Pune ITAT Allows Section 80P Deduction on Bank Deposit Interest to Credit Society

By CA Vijayakumar Shetty Income Tax Judiciary July 9, 2026

TaxGuru Citation: 2026 taxguru.in 8280
Case Name: Dapodi Workshop Employees Cooperative Credit Society Limited Vs ITO (ITAT Pune)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2018-19
Courts: All ITAT, ITAT Pune

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Dapodi Workshop Employees Cooperative Credit Society Limited Vs ITO (ITAT Pune)

Pune ITAT Allows Section 80P Deduction to Employees’ Credit Society – Interest from Bank Deposits Held Eligible for Deduction

The ITAT Pune allowed the assessee’s claim for deduction under Section 80P(2)(a)(i) of the Income-tax Act, 1961 in respect of interest income earned by an employees’ co-operative credit society from bank deposits. The Tribunal noted that the assessee, a co-operative credit society providing loans and credit facilities exclusively to its members, had claimed deduction of ₹32,97,192, which was disallowed by the Assessing Officer and upheld by the CIT(A)/NFAC. Relying on its own decision in the assessee’s case for AY 2020-21 and other judicial precedents, the Tribunal held that interest earned on bank deposits qualified for deduction under Section 80P(2)(a)(i). It observed that the identical issue had already been decided in the assessee’s favour and that no contrary material had been produced by the Revenue. Accordingly, the Tribunal set aside the order of the CIT(A)/NFAC, directed the Assessing Officer to allow the deduction under Section 80P(2)(a)(i), allowed the grounds of appeal, and allowed the assessee’s appeal.

The Pune Bench of the Income Tax Appellate Tribunal held that a salary earners’ co-operative credit society engaged exclusively in providing credit facilities to its members is entitled to deduction under section 80P(2)(a)(i), including in respect of interest earned on deposits maintained with banks, and directed the Assessing Officer to allow the deduction in full.

The assessee, a co-operative credit society registered under the Maharashtra Co-operative Societies Act, claimed deduction of ₹32.97 lakh under section 80P(2)(a)(i) for AY 2018-19. The Assessing Officer disallowed the claim, which was affirmed by the CIT(A), prompting the assessee to approach the Tribunal.

Before the Tribunal, the assessee pointed out that an identical issue in its own case for AY 2020-21 had already been decided in its favour. Reliance was also placed on several judicial precedents, including the Supreme Court’s decision in PCIT v. Annasaheb Patil Mathadi Kamgar Sahakari Patpedhi Maryadit Ltd., Mavilayi Service Co-operative Bank Ltd., and various Pune Bench decisions recognising the eligibility of co-operative credit societies for deduction under section 80P.

The Tribunal observed that in the assessee’s own earlier case, it had already held that interest earned on deposits maintained with co-operative banks and scheduled banks, which were made in the course of carrying on the business of providing credit facilities to members and in compliance with statutory requirements, constituted income attributable to the business of the society. It further noted that the earlier decision had relied upon the judgment of the Andhra Pradesh & Telangana High Court in Vavveru Co-operative Rural Bank Ltd., which distinguished the Supreme Court’s ruling in Totgars Co-operative Sale Society Ltd. and held that investment of a society’s own business funds in fixed deposits does not alter the character of the income for the purposes of section 80P.

Finding that the facts of the present year were identical and that the Revenue had not brought any contrary material on record, the Tribunal followed its earlier order in the assessee’s own case and directed the Assessing Officer to allow the deduction under section 80P(2)(a)(i). The appeal of the assessee was accordingly allowed.

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