2025 (6) TMI 710 - AT - Income Tax

Denial of deduction u/s. 80P - interest income from Cooperative Banks - HELD THAT - Section 80P(2)(d) of the Act provides that the sum received in respect of any income by way of interest or dividend derived by Cooperative Society from its investment with any other Cooperative Society the whole of such income is eligible for deduction u/s.80P of the Act. We observe that section 80P(2)(d) of the Act refers to the interest from Cooperative Society but it has been consistently held by this Tribunal (Pune Benches) that Cooperative banks are basically Cooperative Societies except that they get license for doing the banking business. We find that this Tribunal in case of Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd. 2024 (6) TMI 791 - ITAT PUNE dealing with similar issue after placing reliance on another decision of The Ugar Sugar Works Kamgar Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society 2021 (11) TMI 1117 - ITAT PANAJI has held that the interest earned from deposits with Cooperative Banks are also eligible for deduction u/s.80P(2)(d) of the Act. Thus assessee is eligible for deduction u/s.80P(2)(d) for the alleged interest income earned from Cooperative Banks. Assessee appeal allowed.

Summary

The Appellate Tribunal (ITAT Pune) allowed the assessee's appeal against the order dated 15.12.2023 passed by the National Faceless Appeal Centre under section 250 of the Income-tax Act, 1961, arising from the assessment order under sections 143(3), 143(3A), and 143(3B). Despite a 305-day delay in filing the appeal, the Tribunal, relying on the Supreme Court's decision in Collector, Land Acquisition vs. Mst. Katiji (1987) 2 SCC 107, condoned the delay.The sole issue was the denial of deduction under section 80P(2)(d) for interest income of Rs. 29,57,547 earned from Cooperative Banks. The Tribunal noted that section 80P(2)(d) allows deduction for income by way of interest derived by a Cooperative Society from investments with another Cooperative Society. The Tribunal held that Cooperative Banks are essentially Cooperative Societies licensed to conduct banking business.Relying on precedent decisions of this Tribunal, including Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd. v. ITO (ITA No.1365/PUN/2023) and The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society v. ITO (ITA No.84/PAN/2018), the Tribunal concluded that interest earned from deposits with Cooperative Banks is eligible for deduction under section 80P(2)(d).Accordingly, the Tribunal set aside the CIT(A)'s findings and allowed the appeal, holding that the assessee is entitled to the deduction claimed under section 80P(2)(d).