Deoband Cooperative Cane Development Union Ltd. Vs AO (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, adjudicated an appeal filed by the assessee for Assessment Year 2022–23 against the order of the Commissioner of Income Tax (Appeals)/NFAC dated 24.09.2025. The central issue in the appeal concerned the denial of deduction under Section 80P of the Income Tax Act on interest income earned from Fixed Deposit Receipts (FDRs).
During the proceedings, it emerged that the lower authorities had disallowed the assessee’s claim for deduction under Section 80P on the interest income derived from investments made in the form of FDRs. The Revenue supported the disallowance and relied on judicial precedent to argue that such interest income could not be considered as income derived from eligible business activities under Section 80P(2).
The Tribunal examined the issue in light of various judicial decisions and noted that the matter was no longer res integra. It referred to decisions of coordinate benches, particularly a ruling of the Pune Tribunal, which had addressed a similar issue. In that decision, it was held that interest income earned by a cooperative society from investments of surplus funds with cooperative banks or societies qualifies for deduction under Section 80P(2)(d). It was further observed that cooperative banks are a form of cooperative society, and therefore, such interest income falls within the scope of the deduction provisions.
