Nandini Credit Co-operative Society Limited Vs ITO (ITAT Bangalore)
Divergent HC Views? Tribunal Chooses One Favorable to Assessee- Interest From Co-op Banks Attributable to Business: 80P(2)(a)(i) Allowed
Assessee, a credit co-op society, claimed full deduction u/s 80P(2)(a)(i) on interest earned from deposits with Co-operative Bank & District Central Co-operative Bank. AO treated such interest as “income from other sources” relying on Totgars (Karnataka HC 16.06.2017) & allowed only partial deduction; CIT(A)-NFAC upheld disallowance of ₹8,98,286.
Tribunal noted that Karnataka HC has two divergent rulings: the later 16.06.2017 ruling (relied on by AO) & an earlier detailed ruling dated 05.01.2017, which, after analysing SC’s Totgars, held that a Co-op Bank is also a Co-operative Society, & that interest earned from it is eligible for deduction u/s 80P(2)(a)(i) or alternatively u/s 80P(2)(d). Applying the principle that when two coordinate HC decisions exist, the one favourable to Assessee should be followed & the one closer to the facts must prevail, Tribunal adopted the 05.01.2017 ruling. Thus, interest of ₹3,03,968 from Co-op Bank & ₹5,94,318 from District Central Co-op Bank is held deductible u/s 80P(2)(a)(i). Disallowance deleted.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. ITA No. 1649/Bang/2025 is filed by M/s. Nandini Credit Co-operative Society Limited for the assessment year 2020-21 against the Appellate Order passed by the National Faceless Appeal Centre, Delhi (NFAC) (the Ld. CIT(A)) dated 16.06.2025 wherein the Appeal filed by the Appellant against the Assessment Order passed u/s. 143 (3) r.w.s. 144 (B) of the Income Tax Act, 1961 (the Act) dated 26.09.2022 by the Assessment Unit, Income Tax Department for the impugned assessment order was partly allowed.
