Jaimuni Sahkari Patpedhi Maryadit Vs Assessment Unit (ITAT Mumbai)
The ITAT Mumbai adjudicated appeals filed by a credit co-operative society against orders passed by the Commissioner of Income Tax (Appeals) for Assessment Years 2017–18, 2018–19, and 2020–21 involving a common issue relating to deduction under Section 80P. The assessee, registered under the Maharashtra Co-operative Societies Act, was engaged in providing credit facilities exclusively to its members and did not possess a banking licence nor was it registered under the Banking Regulation Act.
The assessee had declared nil income and claimed deductions under Section 80P(2)(a)(i) in respect of income from providing credit facilities and under Section 80P(2)(d) in respect of interest and dividend earned from investments in co-operative banks. The Assessing Officer disallowed the deductions, particularly the claim of ₹1.51 crore under Section 80P(2)(d), on the ground that such interest from co-operative banks was restricted under Section 80P(4).
On appeal, the CIT(A) partly allowed relief by deleting the disallowance relating to income from credit facilities but upheld the denial of deduction on interest earned from co-operative banks, holding that such income was not eligible under Section 80P(2)(d) due to the restriction in Section 80P(4).
Before the Tribunal, the assessee contended that the interest income was derived solely from investments in co-operative banks, which are themselves co-operative societies, and therefore eligible for deduction under Section 80P(2)(d). The assessee distinguished the judicial precedents relied upon by the CIT(A), arguing that those cases involved interest from both co-operative and nationalised banks, unlike the present case.
