INCOME TAX OFFICER WARD 6(1) PUNE, PUNE vs. THE POONA DISTRICT POLICE CO-OPERATIVE CREDIT SOCIETY LIMITED PUNE, PUNE

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.2707/PUN/2025 िनधा�रण वष� / Assessment Year : 2021-22 The Poona District Police Vs. ITO, Ward-6(1), Pune. Co-operative Credit Society Limited, Bunglow No.3, Police Adhikari Vasahat, Somwar Peth Police Line, Kasba Peth, Pune- 411011. PAN : AAAAC1832F Appellant Respondent आयकर अपील सं. / ITA No.2921/PUN/2025 िनधा�रण वष� / Assessment Year : 2021-22 ITO, Ward-6(1), Pune. Vs. The Poona District Police Co-operative Credit Society Limited, Bunglow No.3, Police Adhikari Vasahat, Somwar Peth Police Line, Kasba Peth, Pune- 411011. PAN : AAAAC1832F Appellant Respondent Assessee by : Shri Tanzil R. Padvekar Revenue by : Shri Amit Bobde Date of hearing : 23.04.2026 Date of pronouncement : 26.05.2026

2 ITA No.2707/PUN/2025 ITA No.2921/PUN/2025 आदेश / ORDER PER VINAY BHAMORE, JM: These cross-appeals filed by the assessee as well as by the Revenue are directed against the order dated 25.09.2025 passed by Ld. Addl./JCIT(A)-2, Coimbatore [‘Ld. CIT(A)’] for the assessment year 2021-22. 2. Facts of the case, in brief, are that the assessee is a credit cooperative society registered under the Maharashtra Co-operative Societies Act, 1960 and is engaged in the business of providing credit facilities to its members and accepting deposits from them. The return of income was filed on 05.01.2022 by declaring Nil income after claiming deduction of Rs.26,65,65,814/- u/s 80P(2)(a)(i) of the IT Act. Vide intimation order dated 01.12.2022, the return was processed u/s 143(1)(a) of the IT Act and deduction u/s 80P(2)(a)(i) of the IT Act of Rs.26,65,65,814/- was disallowed. Being aggrieved the assessee preferred an application for rectification u/s 154 of the IT Act before CPC. However, vide order dated 24.02.2023, CPC issued rectified intimation with no change. 3. Being aggrieved with the above intimation order passed u/s 154 of the IT Act, the assessee preferred an appeal before Ld.

3 ITA No.2707/PUN/2025 ITA No.2921/PUN/2025 CIT(A). After considering the reply and submissions of the assessee, Ld. CIT(A) partly allowed the appeal of the assessee by allowing the deduction u/s 80P(2)(a)(i) of the IT Act for Rs.24,70,48,788/-, however, the deduction of Rs.1,95,17,026/- was disallowed u/s 80P(2)(d) of the IT Act which represents the interest income earned from FDR made with Pune District Central Co-op Bank Ltd. 4. It is the above order against which the assessee as well as the Revenue is in appeal before this Tribunal. ITA No.2707/PUN/2025 – By Assessee : 5. The assessee has raised the following grounds of appeal :- “1. On the facts and in law, the Learned Commissioner of Income Tax (Appeal) [in short Ld. CIT(A)] erred in upholding disallowance under Section 80P(2)(d) of the Act, Amount to Rs. 1,95,17,026/-. 2. On the facts and in law, the Ld. CIT(A) failed to appreciate that interest income earned by the Appellant Credit Co-Operative Society from the Co- Operative Bank (co-op. society) is eligible for deduction under Section 80P(2)(d) of the Act, though the Appellant is legitimately eligible for claim of deduction under Section 80P(2)(d) of the Act of Rs. 1,95,17,026. 3. On the facts and in law the CIT (A) erred in holding the rectification order u/s 154 as correct one though the disallowance of deduction of sec. 80P(2)(d) was uncalled for u/s 143(1) of the IT Act. 4. On the facts and in law the CIT (A) incorrectly allowed the illegal disallowance of legitimate deduction of section 80 P(2)(d) made u/s 143(1) when there is no such express provision in the Income tax Act.

4 ITA No.2707/PUN/2025 ITA No.2921/PUN/2025 5. The appellant craves, leave to add to alter, modify, revise, or delete any ground (s) in the interest of justice.” 6. With regard to ground no.1 & 2, we find that the assessee has challenged the action of Ld. CIT(A) wherein he disallowed the deduction of Rs.1,95,17,026/- u/s 80P(2)(d) of the IT Act being interest income earned from FDR made with Pune District Central Co-op. Bank Ltd. It is the contention of the assessee that with regard to interest income earned from FDR made with Pune District Central Co-op. Bank Ltd. the assessee is entitled to claim deduction u/s 80P(2)(d) of the IT Act since Pune District Central Co-op. Bank Ltd. is a cooperative society. In support of this proposition, the assessee has placed reliance on the following coordinate jurisdictional bench decisions :- (i) Shri Bhairavnath Multisate Cooperative Credit Society vs. ITO [2014] 164 taxmann.com 382 (Pune – Trib.). (ii) Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd. vs. ITO [2024 158 taxmann.com 322 (Pune – Trib.) (iii) Shree Mahaveer Dhamani vs. ITO, ITA No.2809/PUN/2024.

5 ITA No.2707/PUN/2025 ITA No.2921/PUN/2025 7. In this regard, we find support from the decision of coordinate bench of this Tribunal in the case of Shri Bhairavnath Multisate Cooperative Credit Society (supra) wherein the Tribunal allowed the deduction u/s 80P(2)(a)(i) and 80P(2)(d) of the IT Act by observing as under :- “5. We heard the rival submissions and perused the material on record. We find this issue is no more res integra by virtue of catena of decisions passed by the Coordinate Benches of this Tribunal. In the present case, we find that admittedly the interest income was earned from the investments out of surplus funds made with cooperative banks/socieites, the cooperative bank is also a specie of cooperative society, therefore, the interest income earned by the cooperative society from the cooperative banks qualifies for deduction u/s.80(P)(2)(d) of the Act. Such interest also qualifies for exemption u/s.80P(2)(a)(i) as held by the Co-ordinate Bench of Pune Tribunal in the case of Nashik Road Nagari Sahkari Patsanstha Limited Vs. ITO in ITA No.1700/PUN/2017 wherein the Tribunal held as under :- “9. We heard the rival submissions and perused the material on record. Admittedly, the appellant is a Cooperative society formed under the provisions of Maharashtra Cooperative Societies Act,1960 with the objective of accepting deposits and lending money to its members. The money which is not immediately required for the purpose of lending to the members is deposited with Bank of Baroda in the form of Fixed Deposit. The question is whether the interest so earned qualifies for exemption u/s. 80P(2)(a)(i) of the Act. The AO as well as the CIT(A) were of the opinion that the interest earned from third parties or nonmembers does not quality for exemption u/s.80P. It is an admitted position that the interest so earned should be taxed as ‘income from other sources’ There is a cleavage of judicial opinion among several High Courts on the issue of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i) of the Act. The Hon’ble Punjab & Haryana High Court in the case of CIT vs. Punjab State Cooperative Federation of Housing Building Societies Ltd. 11 taxmann.com 448, the Hon’ble Gujarat High Court in the case of State Bank of India Vs. CIT 389 ITR 578 (Guj.), the Hon’ble Delhi High Court in the case of Mantola Cooperative Thrift & Credit Society Ltd. Vs. CIT 50

6 ITA No.2707/PUN/2025 ITA No.2921/PUN/2025 taxmann.com 278, the Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Punjab State Cooperative Agricultural Development Bank Ltd. 389 ITR 68 and the Hon’ble Kolkata High Court in the case of CIT Vs. Southern Eastern Employees Cooperative Credit Society Ltd. 390 ITR 524 took a view that the income arising on the surplus invested in short term deposits and securities cannot be attributed to the activities of the society and, therefore, not eligible for exemption u/s.80P(2)(a)(i) of the Act. However, the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 taxmann 309 (Kar.) and the Hon’ble Telangana and Hon’ble Andhra Pradesh High Court in the case of Vaveru Co- operative Rural Bank Ltd. v CIT [(2017) 396 ITR took a view that such interest income is attributable to the activities of the society and, therefore, eligible for exemption u/s.80P(2)(a)(i) of the Act. The Coordinate Bench of Pune Benches in the case of M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit Vs. ITO (ITA Nos.559/560/PUN/2018, dated 11-12- 2018) has taken view in favour of the assessee following the judgment of Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). Respectfully following the decision of the Coordinate Bench, we hold that the interest income earned on the investment of surplus money with banks is also eligible for exemption u/s.80P(2)(a)(i) of the Act. Thus, the grounds of appeal No. 1 & 2 stands allowed.” 6. Thus, the order passed by the ld.CIT(A) is in conformity with the settled position of law by virtue of the above discussion. Therefore, we affirm the impugned order directing the Assessing Officer to allow the claim of exemption u/s.80P(2)(a)(i)/80P(2)(d) on the interest income earned on investments made out of surplus funds made with Cooperative banks, Cooperative Societies and Nationalised banks.” 8. Respectfully following the above decision of coordinate bench of this Tribunal in the case of Shri Bhairavnath Multisate Cooperative Credit Society (supra), we are of the considered opinion that the assessee is eligible for deduction u/s 80P(2)(a)(i) and 80P(2)(d) of the IT Act. Accordingly, we set-aside the order

7 ITA No.2707/PUN/2025 ITA No.2921/PUN/2025 passed by the Ld. CIT(A) and direct the Assessing Officer to allow the deduction of Rs.1,95,17,026/- u/s 80P(2)(d) of the IT Act since the above interest income was earned from other cooperative society i.e. Pune District Central Co-op. Bank Ltd. Thus, the ground no.1 & 2 raised by the assessee are allowed. Since we have allowed the appeal on ground no.1 & 2 raised by the assessee, other grounds becomes infructuous, hence not adjudicated. 9. In the result, the appeal filed by the assessee in ITA No.2707/PUN/2025 is allowed. ITA No.2921/PUN/2025 – By Revenue : 10. The Revenue has raised the following grounds of appeal :- “1. On the facts and in the circumstances of the case and in law, the Ld. Addl. CIT(A) has erred ruling that the deduction u/s. 80P(2) (a) (i) was allowable without discussing/examining how the order sought to be rectified was erroneous within the strict and limited scope of section 154 of the Act. 2. On the facts and in the circumstances of the case and in law, the Ld. Addl. CIT(A) has erred in making decision on the limited legal issue of whether mistake made by the assessee while filing return of income can be rectified u/s. 154 of the Act. 3. The appellant craves leave to add to, amend, alter any of the above grounds of appeal.” 11. With regard to above ground no.1, we find that time and again it has been held by various coordinate benches of this Tribunal that

8 ITA No.2707/PUN/2025 ITA No.2921/PUN/2025 the assessee being a primary credit cooperative society is entitled to claim deduction u/s 80P(2)(a)(i) of the IT Act. In this regard, we have already relied on the decision passed in the case of Shri Bhairavnath Multisate Cooperative Credit Society (supra) wherein the Tribunal allowed the deduction u/s 80P(2)(a)(i) of the IT Act with regard to income attributable to the business of the assessee i.e. interest income. Thus, the ground no.1 raised by the Revenue is dismissed. 12. With regard to ground no.2 raised by the Revenue, we find that the assessee has claimed deduction of Rs.26,65,65,814/- u/s 80P(2)(a)(i) of the IT Act in its return of income and this amount consists of business profits of Rs.24,70,48,788/- and income of Rs.1,95,17,026/- being interest income received from its investments from other cooperative bank i.e. Pune District Central Co-op. Bank Ltd.. Therefore, admittedly the assessee has claimed deduction of its total income under Chapter VI-A of the IT Act precisely u/s 80P(2)(a)(i) of the IT Act and Ld. CIT(A) allowed deduction of Rs.24,70,48,788/- u/s 80P(2)(a)(i) of the IT Act being business profits and voluntarily choose to disallow an amount of Rs.1,95,17,026/- u/s 80P(2)(d) of the IT Act. Accordingly, it is not

9 ITA No.2707/PUN/2025 ITA No.2921/PUN/2025 the case of the assessee that it has not claimed deduction u/s 80P(2) of the IT Act in its return of income as claimed by the Revenue. Thus, the ground no.2 raised by the Revenue is also dismissed. 13. In the result, the appeal filed by the Revenue in ITA No.2921/PUN/2025 is dismissed. 14. To sum up, the appeal filed by the assessee is allowed and the cross appeal filed by the Revenue is dismissed, as indicated above. Order pronounced on this 26th day of May, 2026. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 26th May, 2026. Sujeet/DOC Digitally signed by Sujeet Kumar Sujeet Kumar Sharma Sharma Date: 2026.05.26 आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : 17:03:57 +05'30' अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Addl./JCIT (A)-2, Coimbatore. 4. The Pr.CIT/CIT concerned. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “B” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.