Case Law Details
Bhairavnath Multi State Co.op. Credit Society Limited Vs ITO (ITAT Pune)
The ITAT Pune considered whether a cooperative credit society was entitled to deduction under Section 80P(2)(d) of the Income-tax Act, 1961 on interest income of ₹3,87,34,866 earned from investments with Cooperative Banks and Cooperative Societies for AY 2020-21. The Assessing Officer denied the deduction, and the CIT(A) affirmed the disallowance. Before the Tribunal, the assessee submitted that the issue had already been decided in its own favour for AY 2014-15 and that consistent decisions of the Tribunal had held interest earned from investments with Cooperative Banks to be eligible for deduction under Section 80P(2)(d). The Tribunal observed that the issue was no longer res integra, noting a consistent judicial view that interest earned from deposits with Cooperative Banks qualifies for deduction under Section 80P(2)(d). Referring to its recent decision in Annapurna Nagari Sahkari Pathsanstha Maryadit Yawal Vs. ITO and earlier coordinate bench decisions, the Tribunal reiterated that Cooperative Banks are basically Cooperative Societies that have obtained banking licences, and therefore interest earned from investments with them is eligible for deduction under Section 80P(2)(d). Following these precedents, the Tribunal held that the assessee was entitled to the claimed deduction, set aside the impugned order, allowed the deduction under Section 80P(2)(d), and allowed the appeal.
Cases Discussed
- Annapurna Nagari Sahkari Pathsanstha Maryadit Yawal Vs. ITO, ITA No. 313/PUN/2025, order dated 07.05.2025.
- Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd. Vs. ITO, ITA No. 1365/PUN/2023, dated 01.01.2024.
- The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO, ITA No. 84/PAN/2018, dated 27.05.2022.
FULL TEXT OF THE ORDER OF ITAT PUNE
The captioned appeal at the instance of assessee pertaining to A.Y. 2020-21 is directed against the order dated 27.10.2025 framed by National Faceless Appeal Centre, Delhi arising out of Assessment Order dated 19.09.2022 passed u/s.143(3) r.w.s.144B of the Income Tax Act, 1961.
2. The only grievance of the assessee is that ld.CIT(A) erred in affirming the action of the AO of not granting deduction u/s.80P(2)(d) of the Act for the interest income earned on investments held with Cooperative Banks/Cooperative Societies.
3. At the outset, ld. Counsel for the assessee submitted that there is no dispute about the fact that assessee earned interest of ₹3,87,34,866 from investments held with Cooperative Banks and this fact is clearly discernible from the assessment order. He submitted that in assessee’s own case for A.Y. 2014-15 similar issue has been decided in favour of the assessee and deduction u/s.80P(2)(d) of the Act has been allowed. He further submitted that a consistent view has been taken by this Tribunal allowing the deduction u/s.80P(2)(d) of the Act for the interest income earned from investments held with Cooperative Banks as well as Cooperative Societies.
4. Ld. DR supported the order of ld.CIT(A).
5. We have heard the rival contentions and perused the record placed before us. The issue under consideration is no longer res integra by virtue of catena of decisions taking consistent view that interest income earned from deposits with Cooperative Banks is eligible for deduction u/s.80P(2)(d) of the Act. Recently, this Bench in the case of Annapurna Nagari Sahkari Pathsanstha Maryadit Yawal Vs. ITO in ITA No.313/PUN/2025, order dated 07.05.2025 has allowed the deduction claimed by the assessee u/s.80P(2)(d) of the Act observing as under :
“5. We have heard the rival submissions and perused the record placed before us. There is no dispute to the fact that assessee has earned interest income of Rs.1,02,95,103/- from deposits/investments with Cooperative Banks. This fact has been accepted by the Assessing Officer in the assessment order also. Admittedly, assessee has not filed the requisite details before ld.CIT(A). We however considering the fact that the issue regarding allowability of deduction u/s.80P(2)(d) of the Act for the interest earned from Cooperative Banks is no longer res integra as the very same issue has been decided by this Tribunal in catena of decisions and in assesse’s own case for A.Y. 2020-21 holding that the assessee is eligible for deduction u/s.80P(2)(d) of the Act as the Cooperative Banks are basically Cooperative Societies. For the sake of brevity, the finding given in ITA No.2471/PUN/2024 is reproduced below:
“7. We have heard both the sides and perused the record placed before us. In the instant case, the Assessing Officer disallowed the interest income of Rs.1,63,98,998/- earned out of the Fixed deposits/Investments made with Cooperative Banks treating the same as Income from Other Source. Ld.CIT(A) dismissed the appeal in limine without discussing anything on merits of the issues and on the ground that the assessee has not provided plausible explanation for admission of additional evidences.
8. Section 80P(2)(d) of the Act provides that the sum received in respect of any income by way of interest or dividend derived by Cooperative Society from its investment with any other Cooperative Society, the whole of such income is eligible for deduction u/s.80P of the Act. we find that this issue is no more res integra as the Coordinate Benches of this Tribunal has been consistently holding that the interest income earned out of the FDs/Investments kept with Cooperative Banks is allowable u/s.80P(2)(d) of the Act. We find that this Tribunal in case of Kolhapur District Central Coop. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd., Vs. ITO in ITA No.1365/PUN/2023, dated 01.01.2024 dealing with similar issue after placing reliance on another decision of this Tribunal in the case of The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in ITA No.84/PAN/2018, dated 27.05.2022 has held that the interest earned from deposits with Cooperative Banks are also eligible for deduction u/s.80P(2)(d) of the Act as Cooperative Banks are basically Cooperative Societies only but have turned into Bank on getting necessary banking license.
9. Respectfully following the above referred decisions taking consistent view along with considering the facts of the case, where the assessee made investment with the Cooperative Banks we hold that the assessee is eligible for deduction u/s.80P(2)(d) of the Act for the interest income earned from Cooperative Banks at Rs.1,63,98,998/-. Findings of the ld. CIT(A) is set-aside and the Assessing Officer is directed to allow the claim made by the assessee. Effective grounds of appeal raised by the assessee are allowed.”
6. Respectfully following the same, we hold that deduction of Rs.1,02,95,103/- u/s.80P(2)(d) of the Act claimed by the assessee on the interest earned from deposits/Investments with Cooperative Banks deserves to be allowed. Relevant finding of ld.CIT(A) on merits is set aside and grounds of appeal No.5 to 8 raised by the assessee are allowed.”
6. Considering the above decision and the consistent view taken by this Tribunal, we hold that the interest income earned from deposits/Investments held with Cooperative Bank is eligible for deduction u/s.80P(2)(d) of the Act. We therefore allow the impugned deduction claimed by the assessee u/s.80P(2)(d) of the Act. Impugned order is set aside and the grounds of appeal raised in the instant appeal are allowed.
7. In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 18th day of December, 2025.
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