Shirol Taluka Khajagi Vs ITO (ITAT Pune)
The Pune Bench (SMC) of the ITAT allowed the assessee’s appeal and held that interest income earned by a co-operative credit society from deposits with co-operative banks is fully eligible for deduction under section 80P(2)(d).
The assessee, a registered co-operative credit society providing credit facilities to its members, had earned interest of ₹1,52,829 from deposits placed with various co-operative banks, including the Kolhapur District Central Co-operative Bank and urban co-operative banks. The Assessing Officer treated such interest as income from other sources and denied deduction under section 80P, which was confirmed by the CIT(A).
The Tribunal examined the statutory scheme of section 80P(2)(d) and the definition of “co-operative society” under section 2(19). It reiterated that a co-operative bank is also a co-operative society, and therefore interest or dividend income earned from investments with co-operative banks squarely falls within the ambit of section 80P(2)(d).
Relying on a consistent line of judicial precedents, including decisions of the Madras High Court and multiple ITAT rulings, the Tribunal held that the issue is no longer res integra. Since the interest income was undisputedly earned from deposits with co-operative banks, the disallowance was unsustainable.
Accordingly, the ITAT set aside the order of the CIT(A) and directed the Assessing Officer to delete the addition, allowing the assessee’s claim for deduction under section 80P(2)(d). The appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT PUNE
The captioned appeal at the instance of assessee pertaining to the Assessment Year 2015-16 is directed against the order dated 24.10.2025 of National Faceless Appeal Centre, Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of the Assessment Order dated 28.03.2023 passed u/s.147 of the Act.
