MAGASVARGIYA VIDYUT KARMACHARI SAHAKARI PATASANSTHA MARYADIT,RATNAGIRI vs. INCOME TAX OFFICER, WARD-1, RATNAGIRI, RATNAGIRI

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ITA 943/PUN/2026Status: DisposedITAT Pune18 May 2026AY 2020-216 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal, following Supreme Court and coordinate bench decisions, held that primary credit cooperative societies are eligible for deduction under Section 80P(2)(d) on interest and dividend income earned from other cooperative banks. The order of the CIT(A) was set aside.

What were the facts?

The assessee, a credit co-operative society, claimed deduction under Section 80P(2)(d) for interest and dividend income earned from cooperative banks. The Assessing Officer denied this claim, and the CIT(A) upheld the denial.

What were the issues?

Whether interest and dividend income earned by a primary credit cooperative society from cooperative banks is eligible for deduction under Section 80P(2)(d) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 80P(2)(d),Section 143(3),Section 144B,Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE,

Before: SHRI PAVAN KUMAR GADALE & SHRI DR. DIPAK P. RIPOTE

For Respondent: Shri Madhukar Anand
Hearing: 07.05.2026Pronounced: 18.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC”, PUNE, BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER AND SHRI DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.943/PUN/2026 Assessment Year : 2020-21 Magasvargiya Vidyut ITO, Ward 1, Jail Karmachari Sahakari Road, Police Head Patasanstha Maryadit, Block quarters, Ratnagiri No. 5, Gulistan Appt. Ground Vs. Ratnagiri-415612, Floor, Nachane Road. Maharashtra. Ratnagiri-415612, Maharashtra PAN- AACAM1290P Appellant Respondent

Assessee by : None Revenue by : Shri Madhukar Anand, JCIT (Virtual) Date of hearing : 07.05.2026 Date of pronouncement : 18.05.2026 ORDER PER PAVAN KUMAR GADALE, JM: The assessee has filed the appeal against the order of NFAC (Delhi)/ CIT(A) passed u/sec 250 of the Income Tax Act. The assessee has raised the grounds of appeal challenging the order of the CIT(A) sustaining the denial of claim of deduction u/sec 80P(2)(d) of the Income Tax Act made by the Assessing officer.

2.

The brief facts of the case are that, the assessee is a credit Co-operative Society and is engaged in the business of providing credit facilities to its members. The assessee has filed the return of income for the Assessment Year 2020-21 on 15.01.2021 disclosing a total income of Rs. 520/- after claiming deduction u/sec.80Pof the Act. Subsequently, the case was selected for scrutiny and

ITA No.943/PUN/2026 Magasvargiya Vidyut Karmachari Sahakari Patasanstha Maryadit notice u/sec 143(2) and 142(1) of the Act are issued, calling for details in respect of the claims and information supporting the return of income filed by the assessee. In response to the notice, the assessee has filed detailed information. The Assessing Officer, after considering information and submissions filed in the course of hearing was not satisfied with the explanations and find that the assessee has received interest and dividend income from Co- operative Banks and the assessee is not entitled to deduction u/sec. 80P(2)(d) of the Act and denied the claim and assessed the total income of Rs. 12,29,819/- and passed the order u/sec.143(3) r.w.s. 144B of the Income Tax Act dated13.08.2022.

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 and dividend income earned by the assessee from the Co-operative Banks is not eligible for deduction u/sec 80P(2)(d) of the Act and dismissed the appeal.

4.

Aggrieved by the order of the CIT(A), the assessee has filed the appeal before the Hon’ble Tribunal. None appeared on behalf of assessee and the Ld.DR supported the order of CIT(A).

5.

We heard the Ld.DR submissions and perused the material on record. The assessee in the grounds of appeal submitted that the CIT(A) has erred in observing that the interest and dividend income from the cooperative Bank is ineligible for deduction u/s.80P(2)(d) of the Act. We find the Hon’ble Tribunal in the revenue appeal ITO Ward.-

ITA No.943/PUN/2026 Magasvargiya Vidyut Karmachari Sahakari Patasanstha Maryadit 5,Sangli Vs. Shree Ganesh Nagari Sahakari Pat Sanstha Maryadit (ITA No.2375/PUN/2025 & C.O. No.49/PUN/2025) 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. (ii)PuneJilaMadhyawartiSahkariBankSevakanchiSahkariPatsansth aMaryadit, ITA No.1086/PUN/2025 order dated 23-06-2025. (iii) SharadchandraNagariSahakariPatsansthaMaryadit,ITA No.1041/PUN/2025 order dated 04-06-2025.

16.

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 saheb Patil Mathadi Kamgar Sahkari 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’bleSupreme

Court in Civil Appeal No.8719 of 2022 order dated April 20, 2023 by observing as under :- “1. Feeling aggrieved and dissatisfied with the impugned order dated 14-10-2019 passed by the High Court of Judicature at

ITA No.943/PUN/2026 Magasvargiya Vidyut Karmachari Sahakari Patasanstha Maryadit 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. 2. The High Court considered the following question of law - "Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified as claimed by the assessee on the ground that the assessee, a co-operative credit society and is not a bank for the purpose of Section 80P(4) of the Act?" 3. Apart from the fact that against the relied upon decision in the case of M/s. Quepem Urban Co-operative Credit Society Ltd. (supra),the Special Leave Petition has been dismissed, having heard learned counsel appearing on behalf of the respective parties, the issue involved in the present appeal is squarely covered against the Revenue in view of the decision of this Court in Mavilayi Service Co- operative Bank Ltd. v. CIT [2021] 123 taxmann.com 161/279 Taxman 75/431 ITR 1/[2021] 7 SCC 90. This Court, in the aforesaid decision has specifically observed and held that primary Agricultural Credit Societies cannot be termed as Co-operative Banks under the Banking Regulation Act and, therefore, such credit societies shall be entitled to exemption under section 80(P)(2) of the Income-tax Act, 1961. 4. Ms.AakanshaKaul, learned counsel appearing on behalf of the appellant/Revenue has tried to submit that the respondent/Assessee will fall under the definition of Co-operative Bank as their activity is to give credit/loan. However, it is required to be noted that merely giving credit to its members only cannot be

said to be the Co-operative Banks/Banks under the Banking Regulation Act. The banking activities under the Banking Regulation Act are altogether different activities. There is a vast difference

ITA No.943/PUN/2026 Magasvargiya Vidyut Karmachari Sahakari Patasanstha Maryadit between the credit societies giving credit to their own members only and the Banks providing banking services including the credit to the public at large also. 5. There are concurrent findings recorded by CITA, ITAT and the High Court that the respondent/Assessee cannot be termed as Banks/Cooperative Banks and that being a credit society, they are entitled to exemption under section 80(P)(2) of the Income-tax Act. Such finding of fact is not required to be interfered with by this Court in exercise of powers under Article 136 of the Constitution of India. Even otherwise, on merits also and taking into consideration the CBDT Circulars and even the definition of Bank under the Banking Regulation Act, the respondent/Assessee cannot be said to be Co-operative Bank/Bank and, therefore, Section 80(P)(4) shall not be applicable and that the respondent/Assessee shall be entitled to exemption/benefit under section 80(P)(2) of the Income- tax Act. 6. In view of the above and for the reasons stated hereinabove, the present appeal deserves to be dismissed and is accordingly dismissed, answering the question against the Revenue and in favour of the Assessee.”

17.

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.

ITA No.943/PUN/2026 Magasvargiya Vidyut Karmachari Sahakari Patasanstha Maryadit 19. 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 consider the facts, circumstances and ratio of the judicial decisions dealt and follow the judicial precedence. Accordingly, we set aside the order of the CIT(A) and direct the Assessing Officer to allow the deduction u/sec.80P2(d) of the Act in respect of interest and dividend income from the cooperative banks. And we allow the grounds of appeal in favour of the assessee. 7. In the result, the appeal filed by the assessee is allowed.

Order pronounced on this day of 18th May, 2026. Sd/- Sd/- DIPAK P. RIPOTE PAVAN KUMAR GADALE (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) पुणे / Pune; दिन ांक / Dated : 18th May, 2026. Abhishek Satish Kumar Madishetty Digitally signed by Satish Kumar Madishetty Date: 2026.05.19 13:39:37 +05'30' आदेश की प्रतिलिपि अग्रेपिि / Copy of the Order forwarded to : अपील र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The Pr. CIT concerned. विभ गीय प्रतितनधि, आयकर अपीलीय अधिकरण, “SMC” बेंच, 4. पुणे / DR, ITAT, “SMC” Bench, Pune. ग र्ड फ़ इल / Guard File. 5. आिेश नुस र / BY ORDER, Assistant Registrar, आयकर अपीलीय अधिकरण, पुणे / ITAT, Pune

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