SHRI MAHATMA BASAVESHWAR NAGRI SAHAKARI PATHSANSTHA MARYADIT,MURUM vs. ITO WARD 1 LATUR, LATUR

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC”, PUNE BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER AND SHRI DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकरअपीलसं. ITA No. 687/PUN/2026 & ITA No. 688/PUN/2026 Assessment Year : 2018-19 & 2020-21 Shri Mahatma ITO, Ward-1, Basaveshwar Nagri Swati Chambers, Sahakari Pathsanstha Ausa Road , Maryadit, Vs. Latur-413512 Main Road, Post- Murum Maharashtra. Taluka, Omerga, Osmanabad-413605 Maharashtra PAN- AAGAS6020B Appellant Respondent : Assessee by Shri Girish Ladda.AR (Virtual) : Revenue by Shri Madhukar Anand, JCIT (Virtual) : Date of hearing 07.05.2026 : Date of pronouncement 08.05.2026 ORDER PER PAVAN KUMAR GADALE, JM: These two appeals are filed by the assessee against the separate order of NFAC/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 deduction u/sec 80P(2)(a)(i) of the Act by the assessing officer.

ITA No.687 & 688/PUN/2026 Mahatma Basaveshwar Nagri Sahakari Pathsanstha Maryadit 3. The brief facts of the case are that, the assessee is a Credit co-operative society engaged in the business of providing credit facilities to its members. The assessee has filed the return of income for the Assessment Year 2018-19 disclosing a total income of Rs. NIL after claiming deduction u/sec 80P(2)(a)(i) of the Act. Subsequently, the case was selected for limited scrutiny under the E-assessment scheme. Subsequently,the Assessing Officer has issued notice u/sec 143(2) and u/sec142(1) of the Act. In compliance to the notice, the assessee has filed detailed information. The Assessing Officer, on perusal of the information found that the assessee has received interest income with various co-operative banks and other banks and claimed deduction u/sec80P(2)(a)(i) of the Act and was not satisfied with the explanations and is of the opinion that assessee is not eligible for claim of deduction u/sec. 80P2(a)(i) of the Act and denied the claim and assessed the total income of Rs. 18,64,958/- and passed the order u/sec. 143 r.w.s 143(A) and 143(B) of the Income Tax Act dated 16.04.2021.

ITA No.687 & 688/PUN/2026 Mahatma Basaveshwar Nagri Sahakari Pathsanstha Maryadit from cooperative banks and other banks is not eligible for deduction u/sec 80P2(a)(i) of the Act. The Ld. AR substantiated the submissions with the factual paper book and judicial decisions and prayed for allowing the appeal. Per Contra, Ld. DR relied on the order of the CIT(A).

6.We heard the rival 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 assessee is ineligible for deduction u/s.80P(2)(a)(i) of the Act. We find the Hon’ble Tribunal in the revenue appeal ITO Ward.-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)PuneJilaMadhyawartiSahkariBankSevakanchiSahkariPatsanstha Maryadit, ITA No.1086/PUN/2025 order dated 23-06-2025. (iii) SharadchandraNagariSahakariPatsansthaMaryadit,ITA No.1041/PUN/2025 order dated 04-06-2025.

ITA No.687 & 688/PUN/2026 Mahatma Basaveshwar Nagri Sahakari Pathsanstha Maryadit 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 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.

ITA No.687 & 688/PUN/2026 Mahatma Basaveshwar Nagri Sahakari Pathsanstha Maryadit 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 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.”

ITA No.687 & 688/PUN/2026 Mahatma Basaveshwar Nagri Sahakari Pathsanstha Maryadit 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. 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.” 7. We consider the facts, circumstances, submissions 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(a)(i) of the Act in respect of interest income on deposits with the cooperative banks and other banks. And we allow the grounds of appeal in favour of the assessee. ITA.No.688/PUN/2026.

ITA No.687 & 688/PUN/2026 Mahatma Basaveshwar Nagri Sahakari Pathsanstha Maryadit आिेशकीप्र्ल्पअगे्े र/ Copy of the Order forwarded to : अपीलार्/ The Appellant. 1. प्यर्/ The Respondent. 2. 3. The Pr. CIT concerned. 4. िभागीयप्र्न्ि, आयकरअपीलीयअ्िकरण, “SMC” बें, पुणे/ DR, ITAT, “SMC” Bench, Pune. गार्फ़ाइल/ Guard File. 5. //True Copy// आिेशानुसार/ BY ORDER,

Assistant Registrar, आयकरअपीलीयअ्िकरण, पुणे/ ITAT, Pune.