The Commissioner Of Income Tax – Iv, Mumbai v. Shankarrao Mohite-Patil Sahakari Bank Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.4078 OF 2010 The Commissioner of Income Tax – IV, Mumbai..Appellant. VersusShankarrao Mohite-Patil Sahakari Bank Limited..Respondent. Mr.Vimal Gupta for the appellant. CORAM : J.P. Devadhar &K.K. Tated, JJ. P.C. : DATE : 8th September 2011 1.The basic question of law raised in this appeal reads thus :- “Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing deduction under Section 80P(2)(d) of the Income-tax Act, 1961 on the whole interest accrued to the assessee company on its investment in other co-operative banks and societies amounting to Rs.277,52,469/- and not on the proportionate interest of Rs.54,92,077/- as determined by the Assessing Officer ?” 2.The assessment year involved herein is AY 2006-07. 3.The assessee is a co-operative bank. In the assessment year in question, the assessee claimed deduction under Section 80P(2)(d) of the Income Tax Act, 1961 in respect of the interest income earned from other co- operative banks and societies. The assessing officer disallowed deduction under Section 80P(2)(d) on part of the interest on the ground that the investments in other co-operative banks were made out of the funds belonging to the customers and, therefore, proportionate interest paid to the customers have to be deducted from the interest received by the assessee from other co-operative banks and societies while computing deduction under Section 80P(2)(d) of the Act. 4.Challenging the aforesaid order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who accepted the contention of the assessee and set aside the order passed by the Assessing Officer. On further appeal filed by the Revenue, the Income Tax Appellate Tribunal confirmed the order of the Commissioner of Income Tax (Appeals). Challenging the order of the Income Tax Appellate Tribunal, the Revenue has filed the present appeal. 5.Sections 80P(1) and 80P(2)(d) of the Income Tax Act, 1961, to the extent relevant, reads thus : “Deduction in respect of income of co-operative societies. 80P. (1)Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. following, namely - ----(a) ----(b) ----(c) (d)in respect of any income by way of interest or dividends derived by the c-operative society from its investments with any other co-operative society, the whole of such income;” 5.Plain reading of Section 80P(2)(d) clearly shows that the whole of the interest or dividend income derived by a co-operative society from its investments with other co-operative society is liable to be deducted under Section 80P of the Act. As the language used in Section 80P(2)(d) is clear and unambigious, the Income Tax Appellate Tribunal was justified in holding that there was no scope for disallowing part of the interest / dividend income and that the assessee was entitled to the deduction under Section 80P(2)(d) on the whole of the amount received by the assessee as interest on the investments with other co-operative societies. 6.Accordingly, we see no merit in the appeal and the same is hereby dismissed with no order as to costs. (K.K. Tated, J.)(J.P. Devadhar, J.)