Case Law Details
Laxmi Cooperative Housing Society Limited Vs ITO (ITAT Pune)
Pune ITAT: Housing Society Wins U/s 80P Deduction on Interest from Cooperative Banks
The Pune ITAT allowed a cooperative housing society’s claim for deduction under section 80P(2)(d) on interest income of ₹14.98 lakh earned from deposits and investments made with cooperative banks. The deduction had been disallowed by CPC while processing the return under section 143(1), and the disallowance was subsequently upheld by the CIT(A).
The Tribunal observed that a cooperative bank is also a cooperative society within the meaning of section 2(19) of the Income-tax Act. Therefore, interest or dividend earned by one cooperative society from investments made with another cooperative society, including a cooperative bank, qualifies for deduction under section 80P(2)(d). The ITAT noted that this issue is well settled by several judicial precedents, including decisions of the Madras High Court.
The Tribunal also took note of the assessee’s contention that, prior to the amendments made by the Finance Act, 2021, CPC did not have the authority under section 143(1) to make such an adjustment while processing the return. Holding that the assessee was fully entitled to the deduction, the ITAT reversed the order of the CIT(A) and directed allowance of the entire claim of ₹14.98 lakh under section 80P(2)(d).
FULL TEXT OF THE ORDER OF ITAT PUNE
The captioned appeal at the instance of assessee pertaining to A.Y. 2020-21 is directed against the order dated 15.12.2025 framed by Addl/JCIT(A)-1, Delhi passed u/s.250 of the Income Tax Act, 1961 (in short ‘the Act’) arising out of Intimation Order dated 25.11.2021 passed u/s.143(1) of the Act.
2. The only issue for my consideration is disallowance u/s.80P(2)(d) of the Act at Rs.14,98,110/-.
3. At the outset, ld. Counsel for the assessee submitted that assessee deserves to succeed firstly on the ground that no such disallowance u/s.80P could have been made by CPC for A.Y. 2020-21 as necessary powers have been introduced by the Finance Act 01.04.2021. Secondly, even otherwise on merits in light of plethora of decisions assessee is eligible to claim deduction u/s.80P(2)(d) of the Act on the interest earned from the deposits/investments with Cooperative Banks.
4. On the other hand, ld. DR supported the order of ld.CIT(A).
5. I have heard the rival contentions and perused the record placed before me. I note that the assesse is a Cooperative Housing Society and income of Rs.18,39,680/-declared in the return for A.Y. 2020-21 filed on 24.10.2020. Return processed u/s.143(1) of the Act disallowing deduction of Rs.14,98,110/- claimed u/s.80P(2)(d) of the Act. Assessee preferred appeal before ld.CIT(A) and ld.CIT(A) upheld the action of CPC disallowing the said deduction. Now the assessee is in appeal before this Tribunal.
6. I note that assessee in its ground-wise submissions made before ld.CIT(A) submitted that it has been earning interest from Cooperative Banks for past many years since and for A.Yrs. 2014-15, 2015-16 and 2017-18 the returned income has been accepted allowing deduction claimed u/s.80P(2)(d) of the Act for respective years. Assessee has also made submissions stating that decisions have been rendered on the similar issue deciding that prior to Finance Act, 2021, no express authority provided to CPC u/s.143(1)(a)(v) of the Act to disallow the deduction claimed under Chapter VIA of the Act for delay in filing income tax return. Ld. DR could not controvert the above position.
7. So far as the alleged issue about allowing of deduction u/s.80P(2)(d) of the Act, there is no dispute that the assessee is a registered under Maharashtra Cooperative Societies Act, 1960 and is providing credit facilities to its Members and derived interest income on investments kept with Cooperative Societies/Banks. The provisions of section 80P(2)(d) of the Act, provides for deduction towards any income by way of interest or dividend derived by a co-operative society from its investment with any other co-operative society. The term Cooperative Society has been defined u/s. 2(19) of the Act, which includes a co-operative society registered under the Cooperative Societies Act, 1912 or under any other law for the time being in force in any state for the registration of co-operative societies. Perusal of the aforesaid definition would make it clear that cooperative Society means a cooperative society registered under Cooperative Societies Act, 1912 as defined under the Act, be it a co-operative society carrying on banking business or cooperative society carrying on the other business or a cooperative bank. Interest/dividend income earned from a cooperative society from its investment with other cooperative societies, whether such society is cooperative bank or not is to be considered for allowing deduction u/s.80P(2)(d) of the Act.
8. This issue is no longer res integra by virtue of catena of decisions passed by this Tribunal on this very issue and the assessee’s case is squarely covered in its favour. In the case of Thorapadi Urban Co-op Credit Society Ltd & Others vs ITO in W.P. Nos. 11172 and others, judgment dated 10.10.2023, the Hon’ble High Court of Madras following the decision of Division Bench of Hon’ble High Court of Madras in the case of CIT vs The Salem Agricultural Producers Co-operative Marketing Society Ltd in Tax Case Appeal No. 5 of 2015 held that a cooperative society is entitled to avail the benefit u/s.80P(2)(d) of the Act.
9. In light of above discussion, I hold that assessee is entitled to deduction u/s.80P(2)(d) of the Act at Rs.14,98,110/-. Finding of ld.CIT(A) is reversed. Grounds of appeal raised by the assessee are allowed.
10. In the result, the appeal of the assessee is allowed.
Order pronounced on this 02ndday of June, 2026.
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