SUMAN CO-OPERATIVE HOUSING SOCIETY LTD ,MUMBAI vs. I.T.O WARD 27(3)(1), MUMBAI

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ITA 4375/MUM/2026Status: DisposedITAT Mumbai14 July 2026AY 2012-20135 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a co-operative bank is a species of co-operative society and therefore, interest income earned by a co-operative society from a co-operative bank is eligible for deduction under Section 80P(2)(d). The deduction under Section 80P(2)(c)(ii) was also allowed as it was within the permissible limit.

What were the facts?

The assessee, a co-operative housing society, claimed deductions under Section 80P(2)(d) and 80P(2)(c)(ii) for interest income from co-operative banks and other income. The Assessing Officer disallowed the deduction under Section 80P, which was upheld by the CIT(A) citing Section 80P(4).

What were the issues?

Whether interest income earned by a co-operative society from a co-operative bank is eligible for deduction under Section 80P(2)(d), and whether the deduction under Section 80P(2)(c)(ii) was correctly claimed.

Which sections of the Income-tax Act were involved?

Section 80P,Section 147,Section 144,Section 80P(2)(d),Section 80P(2)(c)(ii),Section 80P(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH MUMBAI

Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL

Hearing: 02.07.2026Pronounced: 14.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 4375/MUM/2026 Assessment Year: 2012-13 Suman Co-operative housing I.T.O, Ward 27(3)(1), society Ltd Mumbai Office Block ,V.N.Purav Marg Chembur Mumbai 400071 Vs. Mumbai - 400071 (PAN: ABFFS2941C) (Appellant) (Respondent) Present for: Assessee : Shri Bharat Kumar, CA Revenue : Smt. Sujatha Iyyanger, Sr, DR Date of Hearing : 02.07.2026 Date of Pronouncement : 14.07.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of ld. ADDL/JCIT (A) AGRA, vide order no. ITBA/APL/S/250/2025- 26/1086668964(1), dated 27.02.2026, passed against the assessment order by the Income Tax Officer, Ward 27(3)(3), Mumbai u/s. 147 r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 09.12.2019, for Assessment Year 2012-13.

2.

Grounds taken by the assessee are reproduced as under: 1. On the facts and in the circumstances of the case, the learned CIT(A) has erred in law in upholding the validity of the reassessment proceedings initiated under section 147/148 of the Income tax Act, 1961, which are bad in law, without jurisdiction and liable to be quashed.

2 ITA No. 4375/Mum/2026 Suman CHSL Assessment Year 2012-13 2. On the facts and in the circumstances of the case, the learned CIT(A) has erred in law and on facts in confirming the disallowance of deduction of Rs. 13,12,740/- claimed under section 80P(2)(d) as well as 80P(2) (c)(ii) of the Income tax Act, 1961.

3.

Brief facts of the case as culled out from the records are that assessee is a co-operative housing society established in the year 1964, deriving income primarily from members’ contributions and interest income from deposits placed with co-operative banks. Return of income was filed on 28.12.2012, reporting total income at Nil after claiming deduction under section 80P(2)(d) amounting to Rs. 12,90,138/- and under section 80P(2)(c)(ii) amounting to Rs. 22,602/-, aggregating to Rs. 13,12,740/-. In the original assessment made under section 143(3), dated 11.12.2014, said deduction was allowed. Subsequently, case was reopened under section 147 and the ld. Assessing Officer disallowed the entire deduction claimed under section 80P and assessed the same as income from other sources. Aggrieved, assessee went in appeal before the ld. CIT(A), who upheld the disallowance made by the ld. Assessing Officer by holding that the assessee is not entitled to deduction under section 80P(2)(d) on interest income earned from deposits placed with co-operative banks in view of section 80P(4). Aggrieved, assessee is in appeal before the Tribunal.

4.

We have heard both the parties and perused the material on record. Regarding the issue in respect of claim of deduction u/s. 80P(2)(d) in respect of interest earned on deposits kept with cooperative banks is no longer res integra, as there is no dispute in respect of earning of interest by the assessee from the cooperative banks. The aspect of allowability u/s.80(2)P(d) is extensively dealt by the Hon'ble High Court of Karnataka in case of the PCIT vs. Totagar

3 ITA No. 4375/Mum/2026 Suman CHSL Assessment Year 2012-13 Cooperative Sales Society Limited [2017] 78 taxmann.com 169 (Kar). Relevant findings given in para 7 to 12 are as under: "7. However, the contention being taken by the learned counsel is untenable. For the issue that was before ITAT, was a limited one, namely whether for the purpose of Section 80P(2)(d) of the Act, a Co-operative Bank should be considered as a Co-operative Society or not? For, if a Co-operative Bank is considered to Co- operative Society, then any interest earned by the Co-operative Society from a Co- operative Bank wo necessarily be deductible under Section SOP(I) of the Act. 8. The issue whether a Co-operative Bank is considered to be a Co- operative Society is no longer res integra. For the said issue has been decided by the ITAT itself in different cases. Moreover, the word "Co-operative Society" are the words of a large extent, and denotes a genus, whereas the word "Co-operative Bank" is a word of limited extent, which merely demarcates and identifies a particular species of the genus Co-operative Societies. Co- Operative Society can be of different nature, and can be involved in different activities; the Cooperative Society Bank is merely a variety of the Co-operative Societies. Thus the Co- operative Bank which is a species of the genus would necessarily be covered by the word "Co-operative Society". 9. Furthermore, even according to Section 56(i)(ccv) of the Banking Regulations Act, 1949, defines a primary Co-operative Society bank as the meaning of Co- Operative Society. Therefore, a Co-operative Society Ban. would be included in the words 'Co- operative Society'. 10. Admittedly, the interest which the assessee respondent had earned was from a Co-operative Society Bank Therefore, according to Sec. 80P(2)(d) of the IT. Act, the said amount of interest earned from a Co-operative Society Bank would be deductible from the gross income of the Co-operative Society in order to assess it: total income. Therefore, the Assessing Officer was not justified in denying the said deduction to the assessee respondent. 11.The learned counsel has relied on the case of Totgars Co- operative Sale Society Ltd. v. IΠΟ (2010) 322 ITR 283/188 Taxman 282 (SC). However, the said case dealt with the interpretation, and the deduction, which would be applicable under Section 80P(2)(a)(i) of the I.T. Act. For, in the present case the interpretation that is required is of Section 80P(2)(d) of the L.T. Act and not Section 80P(2)(a)(i) of the IT. Act. Therefore, the said judgment is inapplicable to the present case. Thus, neither of the two substantial questions of la canvassed by the learned counsel for the Revenue even arise it is the present case. 12. For the reasons stated above, this Court does not find any merit in the present appeal. Hence, the appeal is dismissed.” 4.1. We also find that the issue before us of whether a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) for the interest income derived from its investments held with a cooperative bank or not, is covered in favour of the assessee not only by the decision

4 ITA No. 4375/Mum/2026 Suman CHSL Assessment Year 2012-13 of Hon’ble High Court of Karnataka referred above but also in plethora of cases including few of the following cases: (i) Land and Cooperative Housing Society Ltd. v. ITO (2017) 46 CCH 52 (Mum) (ii) C. Green Cooperative Housing and Society Ltd. v. ITO 21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017 (iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. v. ITO Range- 20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017.

5.

From the above, we understand that under section 80P(2)(d), assessee is entitled for the deduction in respect of interest or dividends received from investments made with any other cooperative societies. From the above extraction, we also note that Hon'ble High Court held that the word ‘cooperative society’ are the words of large extent and denotes a genus, whereas the word ‘cooperative bank’ is a word of limited extent, which merely de-markets and identifies a particular species of the genus ‘cooperative societies’. Thus, a cooperative bank is merely a variety of the cooperative societies which can be of a different nature and can be involved in different activities.

5.1. We are of the considered view that though the co-operative bank pursuant to the insertion of Sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P, however, since a co- operative 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 cooperative societies, therefore, the interest and dividend income derived by a cooperative 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.

5 ITA No. 4375/Mum/2026 Suman CHSL Assessment Year 2012-13 6. Considering the undisputed factual matrix in the present case which are akin to the judicial precedents dealt above and the judicial precedents referred, we hold that assessee is entitled to claim of deduction u/s. 80P(2)(d). Accordingly, disallowance made by ld. Assessing Officer is deleted.

6.1. In respect of claim of deduction of Rs.22,602/- u/s 80P(2)(c)(ii), it is noted from the said section that a deduction of Rs.50,000/- is permissible to a co-operative society towards profits and gains on activities carried out by it independently other than those mentioned in sub-clause (a) and (b) of section 80P(2). From the return of income, it is noted that assessee had reported its income of Rs.22,602/- towards coconut trees, promotional charges, rent from running of ironing activity and sale of scrap. In the given factual matrix which remains uncontroverted, the said claim of deduction by the assessee is allowed which is well below the prescribed threshold of Rs.50,000/-. Disallowance made by the ld. Assessing Officer is deleted.

7.

In the result, appeal filed by the assessee is allowed.

Order pronounced in the open court on 14 July, 2026.

Sd/- Sd/- (Amit Shukla) (Girish Agrawal) Judicial Member (Accountant Member) Dated: 14 July, 2026 MP, Sr.P.S.

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