ITO Vs Shivsahyadri Sahakari Pathpedhi (ITAT Mumbai)
n the case of ITO Vs Shivsahyadri Sahakari Pathpedhi (ITAT Mumbai), the issue revolves around the claim for deductions under Section 80P of the Income Tax Act, 1961, for investments made by a credit co-operative society in a co-operative bank. The Revenue challenged the order passed by the CIT(A) for the Assessment Year 2018-19 and 2020-21, where the credit co-operative society had claimed a deduction of Rs. 4,34,49,404 under Sections 80P(2)(a)(i) and 80P(2)(d) for interest income received from investments in a co-operative bank.
The Revenue’s primary argument was that co-operative banks should not be considered as “co-operative societies” for the purpose of Section 80P(2)(d), and hence, interest earned from investments in co-operative banks should not be eligible for deduction. The Revenue further referenced the Citizen Co-operative Society Ltd. vs. ACIT judgment, asserting that the co-operative bank is distinct from a co-operative society, as the former is considered an urban commercial bank.
However, the ITAT Mumbai ruled in favor of the assessee, citing previous case law that established the eligibility of such deductions under Section 80P(2)(d). The Tribunal pointed to the decision in the assessee’s case for AY 2017-18, where it was held that investments made by credit co-operative societies in co-operative banks qualify for deductions under Section 80P(2). The Tribunal also referred to the PCIT vs. Annasaheb Patil case, where the Supreme Court held that credit societies are entitled to deductions under Section 80P and cannot be classified as public co-operative banks, thereby making the provisions of Section 80P(4) inapplicable.
