GAYATRI DUDH UTPADAKANCHI GRAMIN BIGARSHETI SAH PATSANSTHA MARYADIT ALE,ALE vs. INCOME TAX OFFICER WARD 10(1), PUNE, PUNE

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE BEFORE SHRI DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.1338 & 1339/PUN/2026 िनधा�रण वष� / Assessment Years : 2018-19 & 2020-21 Gayatri Dudh Vs. ITO, Ward-10(1), Pune. Utpadakanchi Gramin Bigarsheti Sah. Patsanstha Maryadit Ale, 1, Mukund Arts, Nagar Road, Alephata, Ale, Pune- 412411 PAN : AACAG0043J Appellant Respondent Assessee by : Shri Sharad Shah Revenue by : Shri Sanjay Keshavrao Dhivare (Virtual) Date of hearing : 17.06.2026 Date of pronouncement : 22.07.2026 आदेश / ORDER PER VINAY BHAMORE, JM: These appeals filed by the assessee are directed against the separate orders dated 25.02.2026 passed by Ld. CIT(A)/NFAC for the assessment years 2018-19 and 2020-21 respectively.

2 ITA Nos.1338 & 1339/PUN/2026 2. Since the facts are identical and involving common issues in both the above captioned appeals of the assessee, we proceed to dispose of the same by this common order. 3. First, we shall take up the appeal in ITA No.1338/PUN/2026 for A.Y. 2018-19 for adjudication as the lead case. ITA No.1338/PUN/2026, A.Y. 2018-19 : 4. The appellant has raised the following grounds of appeal :- “1. The Ld. AO erred in (Ld. CIT(A) erred in confirming) rejecting the assessee society's claim for deduction under section 80P of Rs. 23,06,672/- w.r.t. interest received from PDCC bank and Rajguru Nagar Sahakari Bank which are the Cooperative bank. 2. The Ld. CIT(A) ought to have appreciated the fact that the similar issue was decided in Favor of assessee by Appellate authority in AY 2015-16 and AY 2016-17. 3. The appellant craves its right to add to or alter the Grounds of Appeal at any time before or during the course of hearing of the case.” 5. Facts of the case, in brief, are that the assessee is an Association of Persons (AOP) and a primary credit cooperative society engaged in the activity of providing credit facilities to its members and also accepting deposits from them and has furnished its return of income on 14.10.2018 by declaring income of Rs.Nil after claiming deduction of Rs.23,06,672/- u/s 80P(2)(a)(i) of the IT Act. The case was selected for scrutiny and notices u/s 143(2) and

3 ITA Nos.1338 & 1339/PUN/2026 142(1) respectively were issued to the assessee. After considering the reply and submissions of the assessee including bank accounts statement, list of members, list of deposits, list of investments made during the year and registration certificate of society, the Assessing Officer vide order dated 22.02.2021 completed the assessment proceedings u/s 143(3) r.w.s. 143(3)(A) and 143(3)(B) of the IT Act by determining the income of Rs.23,06,672/- as against Rs.Nil income returned by the assessee. The above assessed income includes addition of Rs.23,06,672/- on account of disallowance of deduction u/s 80P2 of the IT Act regarding interest income earned on deposits/FDRs. 6. Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. After considering the reply and submissions of the assessee, Ld. CIT(A)/NFAC rejected the claim of deduction u/s 80P(2)(d) of the IT Act and dismissed the appeal of the assessee by relying on various judgements including the judgement of Hon’ble Karnataka High Court in the case of PCIT vs. Totagars Co-operative Sale Society [2017] 395 ITR 611 and the judgement of Hon’ble Supreme Court

4 ITA Nos.1338 & 1339/PUN/2026 in the case of Mavilayi Service Cooperative Bank Ltd. vs. CIT [2020] 114 taxmann.com 85 (SC). 7. It is the above order against which the assessee is in appeal before this Tribunal. 8. We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book furnished by the assessee. In this regard, we find that the assessee credit cooperative society in its return of income has claimed the deduction u/s 80P(2)(a)(i) of the IT Act with regard to income from providing credit facilities & also with regard to interest income earned from other cooperative banks & therefore, requested before Ld. CIT(A)/NFAC to allow the deduction u/s 80P(2)(a)(i) of the IT Act, however, Ld. CIT(A) has disallowed the deduction of Rs.23,06,672/- by referring section 80P(2)(d) of the IT Act. In this regard, we find that for assessment years 2015-16 and 2016-17, the claim of deduction u/s 80P(2)(d) of the IT Act made by the assessee with regard to interest income earned on its investments with other cooperative banks was allowed by Ld. CIT(A). In this regard, first appellate order for both the above assessment years are produced

5 ITA Nos.1338 & 1339/PUN/2026 before us in paper book page no.27 to 47, wherein Ld. CIT(A) after relying on various coordinate bench decisions, has allowed the claim of deduction u/s 80P(2)(d) of the IT Act. Accordingly, Ld. AR alternatively prayed before us to allow deduction u/s 80P(2)(d) of the IT Act instead of u/s 80P(2)(a)(i) of the IT Act as claimed by the assessee in its return of income. On the other hand, Ld. DR objected & submitted that the assessee in its return of income, has claimed deduction u/s 80P(2)(a)(i) of the IT Act & therefore, deduction u/s 80P(2)(d) of the IT Act cannot be allowed to the assessee. In this regard, we are of the considered opinion that the assessee is entitled to claim alternative deduction u/s 80P(2)(d) of the IT Act in place of section 80P(2)(a)(i) of the IT Act which was already claimed by the assessee in its return of income. Apart from above, we also find that in the case of the assessee in earlier years, the same impugned interest income was allowed by Ld. CIT(A) u/s 80P(2)(d) of the IT Act, therefore, we deem it appropriate to consider the alternative request of the assessee & proceed to decide the issue in the light of impugned order passed by Ld. CIT(A)/NFAC wherein after relying on the decision passed by

6 ITA Nos.1338 & 1339/PUN/2026 Hon’ble High Court of Karnataka in the case of PCIT vs. Totagars Co-operative Sale Society [2017] 395 ITR 611, it was held by Ld. CIT(A)/NFAC that the deduction u/s 80P(2)(d) of the IT Act is not allowable to the assessee. However, we do not find favour with the above finding of Ld. CIT(A)/NFAC and in this regard find support from the following coordinate bench decisions wherein identical issue was decided in favour of various other assessees :- 1. ANNAPURNA NAGARI SAHKARI PATHSANSTHA MARYADIT, ITA No.2741/PUN/2024, dated 24.03.2025. 2. N Sai Multi State Coopeartive Credit Society Ltd, ITA No.1109/PUN/2024 dated 24.09.2024. 3. Swa Ashokrao Bankar Nagari Sahakaro Patsantha, ITA No.58/PUN/2024 dated 14.05.2024 4. Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd, ITA No.1365/PUN/2023 dated 01.01.2024. 5. Rena Sahakari Sakhar Karkhana Ltd., ITA No.1249/PUN/2018 dated 07.01.2022. 6. Shrikrupa Nagari Sahakari Pathsanstha Maryadit, ITA No.1252/PUN/2023 dated 02.02.2024. 9. Accordingly, we find that the coordinate bench of this jurisdictional Tribunal in number of decisions has already taken a view that the interest income earned by a cooperative credit society from other cooperative banks qualifies for deduction u/s 80P(2)(d) of the IT Act. Regarding the reliance placed by Ld. DR on the judgement passed by Hon’ble Karnataka High Court in the case of

7 ITA Nos.1338 & 1339/PUN/2026 PCIT vs. Totagars Co-operative Sale Society [2017] 395 ITR 611, we find that in the case of N. Sai Multi State Cooperative Credit Society Ltd, ITA No.1109/PUN/2024 order dated 24.09.2024 the above judgement of Hon’ble Karnataka High Court has already been considered and deduction u/s 80P(2)(d) of the IT Act was allowed with regard to interest income earned from other cooperative banks by observing as under :- “9. After hearing both the sides, we find an identical issue had come up before the Tribunal in the case of Shrikrupa Nagari Sahakari Pathsanstha Maryadit vs. ITO vide ITA No.1252/PUN/2023 for assessment year 2017-18 order dated 02.02.2024, where the Tribunal after considering various decisions has held as under: “3. It is in this factual backdrop that we have heard the department as well regarding correctness of the impugned disallowance itself during the course of hearing today and find that the instant issue is no more res integra in light of Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr.CIT (ITA No.1249/PUN/2018) decided on 07-01-2022 as follows : “3. After culmination of the assessment proceedings, the Pr. CIT called for the assessment records of the assessee. It was observed by the Pr. CIT that the assessee had during the year shown interest income from FDs with Cooperative Banks amounting to Rs.75,38,534/-, against which it had claimed deduction under Sec.80P(2)(d) of the Act. It was observed by the Pr. CIT, that the A.O while framing the assessment had allowed the aforesaid claim of deduction raised by the assessee. Observing, that as cooperative banks were commercial banks and not a cooperative society, therefore, the Pr.CIT was of the view that the assessee was not eligible for claim of deduction under Sec.80P(2)(d). In the backdrop of his aforesaid conviction, the Pr. CIT was of the view that the assessment order passed by the A.O under Sec.143(3), dated 07.03.2016, therein allowing the assesses claim for deduction under Sec. 80P(2)(d), had therein rendered his order as erroneous, insofar it was prejudicial to the interest of the revenue. Accordingly, the Pr.CIT not finding favour with the reply of the assessee, wherein the latter had tried

8 ITA Nos.1338 & 1339/PUN/2026 to impress upon him that it was duly eligible for claim of deduction under Sec.80P(2)(d) of the Act, therein “set aside” the order of the A.O with a direction to redecide the issue afresh and reframe the assessment. 4. The assessee being aggrieved with the order of the Pr.CIT has carried the matter in appeal before us. 5. On merits, it was submitted by the ld. A.R, that as the A.O while framing the assessment had after making necessary verifications taken a plausible view, therefore, the Pr. CIT had exceeded his jurisdiction by seeking to review the order passed by him in the garb of the revisional powers vested with him under Sec.263 of the Act. It was submitted by the ld. A.R, that the issue as regards the eligibility of the assessee for claim of deduction under Sec.80P(2)(d) on interest income derived from investments/deposits lying with co-operative banks was squarely covered by the various orders of the coordinate benches of the Tribunal viz., (i). M/s Solitaire CHS Ltd. vs. Pr. CIT, ITA No. 3155/Mum/2019; dated 29.11.2019 ( ITAT “G” Bench, Mumbai); Kaliandas Udyog Bhavan Premises Co-op Society Ltd. Vs. ITO21(2)(1), Mumbai, ITA No. 6547/Mum/2017 (ITAT Mumbai); and (iii). Majalgaon Sahakari Sakhar Karkhana Ltd. Vs. ACIT, Circle-3, Aurangabad, ITA No, 308/Pun/2018 (ITAT Pune). On the basis of his aforesaid contentions, it was averred by the ld. A.R that as the Pr. CIT had exceeded his jurisdiction and had not only sought to review the plausible view that was taken by the A.O after necessary deliberations which was in conformity with the order of the jurisdictional bench of the Tribunal, therefore, his order may be vacated and that of the A.O be restored. 6. Per contra, the ld. Departmental Representative (for short „D.R‟) relied on the order passed by the Pr. CIT under Sec.263 of the Act. It was submitted by the ld. D.R, that as the assessee was not eligible for claim of deduction under Sec.80P on the interest income received on the investments/deposits lying with the co-operative banks, therefore, the Pr. CIT finding the assessment order passed by the A.O under Sec.143(3), dated 07.03.2016 as erroneous, insofar it was prejudicial to the interest of the revenue, had rightly „set aside‟ his assessment with a direction to readjudicate the issue therein involved. Our attention was also drawn by the ld. D.R to his written submissions and certain judicial pronouncements in support of his aforesaid contention. 7. We have heard the ld. authorised representatives for both the parties, perused the orders of the lower authorities and the

9 ITA Nos.1338 & 1339/PUN/2026 material available on record, as well as the judicial pronouncements relied upon by them. Our indulgence in the present appeal has been sought, for adjudicating, as to whether or not the claim of the assessee for deduction under section 80P(2)(d) in respect of interest income earned from the investments/deposits made with the co-operative banks is in order. In our considered view, the issue involved in the present appeal hinges around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 01.04.2007. On a perusal of the order passed by the Pr. CIT under Sec. 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with the co-operative bank, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. Observing, that the co-operative banks from where the assessee was in receipt of interest income were not cooperative societies, the Pr. CIT was of the view that the interest income earned on such investments/deposits would not be eligible for deduction under Sec. 80P(2)(d) of the Act. 8. After necessary deliberations, we are unable to persuade ourselves to concur with the view taken by the Pr. CIT. Before proceeding any further, we may herein cull out the relevant extract of the aforesaid statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. “80P(2)(d) (1). Where in the case of an assessee being a cooperative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in subsection (2), in computing the total income of the assessee. (2). The sums referred to in sub- section (1) shall be the following, namely:- (a)................................................................................. (b)................................................................................. (c).................................................................................. .......... (d) in respect of any income by way of interest or dividends derived by the cooperative society from its investments with any other co- operative society, the whole of such income;” On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investments held with any other co-operative society shall be deducted in

10 ITA Nos.1338 & 1339/PUN/2026 computing its total income. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co-operative society with any other cooperative society. We are in agreement with the view taken by the Pr. CIT, that with the insertion of subsection (4) to Sec. 80P of the Act, vide the Finance Act, 2006 with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. However, at the same time, we are unable to subscribe to his view that the aforesaid amendment would jeopardize the claim of deduction of a co- operative society under Sec. 80P(2)(d) in respect of its interest income on investments/deposits parked with a co-operative bank. In our considered view, as long as it is proved that the interest income is being derived by a cooperative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We find that the term „co- operative society‟ had been defined under Sec. 2(19) of the Act, as under:- “(19) “Co-operative society” means a cooperative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of co-operative societies;” We are of the considered view, that though the cooperative banks pursuant to the insertion of subsection (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a cooperative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank would be entitled for claim of deduction under Sec.80P(2)(d) of the Act. 9. In so far the judicial pronouncements that have been relied upon by the ld. A.R are concerned, we find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income derived from its investments held with a cooperative bank is covered in favour of the assessee in the following cases: (i). M/s Solitaire CHS Ltd. vs. Pr. CIT, ITA No. 3155/Mum/2019; dated 29.11.2019 ( ITAT “G” Bench, Mumbai); (ii). Majalgaon

11 ITA Nos.1338 & 1339/PUN/2026 Sahakari Sakhar Karkhana Ltd. Vs. ACIT, Circle-3, Aurangabad, ITA No, 308/Pun/2018 (ITAT Pune) (iiii). Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon’ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had held, that the interest income earned by the assessee on its investments with a co-operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006 also makes it clear beyond any scope of doubt that the purpose behind enactment of subsection (4) of Sec. 80P was that the co-operative banks which were functioning at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. Although, in all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars co- operative Sale Society (2017) 395 ITR 611 (Karn), as had been relied upon by the ld. D.R before us, had held, that a co- operative society would not be entitled to claim deduction under Sec. 80P(2)(d); but then, the Hon'ble High Court in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon’ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had 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 under Sec.80P(2)(d) of the Act. Backed by the aforesaid conflicting judicial pronouncements, we may herein observe, that as held by the Hon'ble High Court of Bombay in the case of K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court‟s, then a view which is in favour of the assessee is to be preferred as against that taken against him. Accordingly, taking support from the aforesaid judicial pronouncement of the Hon‟ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and that of the Hon’ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), wherein it was observed that the interest income earned by a co-operative society on its investments held with a

12 ITA Nos.1338 & 1339/PUN/2026 co-operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. 10. Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and allowed the assessee‟s claim for deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co- operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 of the Act for dislodging the same. Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263 of the Act, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we set-aside his order and restore the order passed by the A.O under Sec. 143(3), dated 07.03.2016.” 4. We adopt the foregoing detailed discussion mutatis mutandis to accept the assessee’s arguments in it’s main appeal ITA.No.1252/PUN./2023 itself in the larger interest of justice. The same stands accepted. Stay application SA.No.6/PUN./2023 is rendered infructuous very terms. 5. This assessee’s stay application SA.No.6/PUN./ 2023 is dismissed as rendered infructuous and it’s main appeal ITA.No.1252/PUN./2023 is allowed in above terms. A copy of this common order be placed in the respective case files.” 10. Since the facts of the instant case are identical to the facts of the case already decided by the Tribunal, therefore, respectfully following the decision of the Coordinate Bench of the Tribunal (supra), we hold that the CIT(A) / NFAC was not justified in denying the claim of deduction u/s 80P(2)(d) of the Act in respect of the interest income earned from the banks on investments. We, therefore, set aside the order of the CIT(A) / NFAC and the Assessing Officer is directed to delete the addition. The grounds raised by the assessee are accordingly allowed.” 10. Respectfully following the above decision of N. Sai Multi State Cooperative Credit Society Ltd cited supra, & also in the light of the fact that in the case of the assessee for earlier two assessment years i.e. for Asstt. Year 2015-16 & Asstt. Year 2016-17, Ld.

13 ITA Nos.1338 & 1339/PUN/2026 CIT(A) has already allowed the deduction u/s 80P(2)(d) of the IT Act, we are of the considered opinion that the deduction u/s 80P(2)(d) of the IT Act with regard to interest income earned from its investments from other cooperative banks (which are also cooperative societies) is allowable to the assessee in this year as well. 11. Considering the totality of the facts of the case and in view of our above discussion, we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and direct the Assessing Officer to allow the claim of deduction u/s 80P(2)(d) of the IT Act of Rs.23,06,672/- with regard to interest income earned from its investments from other cooperative banks. Thus, the grounds of appeal raised by the assessee are allowed. 12. In the result, the appeal filed by the assessee in ITA No.1338/PUN/2026 for A.Y. 2018-19 is allowed. ITA No.1339/PUN/2026, A.Y. 2020-21 : 13. Since the facts and issues involved in the appeal of the assessee in ITA No.1339/PUN/2026 for A.Y. 2020-21 are identical to the appeal of the assessee in ITA No.1338/PUN/2026 for A.Y. 2018-19 therefore, our decision in ITA No.1338/PUN/2026 for A.Y.

14 ITA Nos.1338 & 1339/PUN/2026 2018-19 shall apply mutatis mutandis to the appeal of the assessee in ITA No.1339/PUN/2026 for A.Y. 2020-21. Accordingly, the appeal of the assessee in ITA No.1339/PUN/2026 for A.Y. 2020-21 is also allowed. 14. In the result, the appeal filed by the assessee in ITA No.1339/PUN/2026 for A.Y. 2020-21 is allowed. 15. To sum up, both the above captioned appeals filed by the assessee are allowed, as indicated above. Order pronounced on this 22nd day of July, 2026. Sd/- Sd/- (DR. DIPAK P. RIPOTE) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 22nd July, 2026. Sujeet/DOC Sujeet Kumar Digitally signed by Sujeet Kumar Sharma Sharma Date: 2026.07.22 14:33:55 आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : +05'30' अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT concerned. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “SMC” ब�च, 4. पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.