INCOME TAX OFFICER, NON CORPORATE WARD-7(3), CHENNAI vs. HEAVY VEHICLES FACTORY EMPLOYEES COOPERATIVE THRIFT AND CREDIT SOCIETY LIMITED, CHENNAI

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ITA 1260/CHNY/2026Status: DisposedITAT Chennai12 June 2026AY 2020-216 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal followed a coordinate bench decision and the Madras High Court's ruling, holding that interest/dividend income received from a cooperative bank registered under the Tamil Nadu Co-operative Societies Act is eligible for deduction under Section 80P(2)(d).

What were the facts?

The assessee, a cooperative society, claimed deduction under Section 80P(2)(a)(i) for interest and dividend income. The AO disallowed this, relying on the Totgars case, but the CIT(A) allowed it under Section 80P(2)(d). The Revenue appealed this decision.

What were the issues?

Whether interest and dividend income received by a cooperative society from a cooperative bank registered under the relevant Act 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)(a)(i),Section 80P(2)(d)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: MS. PADMAVATHY.S & SHRI MANU KUMAR GIRI

For Respondent: Shri E. Elango, JCIT

आदेश / O R D E R

PER PADMAVATHY.S, A.M: This appeal by the Revenue 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 19.06.2025 for Assessment Year (AY) 2020-21.

ITA No.1260/Chny/2026 Heavy Vehicles Factory Employees Cooperative Thrift and Credit Society Ltd. :- 2 -: 2. The assessee is a cooperative society. The assessee filed return of income for AY 2020-21 on 07.01.2021 declaring Nil income after claiming deduction u/s. 80P(2)(a)(i) of the Act to the tune of Rs. 8,23,19,998/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The A.O during the course of assessment noticed that the assessee has income towards interest from cooperative banks amounting to Rs.2,78,26,773/- and dividend from investments amounting to Rs.48,84,722/-. The A.O held that the assessee cannot claim deduction u/s. 80P(2)(a)(i) of the Act towards these amounts by placing reliance on the decision of the Hon'ble Supreme Court in the case of Totgars Cooperative Sale Society Ltd. vs. ITO [2010] 322 ITR 283 (SC). Aggrieved, the assessee filed further appeal before the CIT(A). Before the CIT(A), the assessee placed the alternate plea that the deduction towards the impugned income shall be allowed u/s. 80P(2)(d) of the Act. The CIT(A) by placing reliance on various judicial precedence including the decision of the Hon'ble Jurisdictional High Court, where it has been held that the assessee is entitled for deduction u/s. 80P(2)(d) of the Act and deleted the disallowance made by the A.O. The Revenue is in appeal before the Tribunal against the order of the CIT(A).

3.

There is a delay 154 days in filing the appeal before the Tribunal and the Revenue filed a petition for condonation. Having heard both the parties and perused the material on record, we are of the view that there is a reasonable and sufficient cause for the delay in filing the appeal before the Tribunal. Therefore following the Hon’ble Supreme Court decision in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (167 ITR 471) (SC), we condone the delay in filing the appeal and admit the appeal for adjudication.

ITA No.1260/Chny/2026 Heavy Vehicles Factory Employees Cooperative Thrift and Credit Society Ltd. :- 3 -:

4.

We have heard the parties, and perused the material available on record. We notice that the coordinate bench in the case of Tamilnadu Special Police Employees Cooperative vs. ITO (ITA No.791/CHNY/2025 dated 14.08.2025) has considered an identical issue and held that:

“6. We have heard Ld.DR and perused the material on record. The AO for assessment year 2020-21, had made an identical addition by treating the interest / dividend received from Kanchipuram Central Co-operative Bank Ltd., as ‘income from other sources’, thereby disallowed the claim of deduction u/s.80P(2)(a)(i) and 80P(2)(d) of the Act. We, further notice that for the assessment year 2020-21, the Tribunal in assessee’s own case had decided the issue in favour of the assessee in ITA No.363/CHNY/2023, order dated 15.07.2025. The Tribunal took note of the AR’s submission and certificate of the Co-operative Department, Government of TamilNadu and held that Kanchipuram Central Co-operative Bank Ltd., was registered as a co-operative society under the Tamil Nadu Co-operative Societies Act, 1983. Further the Tribunal by relying on the judgment of the Hon’ble Madras High Court in the case of Thorapadi Urban Co-op Credit Society Ltd., vs. ITO, Vellore in W.P. Nos.11172, 11174, 11177 and 11180 of 2023 and W.M.P Nos.11024, 11038, 11044 and 11048 of 2023 dated 10.10.2023 held that interest/dividend income received from co-operative bank is deemed to have been received from co-operative society since it has been registered under the Tamil Nadu Co-operative Societies Act. The submissions of the Ld.AR before the Tribunal in assessee’s own case for assessment year 2020-21 reads as follows:-

“7. Per contra, the ld.AR for the assessee submitted that the Kancheepuram Central Cooperative Bank Limited is primarily a cooperative society and hence, the earnings of interest and dividend from such cooperative bank is to be treated as earning from another cooperative society and hence, eligible for deduction u/s.80P(2)(d). To buttress the claim of the assessee, the ld.AR submitted a copy of the certificate issued by the cooperative department, Government of Tamil Nadu, wherein, Kancheepuram Central Cooperative Bank Limited was registered as a cooperative society. Further, the assessee relied on the decision of Hon’ble High Court of Madras in the case of Thorapadi urban Co-op Credit Society Limited vs. ITO, Vellore in W.P.Nos.11172, 11174, 11177 and 11180 of 2023 and W.M.P.Nos.11034, 11038, 11044 and 11048 of 2023 dated 10.10.2023, wherein, the Hon’ble Court has stated that any Co- operative Society derived income by way of interest from investment made in any other co-operative bank which was registered under the

ITA No.1260/Chny/2026 Heavy Vehicles Factory Employees Cooperative Thrift and Credit Society Ltd. :- 4 -: Tamil Nadu Co-operative Societies Act, 1983, the whole of such interest is eligible for deduction.”

7.

After considering the above submissions of the Ld.AR, the Tribunal dismissed the appeal of the Department by observing as under:- “11. We find that the issue of allowability of deduction u/s.80P of the Act in respect of Interest and dividend earned from the deposit / investments made in the District credit cooperative bank has already been decided in favour of the assessee in catena of the decisions of the hon’ble High courts and Tribunals. The Hon’ble High Court of Madras in the case of Thorapadi urban Co-op Credit Society Limited vs. ITO, Vellore in W.P.Nos.11172, 11174, 11177 and 11180 of 2023 and W.M.P.Nos.11034, 11038, 11044 and 11048 of 2023 dated 10.10.2023, has confirmed that any Co-operative Society derived income by way of interest from investment made in any other co-operative bank which was registered under the Tamil Nadu Co-operative Societies Act, 1983, the whole of such interest is eligible for deduction. The relevant extract is given below: 9. A reading of the above said provision makes it clear that in the event if any Co-operative Society derived income by way of interest from investment made in any other Co-operative Society the whole such interest is eligible for deduction. Now the issue is as to whether the Co-operative Bank would fall within the purview of the term 'Co- operative Society'. In the present case, the petitioner produced a document to show that the Co-operative Bank, where they have made investments was registered under the Tamil Nadu Cooperative Societies Act, 1983 on 20.5.2003. In this regard, he also produced a copy of the Certificate of Incorporation of the said Co-operative Bank. Therefore, it is clear that the investment made by the petitioner is a Cooperative Bank registered under the Co-operative Societies Act. The Income Tax Act, 1961 has also defined 'Co-operative Society' under Section 2(19) as follows: "2(19). "Co-operative society" means 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 co-operative societies. 10. A reading of the above definition would make it clear that 'Cooperative Society' means a Co-operative Society registered under Cooperative Societies Act, 1912. Thus, a Co-operative Society referred therein is only a co-operative society as defined under the Act, be it a Co-operative Society carrying on banking business or Co-operative Society carrying on the other businesses or a Co-operative bank. 11. The learned counsel for the respondent referred to the judgment of the Hon'ble Supreme Court rendered in Totgars Co- operative Sale Society Ltd., v. Income-tax Officer, Karnataka", wherein the issue came up for consideration as to whether the interest income received by a Co-operative Bank from its members by way of providing the credit facilities to its members is eligible for deduction or not. Ultimately the Hon'ble Supreme Court found that under Section 80P(2)(a)(i), the same is eligible for deduction. Therefore, the law laid down by the Hon'ble

ITA No.1260/Chny/2026 Heavy Vehicles Factory Employees Cooperative Thrift and Credit Society Ltd. :- 5 -: Supreme Court is not applicable for in the present case as the eligibility of deduction of interest has to be decided under Section 80P(2)(d) and not under Section 80P(2)(a)(i). The learned counsel has also relied upon other judgments which are not applicable for the present facts of the present case.

12.

At this juncture, it would be appropriate to refer a judgment passed by a Division Bench of this Court in "Commissioner of Income Tax Salem v. The Salem Agricultural Producers Co-operative Marketing Society Ltd" in Tax Case Appeal No.5 of 2015, wherein, apart from other substantial issues, the following issue has been framed for consideration, which reads as under:

"Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is to be treated as primary agricultural society and is carrying on the business of banking or providing credit facilities to its members and is entitled for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961 with respect to the interest received from Class B members who were involved in non-agricultural society?".

While answering to the above, the Division Bench held that the respondent therein, which is a Co-operative society, is entitled to avail the benefit under 80P(2)(d) of the Act. The judgment was rendered on 10.08.2016, where the judgement rendered by the Hon'ble Supreme Court in 2010 was considered.

13.

In such view of the matter, since the impugned orders are passed without considering all these aspects, this Court is of the view that the same are liable to be set aside. Accordingly, the Writ Petitions are allowed and all the impugned notices are set aside. No costs. Consequently, all the connected miscellaneous petitions are closed.”

12.

Therefore, in the present facts and circumstances of the case and respectfully following the decision of the Hon’ble Madras High Court (supra), we are of the considered view that there is no reason to interfere in the order of the ld.CIT(A) in allowing the assessee’s claim of deduction of interest and dividend u/s.80P(2)(a)(i) of the Act and hence we are inclined dismiss the grounds raised in the appeal of the revenue.” 8. In light of the above order of the Tribunal in assessee’s own case for assessment year 2020-21, which had concluded that Kanchipuram Central Co-operative Bank Ltd., is a co-operative society registered under the Tamil Nadu Co-operative Societies Act, 1983, we are of the view that the said order will have a binding effect for this assessment year also namely AY 2018-19. Therefore, following the Co-ordinate Bench order, we direct the AO to grant deduction u/s.80P(2)(d) of the Act in respect of interest / dividend income received from Kanchipuram Central Co-operative Bank Ltd. It is ordered accordingly.

9.

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

ITA No.1260/Chny/2026 Heavy Vehicles Factory Employees Cooperative Thrift and Credit Society Ltd. :- 6 -: 5. The facts in assessee's case being identical, respectfully following the above decision, we direct the AO to grant deduction u/s.80P(2)(d) of the Act in respect of interest / dividend income to the assessee and we find no infirmity in the order of CIT(A). It is ordered accordingly.

6.

In the result, the appeal of the Revenue is dismissed.

Order pronounced on 12th day of June, 2026 at Chennai.

Sd/- Sd/- (मनु कुमार िग"र) (पदमावती यस) (Manu Kumar Giri) (Padmavathy.S) लेखा सद�य लेखा सद�य सद�य /Accountant Member सद�य �याियक �याियक सद�य �याियक �याियक सद�य सद�य / Judicial Member सद�य लेखा लेखा चे�नई/Chennai, �दनांक/Dated: 12th June, 2026. EDN, Sr. P.S 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: 2026.06.16 12:32:57 +05'30'

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