Deeplaxmi Nagari Sahakari Patsanstha Maryadit Vs ITO (ITAT Pune)
Interest from Co-op Bank FDs Still Gets 80P Shield: Pune ITAT Allows Deduction u/s 80P(2)(a)(i) Post Mavilayi
Pune ITAT (Bench “A”) in Deeplaxmi Nagari Sahakari Patsanstha Maryadit vs. ITO, Ward-2, Ahmednagar (ITA Nos.2322 & 2323/PUN/2024, AYs 2018-19 & 2020-21, order dated 19.12.2025) allowed the appeals of the co-operative credit society and held that interest earned on deposits with co-operative banks is eligible for deduction u/s 80P(2)(a)(i).
The assessee, engaged in providing credit facilities to its members, had parked surplus funds in fixed deposits with co-operative banks and claimed deduction u/s 80P. The AO, relying on Totgars Co-operative Sale Society Ltd., treated such interest as “income from other sources” and denied deduction, which was upheld by CIT(A)/NFAC.
Reversing the disallowance, the Tribunal held that post Mavilayi Service Co-operative Bank Ltd. (SC), Section 80P is a benevolent provision to be interpreted liberally. Interest income earned by a co-operative credit society from deposits with co-operative banks is attributable to its business of providing credit facilities to members, and therefore qualifies for deduction u/s 80P(2)(a)(i). The Tribunal further noted that, in any case, such interest is also eligible for deduction u/s 80P(2)(d), co-operative banks being co-operative societies.
Accordingly, the orders of CIT(A)/NFAC were set aside and the AO was directed to allow deduction of ₹61.83 lakh for AY 2018-19; the same view was followed for AY 2020-21 on identical facts.
FULL TEXT OF THE ORDER OF ITAT PUNE
