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ITAT allows 80P Deduction on Interest from Co-op Banks, SBI & Treasury Investments

Case Law Details

TaxGuru Citation
2025 taxguru.in 2984
Case Name
ITO Vs Kerala Univerity Employees Co-operative Society Ltd. (ITAT Cochin)
Date of Judgement/Order
Only available for paid members
Related Assessment Year
2020-21
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ITO Vs Kerala Univerity Employees Co-operative Society Ltd. (ITAT Cochin)

Income Tax Appellate Tribunal (ITAT) Cochin has dismissed the appeal filed by the Revenue against Kerala University Employees Co-operative Society Ltd., upholding the deduction claimed under Section 80P of the Income Tax Act, 1961. The appeal pertained to the Assessment Year (AY) 2020-21, during which the society had disclosed nil income after claiming a deduction of ₹75.03 lakh under Section 80P. The society, registered under the Kerala Co-operative Societies Act, primarily provides credit services to its members.

The Assessing Officer had denied the deduction on interest income of ₹2.70 crore earned from deposits with the District Co-operative Bank, State Bank of India (SBI), and the state treasury. It was held that the society operated as a co-operative bank, thereby making it ineligible for deduction under Section 80P. This led to the addition of the said interest income to the total taxable income.

However, the Commissioner of Income Tax (Appeals) [CIT(A)] reversed the AO’s findings, citing the ITAT’s own previous ruling in the society’s case for AY 2014-15. The CIT(A) accepted that the interest income from cooperative banks and the treasury qualified for deduction under Section 80P(2)(a)(i), as the funds were part of the society’s regular business activities and surplus deployment.

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Author Info

CA Sandeep Kanoi
Qualification: CA in Job / Business
Company: Taxguru Consultancy
Location: Mumbai, Maharashtra
Articles Published: 20,910

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