Bombay Mercantile Co. Op. Bank Ltd. ... vs Ito 15(1)(2), Mumbai on 27 October, 2020
Without prejudice to the above, it was submitted that
besides eligible u/s 80P(2)(d) assessee was also eligible under section
80P(2)(i) as income from funds kept as short term funds is deemed to
have accrued as profits and gain of business attributable to the activities
of assessee and reliance in this respect was placed on the case law of
Dhan Laxmi Credit Cooperative Society Ltd. vs ITO in I.T.A. No. 2342
wherein under similar circumstances, the deduction u/s 80P(2)(i) was
allowed after taking into account the case law of Totgar's Society as
decided by Hon'ble Supreme Court. The Ld. A.R. also referred to Section
80P(4) and submitted that benefit of Section 80P has been taken away
from 01.04.2007 from cooperative banks but the assessee was not a
cooperative bank but was a cooperative society and therefore, was
eligible for deduction under that section. 9. We have heard rival parties
and have gone through the material placed on record. We find that total
income earned by the assessee included income on fixed deposits placed
with Bombay Mercantile Bank, interest income from a scheduled bank
and dividend income from Delhi Cooperative Bank. From the certificate
as placed at paper book page 30, we find that Bombay Mercantile
Cooperative Bank is a cooperative society registered under Maharashtra
Cooperative Societies Act and we further find that the said society has
been assessed u/s 143(3) as a cooperative society and its income was
allowed to be exempt u/s 80P(2)(i) as held by Mumbai Tribunal in I.T.A.
No. 4128 and 4129 vide its order dated 30.11.2005, for Assessment Year
1990-91 and 1991-92 and further by Mumbai Tribunal vide order dated
07.09.2011 in I.T.A. No. 5292 for Assessment Year 1997-98. Therefore it
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ITA Nos. 3583/M/2014 & 4824/M/2016
A.Ys. 2010-11 & 2012-13
is held that fixed deposits placed with Bombay Mercantile Bank falls
within the exemption granted by Section 80P(2)(d) of the Act. The
assessee was also eligible under the provisions of Section 80P(2)a(i) as
the funds placed by assessee in the form of fixed deposits can be said to
be kept for the purpose of business of the assessee as the assessee had
availed credit facilities also against such fixed deposits which were
again used for the purpose of business of assessee. Moreover, under
similar circumstances, Chandigarh Bench in I.T.A. No. 996/2009 as
noted by Ld. CIT(A) has decided in favour of assessee. The dividend
income is exempt for all persons including assessee. The interest income
from bank amounting to Rs.18,190/- is though not exempt u/s 80(p)(2)(d)
but is exempt u/s 80P(2)(i) of the Act. The case law of Totgar's
Cooperative Society was rightly distinguished by Ld. CIT(A). Therefore,
keeping in view all facts and circumstances, we do not find any infirmity
in the order of Ld. CIT(A).