Dhanalaxmi Mahila Gramin Bigarsheti Sahakari Patsanstha Ltd. Vs PCIT (ITAT Pune)
Assessee, a co-operative credit society, filed return declaring Nil income after claiming deduction of ₹26.02 lakh u/s 80P(2)(a)(i). The case was selected for scrutiny. AO, after issuing notices u/s 143(2)/142(1) & considering replies dated 18.02.2022, accepted the claim & completed assessment u/s 143(3) r.w.s. 144B.
Subsequently, the Pr. CIT invoked s.263, alleging that the AO had failed to:
- Disallow interest income earned from deposits with other co-operative banks, treating it wrongly as business income;
- Disallow NPA provision of ₹7.25 lakh, which is not an allowable deduction u/s 36(1)(vii); &
- Mis-classified the case as “limited scrutiny” instead of “complete scrutiny”.
He therefore set aside the assessment, holding it erroneous & prejudicial to Revenue, & directed the AO to re-examine both issues afresh.
Assessee contended that:
- AO had specifically raised a query on deduction u/s 80P & verified submissions, hence no error existed.
- Interest from deposits with co-operative banks forms part of business income eligible u/s 80P(2)(a)(i).
- Even if NPA provision is disallowed, the resulting enhancement in income remains eligible for the same deduction u/s 80P, making the issue revenue-neutral.
Reliance was placed on coordinate bench decisions including Shrisant Savtamali Gramin Bigarsheti Sahakari Patsanstha Maryadit v. PCIT (ITA 972/PUN/2025, 31.07.2025) & Swami Vivekanand Nagari Sahakari Patpedhi Maryadit (ITA 1190/PUN/2025, 18.06.2025) following SC in Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd (454 ITR 117).
