Satara Z.P. Class Four Employees Coop. Credit Society Ltd. Vs ITO (ITAT Pune)
The Income Tax Appellate Tribunal (ITAT) Pune addressed an appeal filed by Satara Z.P. Class Four Employees Coop. Credit Society Ltd., concerning the disallowance of a deduction claimed under Section 80P(2)(d) of the Income Tax Act, 1961. The assessee, a cooperative credit society, had earned interest income of ₹13,39,682 from investments in cooperative banks, which the Assessing Officer treated as “Income from Other Sources” under Section 56, denying the deduction. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the Assessing Officer’s decision.
The ITAT, however, ruled in favor of the assessee, citing consistent precedents from coordinate benches. Section 80P(2)(d) allows deductions for interest income derived by a cooperative society from investments in other cooperative societies. The ITAT referenced prior decisions, notably “Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd. Vs. ITO” and “The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO,” which established that cooperative banks, despite their banking licenses, remain fundamentally cooperative societies. Therefore, interest earned from deposits with these banks qualifies for deduction under Section 80P(2)(d). The ITAT set aside the CIT(A)’s findings and directed the Assessing Officer to allow the assessee’s deduction claim, effectively recognizing the eligibility of interest income from cooperative bank investments for tax deduction under the relevant provision.
FULL TEXT OF THE ORDER OF ITAT PUNE
