THE KALKULAM CO OPERATIVE CREDIT SOCIETY LTD,THUKALAY KANYAKUMARI vs. INCOME TAX OFFICER WARD 5, NAGERCOIL

PDF · subscribers
ITA 1209/CHNY/2026Status: DisposedITAT Chennai30 April 2026AY 2018-194 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 interest income earned by a cooperative society from its investments in another cooperative bank qualifies for deduction under Section 80P(2)(d) of the Act. Section 80P(4) does not apply as the assessee is not a cooperative bank.

What were the facts?

The assessee, a credit cooperative society, claimed deduction under Section 80P for interest earned from investments in a cooperative bank. The Assessing Officer denied this deduction, a view upheld by the CIT(A).

What were the issues?

Whether interest income earned by a cooperative society from deposits with a cooperative bank is eligible for deduction under Section 80P(2)(d), and the applicability of Section 80P(4).

Which sections of the Income-tax Act were involved?

Section 80P,Section 80P(2)(a)(i),Section 80P(2)(d),Section 80P(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI

Before: SHRI GEORGE GEORGE KAND MS. PADMAVATHY.S

Hearing: 22.04.2026Pronounced: 30.04.2026

आदेश / O R D E R

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 09.12.2025 for Assessment Year (AY) 2018-19.

2.

The assessee is a credit cooperative society and filed the return of income for AY 2018-19 on 06.10.2018 declaring Nil income after claiming deduction u/s. 80P of the Act to the tune of Rs. 2,48,68,938/-. The A.O denied the deduction claimed by the assessee to the tune of Rs. 1,95,98,332/-

ITA No.1209/Chny/2026 The Kalkulam Cooperative Credit Society Ltd. :- 2 -: u/s. 80P(2)(a)(i)/80P(2)(d) of the Act stating that interest received from investments in Kanyakumari District Central Cooperative Bank cannot be claimed as a deduction. In this regard, the A.O placed reliance the decision of the Hon'ble Supreme Court in the case of Totgar's Cooperative Sales Society Ltd. vs. ITO [2010] 322 ITR 283 (SC). On further appeal, the CIT(A) upheld the disallowance made by the A.O.

3.

We heard the parties and perused the material on record. The assessee claimed deduction u/s.80P(2)(d) towards interest earned from deposits with Kanyakumari District Central Cooperative Bank. The deduction is denied on the ground that the interest income from cooperative banks cannot be claimed as deduction u/s.80P(2)(d) and also u/s.80P(2)(a)(i) since the income is arising from transactions with non-member. With regard to the issue of allowability of deduction under section 80P(2)(d) in respect of interest income earned from deposits with co-operative banks, we notice that the Hon’ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 123 taxmann.com 161 (SC), while analysing the scope of section 80P(4) of the Act, held that the said provision operates as a proviso to section 80P(1) and (2) and excludes only such co-operative banks which, though co- operative societies, possess an RBI licence to carry on banking business. The Hon’ble Supreme Court further held that the limited object of section 80P(4) is to deny deduction only to those co-operative banks which function at par with commercial banks by lending money to the general public. In the light of the above decision, we are of the considered view that section 80P(4) becomes relevant only where the assessee itself is a co-operative bank claiming deduction under section 80P, which is admittedly not the case in the present appeal. Therefore, the embargo contained in section 80P(4) has no application to the assessee’s claim under section 80P(2)(d). In other words

ITA No.1209/Chny/2026 The Kalkulam Cooperative Credit Society Ltd. :- 3 -: though, by virtue of insertion of sub-section (4) to section 80P, a co-operative bank is not eligible to claim deduction under section 80P of the Act, it nevertheless continues to be a co-operative society registered under the Co- operative Societies Act, 1912 or under the relevant State Co-operative Societies Act. 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. Therefore in our considered view that as long as it is proved that the interest income is being derived by a co-operative 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) cannot be denied. Accordingly we hold that the interest income earned by the assessee being a co-operative society from investments or deposits made with a co-operative bank would qualify for deduction under section 80P(2)(d) of the Act. The coordinate bench in several judicial proceedings has been consistently holding a similar view. Therefore we direct the AO to delete the disallowance made in this regard. Since we have held that the assessee is entitled to claim deduction u/s.80P(2)(d) towards the impugned income, the contentions with regard to allowability of the impugned interest u/s.80P(2)(a)(i) has become academic.

4.

In the result, the appeal of the assessee is allowed. Order pronounced on 30th day of April, 2026 at Chennai. Sd/- Sd/- (जॉज� जॉज� के) (पदमावती यस) (Padmavathy.S) (George George K) उपा�� / Vice President लेखा लेखा सद�य लेखा लेखा सद�य सद�य /Accountant Member सद�य चे�नई/Chennai, �दनांक/Dated: 30th April, 2026. EDN, Sr. P.S

ITA No.1209/Chny/2026 The Kalkulam Cooperative Credit Society Ltd. :- 4 -: आदेश क� �ितिल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF

Digitally signed by EJTADA DURGA EJTADA DURGA NARESH NARESH Date: 2026.05.05 17:12:15 +05'30'

More judgments on Section 80P

All 5,069 judgments and leading authorities on Section 80P →

Recent GST High Court judgments

Search GST case law →