SEAMIST CO-OPERATIVE HOUSING SOCIETY LIMITD,MUMBAI vs. INCOME TAX OFFICER WARD 23(3)(1), PIRAMAL CHAMBER

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ITA 3852/MUM/2026Status: DisposedITAT Mumbai07 July 2026AY 2021-226 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that a cooperative bank is a species of cooperative society, and therefore, interest earned by a cooperative society from investments in a cooperative bank is eligible for deduction under Section 80P(2)(d). The disallowance made by the CPC was deleted.

What were the facts?

The assessee, a Cooperative Housing Society, claimed a deduction under Section 80P(2)(d) for interest income earned from investments in cooperative banks. The CPC disallowed this deduction, which was upheld by the CIT(A).

What were the issues?

Whether interest income earned by a cooperative society from investments in cooperative banks is deductible under Section 80P(2)(d) despite Section 80P(4) restricting deductions for cooperative banks themselves.

Which sections of the Income-tax Act were involved?

Section 80P(2)(d),Section 80P(4),Section 2(19)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH MUMBAI

Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL

Hearing: 01.07.2026Pronounced: 07.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH MUMBAI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 3852/MUM/2026 Assessment Year: 2021-22 Seamist Co-Operative Housing Income Tax Officer Society Limited Ward 23(3)(1), Seamist CHS, Mumbai 14th Manuel Gonsalves Road, Bandra West, Vs. Mumbai – 400050 Maharashtra (PAN: AAAAS6542A) (Appellant) (Respondent) Present for: Assessee : None Revenue : Smt. Sujatha Iyyanger, Sr. DR Date of Hearing : 01.07.2026 Date of Pronouncement : 07.07.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of ADDL/JCIT (A), Panaji vide Order No. ITBA/APL/S/250/2025- 26/1085072427(1) dated 22.01.2026, passed against the rectification order by DDIT, Centralized Processing Centre (CPC), Bengaluru, u/s. 154 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 23.08.2023, for Assessment Year 2021-22.

2.

Assessee has raised the following grounds of appeal: “a) On the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in confirming the disallowance of 27,30,180/- made by the CPC to the

2 ITA No. 3852/Mum/2026 Seamist CHSL AY 2021-22 income of the Appellant by denying deduction claimed u/s. 80P(2)(d) of the Income-tax Act, 1961 in respect of interest income earned from investments made with co-operative banks. b) The Id. CIT(A) failed to appreciate that:- (i) the interest income was earned by the Appellant from investments made with Saraswat Co-operative Bank Ltd. and Maharashtra State Co-operative Bank Ltd., which are co-operative societies within the meaning of section 2(19) of the Act; (ii) the provisions of section 80P(2)(d) specifically allow deduction in respect of interest income derived from investments with any other co-operative society; (iii) the provisions of section 80P(4) are applicable only to co-operative banks claiming deduction u/s. 80P and do not restrict the eligibility of a co-operative society to claim deduction u/s. 80P(2)(d) in respect of income earned from co- operative banks; (iv) the reliance placed on judicial decisions in the case of Totagars Co- operative Sale Society Ltd. is misplaced and distinguishable on facts as well as in law; and (v) the issue being debatable and involving interpretation of law, the disallowance made while processing the return u/s. 143(1)/ 154 is beyond the scope of permissible adjustments. c) In reaching to the conclusion and confirming such disallowance, the Id. CIT(A) omitted to consider relevant submissions, judicial precedents and evidences furnished before him and erred in law in upholding the action of the CPC.

3.

Brief facts of the case as culled out from the records are that assessee is a Cooperative Housing Society registered under the Maharashtra Co-operative Societies Act, 1960 and is covered under the definition of Cooperative Society u/s 2(19) of the Act. Return of income was filed on 14.03.2022, reporting total income at 55,360/- after claiming deduction of Rs 7,30,180/- in respect of interest income received from Saraswat Co-op Bank and Maharashtra State Co-operative Bank u/s 80P(2)(d). Return of income was processed by CPC for which intimation was issued u/s. 143(1), disallowing the claim made u/s. 80P(2)(d), resulting in the tax demand of Rs. 2,24,720/- and resultant interest and penalty of Rs. 45,015/-. From

3 ITA No. 3852/Mum/2026 Seamist CHSL AY 2021-22 the perusal of the said intimation, it emerges that a deduction of Rs. 7,30,736/- claimed by the assessee u/s 80P(2)(d) was disallowed by CPC, Bangalore. Aggrieved, assessee went in appeal before the ld. CIT(A), who sustained the disallowance made by the CPC. Aggrieved, assessee is in appeal before the Tribunal.

4.

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 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:

4 ITA No. 3852/Mum/2026 Seamist CHSL AY 2021-22 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 favor of the assessee not only by the decision 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

5 ITA No. 3852/Mum/2026 Seamist CHSL AY 2021-22 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.

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 CPC is deleted.

7.

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

Order is pronounced in the open court on 07 July, 2026

Sd/- Sd/- (Amit Shukla) (Girish Agrawal) Judicial Member (Accountant Member) Dated: 07 July, 2026 MP, Sr.P.S.

6 ITA No. 3852/Mum/2026 Seamist CHSL AY 2021-22 Copy to : 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai Sr. No. Details Date Initial Designation 1. Draft dictated on Sr.PS/PS 2. Draft Placed before author Sr.PS/PS 3. Draft proposed & placed JM/AM before the Second Member 4. Draft discussed/approved JM/AM by Second Member 5. Approved Draft comes to Sr.PS/PS the Sr.PS/PS 6. Order pronouncement on 7.7.2026 Sr.PS/PS 7. File sent to the Bench 9.7.2026 Sr.PS/PS Clerk 8. Date on which the file goes to the Head clerk 9. Date on which file goes to the AR 10. Date of Dispatch of order

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