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Facts
The assessee, a cooperative housing society, claimed deduction under section 80P of the Income Tax Act. The Assessing Officer (AO) disallowed the deduction, and the Commissioner of Income Tax (Appeals) upheld the disallowance.
Held
The Tribunal held that the interest income earned by a cooperative society on its investments held with a cooperative bank is eligible for deduction under Section 80P(2)(d) of the Act, following various High Court and ITAT decisions. The AO erred in disallowing the deduction.
Key Issues
Whether interest income earned by a cooperative society on its investments is eligible for deduction under Section 80P(2)(d) of the Income Tax Act, 1961.
Sections Cited
250, 80P, 80P(2)(d), 80P(2)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI SANDEEP GOSAIN
Date of Hearing 03.09.2025 Date of Pronouncement 31.10.2025 ORDER PER SANDEEP GOSAIN, JM:
These two appeals have been filed by the assessee challenging the different impugned orders passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2018-19 & 2020-21.
Since all the issues involved in these two appeals are common and identical, therefore, they have been clubbed, heard together and consolidated order is being passed for the sake of convenience and brevity. We shall take A.Y 2018-19 as lead case and facts narrated therein.
4670/Mum/2025, A.Y 2018-19
The only dispute raised in this appeal relates to 3. challenging the disallowance of deduction claimed by the assessee u/s 80P(2)(d) and 80P(2)(c) of the act. Therefore I have decided to adjudicate these grounds through the present consolidated order.
Ld. AR appearing on behalf of the assessee, reiterated the same arguments as were raised before the revenue authorities and also relied upon several decisions of honourable High Court and the coordinate benches of the Tribunal, wherein the issue in question is squarely covered by the following case laws;
Pr.CIT Vs. Ashwinkumar Arban Co-Operative Society Ltd. [(2024) 168 taxmann.com 314 (Gujarat HC)] Pr.CIT v/s. Shree Madhi Vighag Khand Udyog Sahakari Mandli Ltd. [(2025) 171 taxmann.com 22 (Gujarat HC)] Pr.CIT v/s. Shree Aradhana Urban Co-Op. Credit Society Ltd. [(2025) 172 taxmann.com 537 (Gujarat HC)] State Bank of India Vs. CIT [(2016) 72 taxmann.com 64 (Gujarat HC)] Thorapadi Urban Co-op Credit Society Ltd. Vs ITO [(2023) 156 taxmann.com 419 (Madras HC)] PCIT Hubli. Vs. Totagars Co-Operative Sale Society [(2017) 78 taxmann.com 169 (Karnataka HC)] Progressive Ambar Co-Operative Housing Society Ltd. v/s. CIT(A) [ITA no. 2720/M/2025 (Mumbai Trib.)] & 4671/Mum/2025 Lake Florence ABCDEF and G CHS Ltd., Mumbai. Blue Rose Industrial Premises Co-Op. Society Ltd. Vs. CIT(A) [(2024) 158 taxmann.com 1103 (Mumbai Trib.)] M/s. Raheja Chambers Premises Co-Operative Society Limited Vs. NFAC [ITA no. 630/Mum/2024 (Mumbai Trib.)] Mhada Karmachari Sahakari Patpedhi Maryadit v/s. Assessment Unit [ITA no. 6372/Mum/2024 (Mumbai Trib.)] The Totgars' Co-operative Sale Society Ltd. v/s. ACIT [ITA no. 376 to 379/Bang/2023 (Bang. Trib.)] Judgement of the Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 5. On the other hand, DR relied upon the orders passed by the revenue authorities.
I have heard the counsel for both the parties, perused the material placed on record, judgements cited before me and also the orders passed by the revenue authorities. From the records, I noticed that Assessee being a cooperative housing society, registered under Maharashtra Cooperative Societies Act, 1960 claimed deduction u/s 80P of the Act, which was disallowed by the AO and the said order was upheld by Ld. CIT(A).
However, after having gone through the various decisions cited before me, I found that the issue in question is squarely covered by the decision of honourable High Court and also by the orders of the coordinate bench of ITAT, wherein it was observed that the interest income earned by a Co-operative Society on its investments held with a Co-operative bank would be eligible for claim of deduction u/s 80P(2)(d) of the Act.
& 4671/Mum/2025 Lake Florence ABCDEF and G CHS Ltd., Mumbai.
Therefore, respectfully following the decisions of Hon’ble High Courts and the Coordinate Bench of Hon’ble ITAT as mentioned above, and in order to maintain judicial consistency, I am of the considered view that the AO has erred in disallowing the deduction claimed u/s 80P(2)(d) and 80P(2)(c) of the Act. Therefore the AO is directed to allow the claim of the assessee made u/s 80P(2)(d) and 80P(2)(c) of the Act. Accordingly the appeal raised by the assessee is allowed. (A.Y: 2020-21)
As the facts and circumstances in this appeal is identical to for the A.Y 2018-19 (except variance in figures) and the decision rendered in above paragraph would apply mutatis mutandis for this appeal also. Accordingly, the grounds of appeal of the present appeals also stands allowed.
In the result, both the appeals filed by the assessee are allowed.