Mumbai Postal Employees Co-Operative Credit Society Ltd. vs. ITO

Parties Involved

Facts Summary

The assessee-society, registered under the Maharashtra Co-operative Societies Act, availed loans from Mumbai Central Co-operative Bank and utilized the same to grant loans to its members. The assessee-society purchased minimum stipulated shares of the lending bank. The loan was continued in later years, and the investment in shares got continued. The bank declared dividends to its shareholders. The assessee received dividends which have been claimed as a deduction under Section 80P(2)(d) of the Income Tax Act, 1961. The Assessing Officer rejected the claim of the assessee of deduction, whereas the Commissioner of Income Tax (Appeals) allowed the claim. The appellant, the Revenue, filed an appeal against the order passed by the Commissioner of Income Tax (Appeals).…

Legal Issues

• 1. Whether the Commissioner of Income Tax (Appeals) was correct in allowing deduction under Section 80P(2)(6) of the Income Tax Act, 1961 for interest earned from deposits from a cooperative bank, ignoring the amendment made by the Finance Act, 2015.
• 2. Whether the Commissioner of Income Tax (Appeals) was correct in allowing deduction under Section 80P(2)(d) of the Income Tax Act, 1961 for interest earned from deposits in a cooperative bank.

Judgment Outcome

Decided in favour of Revenue.

Precedents Relied Upon

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