Saikrupa Nagari Sahakari Patsanstha Maryadit Kolhapur Vs ITO (ITAT Pune)
The Income Tax Appellate Tribunal (ITAT) Pune has ruled in favor of Saikrupa Nagari Sahakari Patsanstha Maryadit, Kolhapur, allowing a deduction under Section 80P(2)(d) of the Income-tax Act, 1961. The case pertained to the Assessment Year 2018-19, where the assessee, a cooperative credit society, had declared nil income after claiming deductions under Chapter VIA, including a deduction of ₹26,32,236 under Section 80P. The dispute arose when the Assessing Officer (AO) disallowed the deduction of ₹19,33,878 on interest earned from fixed deposits in cooperative banks, classifying it as “Income from Other Sources” under Section 56. The disallowance was upheld by the Commissioner of Income Tax (Appeals) [CIT(A)], prompting the assessee to appeal before the ITAT.
The tribunal examined the applicability of Section 80P(2)(d), which allows deductions on interest or dividends earned from investments made in other cooperative societies. The core argument was whether cooperative banks qualify as cooperative societies for this deduction. The ITAT referred to multiple precedents, including the case of Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd. vs. ITO (ITA No.1365/PUN/2023, dated 01.01.2024), which held that cooperative banks, though functioning as banks, are essentially cooperative societies and should be treated accordingly for tax purposes. Another cited case, 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), reinforced this interpretation, allowing deductions under Section 80P(2)(d) for interest earned from cooperative banks.
