DCIT Vs Larsen & Toubro Group Employees Co-op. (ITAT Chennai)
The ITAT Chennai dismissed the Revenue’s appeal and upheld deletion of ₹2.00 crore disallowance, firmly holding that interest earned by a co-operative society from deposits with co-operative banks qualifies for deduction u/s 80P(2)(d).
The assessee, an employees’ co-operative thrift & credit society, earned interest of ₹1.21 crore from Chennai Central Co-operative Bank and ₹79 lakh from George Town Co-operative Bank. The AO denied deduction by mechanically relying on Totgars (SC), treating the interest as taxable income. The CIT(A) reversed the disallowance.
Confirming the CIT(A), the Tribunal held that Totgars was rendered in the context of s.80P(2)(a)(i) and has no application to s.80P(2)(d). Relying on binding Karnataka High Court authority (which itself examined Totgars), the ITAT reiterated the settled position that a co-operative bank is nothing but a species of a co-operative society, and therefore interest received from a co-operative bank squarely falls within s.80P(2)(d).
The Bench also noted consistent judicial support, including Madras HC (Thorapadi Urban Co-op.), and held that once the payer is a co-operative society, the nature of funds or business compulsion is irrelevant for s.80P(2)(d). The AO’s approach amounted to mixing up distinct clauses of s.80P, which is impermissible.
Accordingly, the ITAT found no infirmity in the CIT(A)’s order and dismissed the Revenue’s appeal, reinforcing that Totgars cannot be stretched beyond its statutory context.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 06.08.2025 for the Assessment Year (hereinafter referred to as “AY”) 2017-18.
