SATARA ZILLA GRAMIN DAK SEVAK SAHAKARI PATSANSTHA LTD,SATARA vs. ASSESSING OFFICER, EXEMPTION WARD 1(1), PUNE, PUNE

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE BEFORE SHRI DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.25/PUN/2026 िनधा�रण वष� / Assessment Year : 2021-22 Satara Zilla Gramin Dak Vs. ITO, Ward-1(1), Pune. Sevak Sahakari Patsanstha Ltd., G2 Rajwada, Yadogophal Peth, S.O. Satara, Satara- 415002. PAN : AAGTS1973G Appellant Respondent Assessee by : Shri Raj Kumar Doshi : Shri Sandeep Sathe Revenue by Date of hearing : 07.04.2026 Date of pronouncement : 26.05.2026 आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 22.08.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2021-22. 2. There is delay of 67 days in filing of the present appeal. We are satisfied with the reasons mentioned in the application for

2 ITA No.25/PUN/2026 condonation of delay duly supported by an affidavit that the applicant was prevented by sufficient cause for not filing the appeal within the prescribed time limit. After hearing Ld. DR, we condone the delay of 67 days and proceed to adjudicate the appeal. 3. The appellant has raised the following grounds of appeal :- “1. The learned Commissioner of Income-tax (appeal) has erred in both on facts and in law in confirming the disallowance of deduction of INR 5,92,356/- claimed under section 80P of the Income-tax Act. 2. Without prejudice to ground number 1, disallowance of deduction of INR 5,92,356/- claimed under section 80P of the Income-tax Act, if at all to be made, should be restricted to net income after deduction of expenses on proportionate basis. 3. The Appellant request for admission of additional evidence if any requires in support of above grounds of appeal. 4. The appellant craves, leave to add, alter, amend or delete any of the grounds of appeal.” 4. 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 14.02.2022 declaring an income of Rs.200/- after claiming deduction u/s 80P(2)(a)(i) of the IT Act. The return was processed u/s 143(1)(a) of the IT Act accepting the returned income. Subsequently, the case was selected for scrutiny

3 ITA No.25/PUN/2026 through CASS and notice u/s 143(2), 142(1) and show cause notices respectively were issued to the assessee. After considering the reply and submissions, the Assessing Officer vide order dated 28.12.2022 completed the assessment proceedings u/s 143(3) r.w.s. 144B of the IT Act by determining income of the assessee at Rs.5,92,556/- as against the income of Rs.200/- returned by the assessee. The above assessed income includes addition of Rs.5,92,556/- being interest and dividend income received from cooperative banks. 5. Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. After considering the reply and submissions of the assessee, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee. 6. It is the above order against which the assessee is in appeal before this Tribunal. 7. We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book furnished by the assessee. In this regard, we find that the Assessing Officer disallowed the deduction u/s 80P(2)(d) of the IT Act and made addition of Rs.5,92,556/-. Ld. CIT(A)/NFAC also confirmed the same by referring the provisions of section 80P(4) of the IT Act and

4 ITA No.25/PUN/2026 also relying on judgement of Hon’ble Supreme Court passed in case of Mavilayi Service Cooperative Bank Ltd. vs. CIT [123 taxmann.com 161(SC)]. 8. In this regard, we find that section 80P(4) of the IT Act excludes cooperative banks to claim any deduction u/s 80P of the IT Act. However, at the same time, we find that in the instant case in hand, the assessee is not a cooperative bank rather a primary credit cooperative society which is entitled to claim deduction u/s 80P of the IT Act. It is worthwhile to mention here that the Assessing Officer has allowed the deduction u/s 80P(2)(a)(i) of the IT Act and disallowed the deduction u/s 80P(2)(d) of the IT Act being interest and dividend income received from other cooperative banks/societies. 9. Time and again, it has been held by various coordinate benches of this Tribunal that the primary credit cooperative societies are eligible for deduction u/s 80P(2)(d) of the IT Act with regard to interest and dividend income received from other cooperative banks and societies. In this regard, we find support from the decision of coordinate bench of this Tribunal in the case of Kai Fakira Jairam Patil Sahakari Patsanstha Maryadit Shahada vs. ITO in ITA

5 ITA No.25/PUN/2026 No.553/PUN/2023 order dated 25.05.2023 wherein the Tribunal allowed the deduction u/s 80P(2)(d) of the IT Act by observing as under :- “6. We heard the ld. Sr. DR and perused the material on record. The only issue in the present case is as to the allowability of exemption under the provisions of section 80P(2)(d) in respect of interest income earned by a cooperative society from the cooperative bank. This issue is no longer res integra as the issue was decided by the Co-ordinate Bench of the this Tribunal in the case of The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in ITA No.84/PAN/2018 for A.Y. 2012-13 order dated 27.05.2022 in favour of the appellant society. The relevant paragraphs of the said order of Co-ordinate Bench of the Tribunal (supra) is reproduced herein under :- “8. We heard the rival submissions and perused the material on record. The only issue in the present appeal is pertaining to the allowability of deduction under the provisions of section 80P(2)(d) of the Act. On perusal of provisions of section 80P(2)(d), it is clear that the income derived by a cooperative society from its investment held with other cooperative societies shall be exempt from the total income of a cooperative society. Therefore, what is relevant for claiming of deduction u/s 80P(2)(d) is that interest income should have been derived from the investment made by the assessee cooperative society with any other cooperative society. In the present case, the reasoning given by the lower authorities for denial of exemption u/s 80P(2)(d) of the Act is that interest was received from cooperative bank has no legs to stand as a cooperative bank is also a cooperative society. This issue was considered by the Hon’ble Karnataka High Court in the case of CIT vs. Totagars Cooperative Sale Society, 392 ITR 74 (Karn) wherein the Hon’ble High Court referring to the Hon’ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. (supra) held that the ratio of decision of the Hon’ble Supreme Court in the aforesaid case (supra) not to be applicable in respect of interest income on investment as same falls under the provisions of section 80P(2)(d) and not u/s 80P(2)(a)(i) of the Act. 9. Even the decision of Pune Bench of the Tribunal in the case of Sant Motiram Maharaj Sahakari Pat Sanstha Ltd. vs. ITO, 120 taxmann.com 10 wherein the Tribunal after making reference to

6 ITA No.25/PUN/2026 the decisions of the Hon’ble Supreme Court in the case of Totgars Cooperative Sales Society Ltd. (supra) and having noticed the divergent views of the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. vs. ITO, 55 taxmann.com 447 and the Hon’ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. vs. CIT, 50 taxmann.com 278, decision of the Hon’ble Delhi High Court in the case of Mantola Cooperative Thrift Credit Society Ltd. (supra) had not been preferred to view of the Hon’ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Co-op. Ltd. (supra). The relevant observation of the Pune Bench of the Tribunal in the case (supra) is as under :- “9. The Pune Benches of the Tribunal in Sureshdada Jain Nagari Sahakari Patsanstha Maryadit Vs. The Pr.CIT (ITA No.713/PUN/2016, dated 9-4-2019) decided the question of availability of deduction u/s 80P on interest income by noticing that the Pune Bench in an earlier case of Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit Vs. ITO (ITA No.604/PN/2014, dated 19-8-2015) has allowed similar deduction. In the said case, the Tribunal discussed the contrary views expressed by the Hon'ble Karnataka High Court in Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 Taxman 309 (Kar.) allowing deduction u/s. 80P on interest income and that of the Hon'ble Delhi High Court in Mantola Cooperative Thrift Credit Society Ltd. Vs. CIT (2014) 110 DTR 89 (Delhi) not allowing deduction u/s.80P on interest income earned from banks. Both the Hon'ble High Courts took into consideration the ratio laid down in the case of Totgar's Cooperative Sale Society Ltd. (2010) 322 ITR 283 (SC). There being no direct judgment from the Hon'ble jurisdictional High Court on the point, the Tribunal in Shri Laxmi Narayan Nagari Sahakari Pat Sanstha Maryadit (supra) preferred to go with the view in favour of the assessee by the Hon'ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). 10. Insofar as the reliance of the ld. DR on the case of Pr. CIT and Another Vs. Totagars Cooperative Sales Society (2017) 395 ITR 611 (Kar.) is concerned, we find that the issue in that case was the eligibility of deduction u/s.80P(2)(d) of the Act on interest earned by the assessee co-operative society on investments made in co-operative banks. In that case, the assessee was

7 ITA No.25/PUN/2026 engaged in the activity of marketing agricultural produce by its members; accepting deposits from its members and providing credit facility to its members; running stores, rice mills, live stocks, van section, medical shops, lodging, plying and hiring of goods and carriage etc. It was in that background of the facts that the Hon'ble High Court held that the assessee could not claim deduction u/s.80P(2)(d) of the Act. When we consider the impact of this decision, it turns out that the same is not germane to case under consideration in view of the position that the claim of the instant assessee is directly about the eligibility of deduction u/s.80P(2)(a)(i) of the Act and not u/s.80P(2)(d). Moreover, so many decisions relied on by the ld. AR amply go to prove that the view taken by the AO, cannot by any standard, be construed as not a possible view. We, therefore, hold that the ld. Pr. CIT was not justified in exercising the revisional power anent to interest income of Rs.22,34,270/- earned on investments made with co-operative banks.” 7. Respectfully following the decision of the Co-ordinate Bench of this Tribunal (supra), we are of the considered opinion that even the interest income earned by cooperative society on deposits made out of surplus funds with cooperative banks as well as schedule bank qualifies for deduction both under the provisions of section 80P(2)(a)i) and section 80P(2)(d) of the Act, therefore, the reasoning given by the lower authorities on this issue cannot be accepted. Therefore, we direct the Assessing Officer to allow deduction u/s 80P(2)(a)(i) and 80P(2)(d) in respect of interest income earned from cooperative bank/scheduled bank. Thus, the ground of appeal filed by the assessee stands allowed.” 10. Respectfully following the above decision of coordinate bench of this Tribunal in the case of Kai Fakira Jairam Patil Sahakari Patsanstha Maryadit Shahada (supra) which is subsequent to the judgement in the case of Mavilayi Service Cooperative Bank Ltd. (supra) and the facts are distinguishable, we are of the considered opinion that the assessee is eligible for deduction u/s 80P(2)(d) of

8 ITA No.25/PUN/2026 the IT Act. Accordingly, we set-aside the order passed by the Ld. CIT(A) and direct the Assessing Officer to allow the deduction of Rs.5,92,556/- u/s 80P(2)(d) of the IT Act. Thus, the grounds raised by the assessee are allowed. 11. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 26th day of May, 2026. Sd/- Sd/- (DR. DIPAK P. RIPOTE) (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 : 16:56:56 +05'30' अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT concerned. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “SMC” ब�च, 4. पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.