Shiroda Progressive Urban Multipurpose Cooperative society Limited Vs ITO (ITAT Panaji)
Interest From Scheduled Banks May Still Qualify: ITAT Panaji Remands s.80P Claim of Multipurpose Co-op Society
Panaji ITAT ‘SMC’ Bench, in The Shiroda Progressive Urban Multipurpose Cooperative Society Ltd. vs. ITO, NFAC (ITA Nos.272 & 273/PAN/2025, AYs 2018-19 & 2020-21, order dated 23.12.2025), condoned a marginal delay of one day and partly allowed the appeals for statistical purposes, remanding the issue of deduction u/s 80P to the AO for fresh examination.
The Assessee, a co-operative credit society, had claimed deduction u/s 80P(2)(a)(i), 80P(2)(b) / 80P(2)(d) in respect of interest income earned on deposits with co-operative banks and scheduled/commercial banks. The AO denied the claim on interest from scheduled/commercial banks. The CIT(A) granted partial relief by allowing deduction on interest from co-operative societies/banks u/s 80P(2)(d), but sustained denial on interest from scheduled/commercial banks.
Before the Tribunal, the assessee raised an alternative plea that interest from scheduled/commercial banks was attributable to the business of providing credit facilities to members, and hence eligible u/s 80P(2)(a)(i). It was also contended that being a multipurpose co-operative society, deduction u/s 80P(2)(c) was available.
The ITAT noted divergent factual situations between pure credit co-operative societies and multipurpose societies. Following its own recent decision in Akshaya Co-op Credit Society & Ors. and relying on several HC/SC precedents (including Tumkur Merchants, Guttigedarara, Vavveru, Nawanshahar Central Co-op Bank), the Tribunal held that:
– where deposits with scheduled banks are made out of working/operational funds integral to the business of providing credit facilities, the interest may be business income attributable to such activity, eligible u/s 80P(2)(a)(i);
– however, in case of multipurpose co-operative societies, the AO must verify the nature of activities, source of funds and purpose of deposits before allowing deduction;
– deduction u/s 80P(2)(c) also needs fresh consideration.
Accordingly, the ITAT set aside the CIT(A)’s order on this limited issue and restored the matter to the AO to examine the nature of the society’s activities, source of funds, and applicability of ss.80P(2)(a)(i) and 80P(2)(c), after granting due opportunity. Both appeals were allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT PANAJI
