VIBHAGIYA SAHAKARI KHATYA TIL KARMACHARYANCHI SAHAKARI PATPEDHI MARYADIT,PUNE vs. INCOME TAX OFFICER WARD 6(1) PUNE, PUNE

The brief facts of the case are that, the assessee is a credit cooperative society and has filed the return of income for the A.Y. 2020-21 on 29.12.2020 disclosing the total income of Rs. Nil after claiming deduction under Section 80P(2)(a)(i) of the Income Tax Act. Subsequently, the case was selected for scrutiny under CASS and notice u/sec 143(2) and u/sec142(1) of the Act . The AO has called for details in respect of the claims made by the assessee in the return of income. The Assessing officer has dealt on the facts and interest received on loans & interest of fixed deposits with the banks. The Assessing Officer (A.O) has also dealt on the submissions/details of members and activities and find that the assessee is not eligible for claim of deduction under section 80P(2)(a)(i) of the Act and has not made separate disallowance of interest income on fixed deposits with the Pune District Central co-operative Bank Limited. Finally the A.O. was not satisfied with the explanations and dealt on the provisions and denied the claim of deduction u/sec80P2 (a)(i) of the act of and assessed the total income of Rs.16,17,936/- and passed the order u/sec 143(3)r.w.s144B of the Act dated 22.09.2022. 3. Aggrieved by the order, the assessee has filed the appeal with the CIT(A), whereas the CIT(A) has considered the grounds of appeal, submissions of assessee, finding of the Assessing Officer but has sustained the action of the AO that the interest income earned by the assessee from the Co- operative Bank is not eligible for deduction u/sec 80P(2)(d) of the Act and dismissed the assessee’s appeal.Aggrieved by the order of the CIT(A), the assessee has filed the appeal before the Hon’ble Tribunal.

At the time of hearing, Ld. AR submitted that the CIT(A) has erred in confirming the action of the AO in treating the interest income from cooperative banks is not eligible for deduction u/sec 80P2(a)(i)/80P2(d) of the Act. The Ld. AR substantiated the submissions with the factual paper book and judicial decisions and prayed for allowing the appeal. Per Contra, Ld. DR relied on the order of the CIT(A).

We heard the rival submissions and perused the material on record. The Ld.AR submitted that the CIT(A) has erred in observing that the assessee is ineligible for deduction u/s.80P(2)(a)(i) of the Act or u/sec80P2(d) of the Act in respect of interest income earned from the cooperative banks. We find the Hon’ble Tribunal in the revenue appeal ITO Ward.-5,Sangli Vs. Shree Ganesh Nagari Sahakari Pat Sanstha Maryadit (ITA No.2375/PUN/2025 & C.O. No.49/PUN/2025) has dealt and held as under: “15. We have heard Ld. Counsels from both the sides and perused the material available on record. In this regard, we find that all the grounds raised by the Revenue revolves around the issue of allowability of deduction u/s 80P(2)(d) of the IT Act to primary credit cooperative society. In this regard, we find that in number of decisions passed by coordinate benches of this Tribunal it has been held that a primary credit cooperative society is eligible to claim deduction u/s 80P(2) of the IT Act on interest and dividend income earned from its investment with other cooperative banks which are also cooperative societies duly registered under Maharashtra State Cooperative Societies Act. In this regard, following decisions are relevant :- (i)GurudattaGraminBigersheti, ITA No.502/PUN/2025 order dated 28-07-2025.

We further find that the core issue of allowance of deduction u/s 80P(2) of the IT Act to a primary credit cooperative society was also decided by Hon’ble Jurisdictional Bombay High Court in the case of Anna sahebPatilMathadiKamgarSahkari Path pedhi Ltd.in ITANo.933/2017 order dated 14-10-2019 wherein deduction u/s 80P(2) of the IT Act was allowed to a primary credit cooperative society. Subsequently, this Judgement was also approved by Hon’ble Supreme Court in Civil Appeal No.8719 of 2022 order dated April 20, 2023 by observing as under :- 17. “1. Feeling aggrieved and dissatisfied with the impugned order dated 14-10-2019 passed by the High Court of Judicature at Bombay in ITA No. 933/2017, by which the High Court has dismissed the said appeal preferred by the Revenue, relying upon its earlier decision in the case of Quepem Urban Co-operative Credit Society Ltd. v. Asstt. CIT [2015] 58 taxmann.com 113/232 Taxman 510/377 ITR 272 (Bom.), the Revenue has preferred the present appeal.

Respectfully following the above latest decision passed by Hon’ble Supreme Court cited supra, we are of the considered opinion that the issue of allowance of deduction u/s 80P(2) of the IT Act in favour of primary credit cooperative society has attained finality & therefore we do not find any error in the order passed by Ld. CIT(A)/NFAC with regard to allowance of deduction u/s 80P(2)(d) of the IT Act to the assessee on interest income earned from its investment from cooperative banks which are also cooperative societies. 18. In the result, the appeal filed by the Revenue is dismissed.

To sum up, the appeal filed by the Revenue is dismissed and the cross objection filed by the assessee is partly allowed, as indicated above.” 6. We considering the facts, circumstances and ratio of the judicial decisions dealt above and follow the judicial precedence. Accordingly, we set aside the order of the CIT(A) on this disputed issue and direct the Assessing Officer to allow the deduction u/sec.80P2(a)(i) of the Act in respect of interest on deposits earned from the cooperative banks. And the grounds of appeal of the assessee are allowed in favour of the assessee. 7. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 20th July, 2026.