MAHARASHTRA RAJYA TTTB VAHATUK MAHSANGH PREM CO OP SOC. SANGH LTD,MUMBAI vs. ITO WARD 41(1)(1), MUMBAI

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ITA 420/MUM/2026Status: DisposedITAT Mumbai30 April 2026AY 2020-215 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 a cooperative bank is eligible for deduction under Section 80P(2)(d). The disallowance made by the AO was deleted.

What were the facts?

The assessee, a cooperative society, claimed deduction under Section 80P(2)(d) for interest earned on deposits with a cooperative bank. The Assessing Officer disallowed this deduction, holding that interest from a cooperative bank did not qualify.

What were the issues?

Whether interest income earned by a cooperative society from deposits with a cooperative bank is deductible under Section 80P(2)(d) of the Income-tax Act.

Which sections of the Income-tax Act were involved?

Section 80P(2)(d)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “H(SMC

Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI GIRISH AGRAWAL

For Appellant: Shri Kumar Kale, Advocate
For Respondent: Shri Pravin Salunkhe, Sr. DR
Hearing: 04.03.2026Pronounced: 30.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “H(SMC)” BENCH,MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER and SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No. 420/MUM/2026 Assessment Year: 2020-21 Maharashtra Rajya TTTB Income Tax Officer, Vahatuk Mahsangh Prem Co s Ward - 41(1)(1), Op Soc. Sangh Ltd., Mumbai 11, Shramsafalya Plot No E 1 Wadala Truck Terminal, Mumbai - 400037 (PAN: AAABM3603K) Appellant Respondent Present for: Appellant by : Shri Kumar Kale, Advocate Respondent by : Shri Pravin Salunkhe, Sr. DR Date of Hearing : 04.03.2026 Date of Pronouncement : 30.04.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), Delhi / CIT(A), vide order no. ITBA/NFAC/S/250/2025-26/1075423286(1), dated 02.04.2025, passed against the assessment order by the Assessment Unit, Delhi u/s 143(3) r.w.s 144C of the Income-tax Act (hereinafter referred to as the “Act”), dated 24.08.2022, for Assessment Year 2020-21.

2.

Grounds taken by the assessee are reproduced as under:

2 ITA No. 420/Mum/2026 Maharashtra Rajya TTTB Vahatuk Mahsangh Prem Coop Soc Sangh Ltd. AY 2020-21 1. On the facts and in the circumstances of the case, and also in law, the Ld. CIT(A) erred in confirming the disallowance of deduction u/s. 80P(2)(d) of Rs.28,77,528/ made by the Ld. AO. Your appellant, therefore, prays that deduction u/s. 80P(2)(d) of Rs 28,77,5287-be allowed to it.

3.

The sole issue raised by the assessee in the present appeal is in respect of disallowance of deduction claimed u/s. 80P(2)(d) of Rs.28,77,528/-. Brief facts as culled out from records in this regard are that assessee is a cooperative society formed on 01.01.1997, carrying on the activity of upkeeping and maintaining premises owned by its members and other ancillary activities for the benefits of its member. It is registered under the Maharashtra Co-operative Societies Act, 1960 and classified as Resource Society u/s 12 of the Maharashtra Cooperative Societies Act, 1960, It is a mutual association of persons and other than members of the society, nobody is allowed to transact any business. The main source of receipts for assessee is contribution from its members and interest earned from its investments made from such contributions.

3.1. Assessee filed its return of income on 30.12.2020, reporting total income at Nil, after claiming deduction u/s. 80P(2)(d). According to the assessee, whole of interest income derived by it is deductible u/s. 80P(2)(d). In this regard, assessee furnished its financial statements and demonstrated the investments reported by it. It was submitted that assessee has made deposits with PMC Bank and has earned interest on FDs. The PMC Bank is multistate scheduled cooperative bank which has been conferred schedule status by RBI in the year 2000. It is a scheduled bank governed by the Banking Regulation Act, 1949 and is also registered under Cooperative Societies Act. Ld. Assessing Officer however, took an adverse view to hold that interest

3 ITA No. 420/Mum/2026 Maharashtra Rajya TTTB Vahatuk Mahsangh Prem Coop Soc Sangh Ltd. AY 2020-21 earned by the assessee from deposits with PMC Bank does not quality for deduction u/s. 80P(2)(d) and thus, made the disallowance.

4.

On the above stated facts, issue before us is no longer res integra as the aspect of allowability u/s.80(2)P(d) is extensively dealt by 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: 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

4 ITA No. 420/Mum/2026 Maharashtra Rajya TTTB Vahatuk Mahsangh Prem Coop Soc Sangh Ltd. AY 2020-21 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 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.

4.2. From the above, we understand that the provisions of section 80P(2)(d) of the Act are very clear and assessee is entitled for deduction u/s.80P(2)(d) of the Act 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.

4.3. 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

5 ITA No. 420/Mum/2026 Maharashtra Rajya TTTB Vahatuk Mahsangh Prem Coop Soc Sangh Ltd. AY 2020-21 be entitled for claim of deduction under Sec. 80P of the Act, but 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 enforced 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.

Considering the 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 the ld. Assessing Officer is deleted.

6.

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

Order pronounced in the open court on 30.04.2026.

Sd/- Sd/- [Narender Kumar Choudhry] [Girish Agrawal] Judicial Member Accountant Member Dated: 30 April, 2026 MP, Sr.P.S. Copy to: 1 The Appellant 2 The Respondent 3 DR, ITAT, Mumbai 4 Guard File 5 CIT BY ORDER,

(Dy./Asstt.Registrar) ITAT, Mumbai

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