Sharadchandra Nagari Sahakari Patsanstha Maryadit Vs ITO (ITAT Pune)
ITAT Pune allowed the appeal of Sharadchandra Nagari Sahakari Patsanstha Maryadit for Assessment Year 2015-16 and held that interest earned by a cooperative society from investments made with cooperative banks is eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961.
The assessee had earned interest of ₹1,48,18,262 from investments with cooperative banks and claimed deduction under Section 80P amounting to ₹72,30,149, which was lower than the interest income itself. The CIT(A) had declined to grant the benefit. Before the Tribunal, the assessee relied upon the decision rendered in its own case for AY 2020-21 in ITA No. 1391/PUN/2024, order dated 24.03.2025, contending that the issue was identical.
The Departmental Representative did not oppose the request. The Tribunal observed that the assessee was a cooperative society and reiterated its consistent view that cooperative banks are basically cooperative societies and, consequently, interest income received from them qualifies for deduction under Section 80P(2)(d). In the assessee’s own earlier case, the Tribunal had similarly held interest of ₹4,15,27,813 earned from cooperative banks eligible for the deduction, while separately confirming disallowance relating to a deposit with MSEDCL. That earlier decision had also referred to Samarth Nagari Shakari Path Sanstha Maryadit and The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society v. ITO. Respectfully following the decision in the assessee’s own case and maintaining its consistent approach, ITAT Pune allowed the entire claim of ₹72,30,149 under Section 80P(2)(d). The assessee’s appeal was accordingly allowed.
Cases Discussed
- Sharadchandra Nagari Sahakari Patsanstha Maryadit, ITA No. 1391/PUN/2024, order dated 24.03.2025 (ITAT Pune) — Followed: Assessee’s own case for AY 2020-21. The Tribunal had held that interest earned from cooperative banks was eligible for deduction under Section 80P(2)(d), cooperative banks being cooperative societies for this purpose.
- Samarth Nagari Shakari Path Sanstha Maryadit (ITAT) — Relied upon in the assessee’s earlier order: Cited as one of the coordinate-Bench decisions consistently allowing Section 80P(2)(d) deduction in respect of interest earned from cooperative banks.
- The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society v. ITO, ITA No. 84/PAN/2018, order dated 27.05.2022 (ITAT) — Relied upon: The decision supports the proposition that interest derived by a cooperative society from investments with a cooperative bank is eligible for deduction under Section 80P(2)(d), since a cooperative bank is also a cooperative society.
FULL TEXT OF THE ORDER OF ITAT PUNE
The captioned appeal at the instance of assessee pertaining to A.Y. 2015-16 is directed against the order dated 28.03.2025 of National Faceless Appeal Centre, Delhi arising out of Assessment Order dated 29.12.2017 passed u/s.143(3) of the Income Tax Act, 1961 ( in short ‘the Act’).
2. The only grievance of the assessee is that ld.CIT(A) erred in not granting benefit u/s.80P(2)(d) of the Act for the interest earned from Cooperative Banks.
3. At the outset, Ld. Counsel for the assessee referring to the decision of this Tribunal in assessee’s own case for A.Y. 2020-21 in ITA No.1391/PUN/2024 order dated 24.03.2025 stated that the issue remains the same and that during the assessee under ITA No.1041/PUN/2025 Sharadchandra Nagari Sahakari Patsanstha Maryadit consideration assessee has made investment with Cooperative Banks and has earned interest of Rs.1,48,18,262/- and therefore net profit for the year at Rs.72,30,149/- deserves to be allowed as deduction u/s.80P(2)(d) of the Act. Ld. Departmental Representative did not oppose this request.
4. We have heard the rival contentions and perused the record placed before us. We notice that the assessee is a Cooperative Society and has earned interest of Rs.1,48,18,262/- from the investments made with Cooperative Banks. Assessee has claimed deduction u/s.80P at Rs.72,30,149/- which is less than the interest income from Cooperative Banks. This Tribunal is taking consistent view that interest income received from Cooperative Banks is also eligible for deduction u/s.80P(2)(d) of the Act as the Cooperative Banks are basically Cooperative Societies. This issue has come up in assessee’s own case for A.Y. 2020-21 before this Tribunal wherein the Tribunal held in favour of the assessee. Finding of this Tribunal in Para No.7 reads as under:
“7. We have heard rival contentions and perused the records placed before us. We observe that the assessee which is a co-operative society has declared income of Rs.3,92,570/- after claiming deduction u/s 80P at Rs.1,33,50,608/-. We also observe that during the year the assessee society has earned interest income of Rs.18,96,95,893/- and has made interest payments of Rs.13,78,57,308/-. Further, the net total income of Rs.1,37,43,180/- has been assessed after considering the interest income earned from surplus funds deposited with cooperative banks at Rs.4,15,27,813/-. We observe that since the cooperative banks are basically cooperative societies, therefore, the interest earned from cooperative banks are clearly eligible for deduction u/s 80P(2)(d) of the Act and this view has been consistently followed by the Co-ordinate Bench of Tribunal in plethora of decisions including that of Samarth Nagari Shakari Path Sanstha Maryadit (supra) and The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in ITA No.84/PAN/2018 order dated 27.05.2022. Therefore, in view of the above, the interest income from cooperative banks at Rs.4,15,27,813/- is eligible for deduction u/s 80P(2)(d) of the Act. However, deposit with MSEDCL at Rs.1,09,529/-, Ld. Counsel for the assessee failed to furnish any judicial precedent, therefore, disallowance to the extent of Rs.1,09,529/- is hereby confirmed. In view of the above, against the total disallowance u/s 80P of the Act at Rs.1,33,50,608/-, we allow the deduction u/s 80P of the Act to the extent of Rs.1,32,41,080/- and confirm the disallowance of Rs.1,09,529/-. Effecting grounds of appeal raised by the assessee are partly allowed.”
5. Respectfully following the above decision and taking consistent view we are inclined to hold in favour of the assessee and allow the claim of deduction u/s.80P(2)(d) of the Act at Rs.72,30,149/-. Grounds of appeal raised by the assessee are allowed.
6. In the result, appeal of the assessee is allowed.
Order pronounced on this 05th day of June, 2025.
