NITK EMPLOYEES CO OP CREDIT SOCIETY LIMITED,SURATHKAL vs. INCOME TAX OFFICER, WARD-1, MANGALORE

ITA 190/BANG/2026Status: DisposedITAT Bangalore10 August 2026AY 2020-2118 pages
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What were the facts?

The assessee, a co-operative society, claimed deduction under Section 80P(2)(d) for interest income earned from co-operative banks. The AO disallowed this deduction, treating the interest as taxable income from other sources, relying on the Supreme Court decision in Totgars Co-operative Society Ltd. The CIT(A) upheld the AO's order.

What did the Tribunal hold?

The Tribunal held that while interest income from co-operative banks is generally not deductible under Section 80P(2)(d), the issue of whether the recipient was a co-operative society or a co-operative bank needed further verification. It also held that if the interest income is taxed as income from other sources, proportionate expenses for earning such income should be allowed under Section 57.

What were the issues?

Whether interest income earned from co-operative banks is eligible for deduction under Section 80P(2)(d), and if such income is taxed as 'income from other sources', whether proportionate expenses are deductible under Section 57.

Which sections of the Income-tax Act were involved?

Section 80P(2)(d),Section 57,Section 80P(4),Section 2(c),Section 5(b),Section 22,Section 56

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC’’ BENCH: BANGALORE

Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY

Hearing: 01.06.2026Pronounced: 10.08.2026

PER KESHAV DUBEY, JUDICIAL MEMBER:

These appeals at the instance of the assessee are directed against the order of the ld. CIT(A)/NFAC both dated 08.01.2026 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1084562178(1) for the AY 2018-19 and vide DIN & Order No. ITBA/NFAC/S/250/2025- 26/1084562897(1) for the AY 2020-21 passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”). Since the issue involved in both these appeals is common, these are clubbed together, heard together and disposed of by this common order for the sake of conve

The order continues below.

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