available on interest income earned from FDs and RDs invested with cooperative bank.
Facts- The assessee is a co-operative housing society registered under Maharashtra Co-operative Housing Society Ltd. Assessee has claimed deduction of Rs. 13,85,628/- u/s. 80P(2)(d) of the Act in respect of bank interest and interest on FDs and RDs received from cooperative banks. AO held that by insertion of Sub-Section (4) in section 80P, cooperative banks are commercial banks and does not fall under the purview of “cooperative society” referred to in Section 80 P(2)(d) of the Act. The assessee has earned bank interest and interest on FDs & RDs from its investment made with cooperative banks and not with cooperative society. Accordingly, he denied the deduction of claim u/s. 80 P(2)(d)(4) of the Act.
Here, we are not dealing with, whether assessee can be treated as cooperative bank or not. Here the issue is, assessee had made investment in the cooperative banks, whether interest earned from such investment falls in the category of interest earned from cooperative society or not so as to get benefit u/s 80 P(2)(d)?
Conclusion- In contravention, section 80P (2)(a) provides income from carrying out various activities which is in the nature of business. Irrespective whether the interest income derived from activities as provided in section 80P (2)(a) which is otherwise the business income for which deduction is allowable, if there is any interest income which is earned on deposits or investment made with cooperative societies, the same must fall in the category activity or the business, but still is eligible for deduction under the specific provision of section 80P(2)(d). Thus, the interest derived by the assessee from cooperative bank is eligible for deduction u/s 80P(2)(d) because as noted above, cooperative are also cooperative societies for this purpose. This has been held so by the Hon’ble Karnataka High Court and latest judgment of Hon’ble Kerala High Court.
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