RATNASINDHU CO-OP CREDIT SOCIETY LTD,MUMBAI vs. ASSESSING OFFICER, AAYKAR BHAWAN MUMBAI

ITA No. 832/Mum/2026; Ratnasindhu Co-op Credit Society Ltd. Per Arun Khodpia, AM: This appeal is preferred by the assessee, against the order of

Commissioner of Income Tax Appeals/ National Faceless Appeal Centre (NFAC),

Delhi [“the Ld. CIT(A)] dated 27.11.2025 for the assessment year 2018-19, arises

from the order u/s. 147 r.w.s 144 dated 15th March, 2024 passed by The

Assessment Unit Income Tax Department. The ground of appeal raised by the

assessee are as under:

“1. Disallowance of deduction u/s 80P(2)(d) - ₹3,12,310

1.1 On the facts and in the circumstances of the case and in law, the Learned CIT(A),

NFAC erred in confirming the disallowance of deduction u/s 80P(2)(d) amounting to

₹3,12,310 being interest earned from investments/deposits made with co-operative

banks.

1.2 The Learned CIT(A) failed to appreciate that co-operative banks are also co-

operative societies, and therefore Interest income earned from them squarely

qualifies for deduction u/s 80P(2)(d).

1.3 The Learned CIT(A) erred in relying upon the decision of the Hon'ble Supreme Court

in Totgars Co-operative Sale Society Ltd. (322 ITR 283), which is factually

distinguishable, as in the appellant's case, deposits were made as part of statutory and

business compulsion and not as surplus idle funds.

1.4 The Learned CIT(A) failed to consider and follow the binding judicial precedents of

the Hon'ble ITAT Mumbai, including:

ITA No. 832/Mum/2026; Ratnasindhu Co-op Credit Society Ltd. • Mumbai Postal Employees Co-op Credit Society Ltd. vs ITO-ITA No.

628/Mum/2024 • Kaliandas Udyog Bhavan Premises CHS Ltd vs ITO • Lands End CHS Ltd vs ITO • Sea Green CHS Ltd vs ITO

wherein interest earned from co-operative banks has consistently been held eligible

for deduction u/s 80P(2)(d).

1.5 The Learned CIT(A) failed to appreciate that Section 80P(4) restricts deduction only

in case of co-operative banks claiming deduction, and does not restrict deduction to

a co-operative society earning interest from co-operative banks.

1.6 The confirmation of addition of ₹3,12,310 is bad in law, contrary to facts, judicial

precedents, and legislative intent, and hence liable to be deleted.

2.1 The Learned CIT(A) erred in confirming levy of interest u/s 234A and 234B, which is

purely consequential and dependent upon final assessed income.

2.2 The appellant prays that interest be deleted or recomputed accordingly after

granting relief on merits.

3.1 The appellant craves leave to add, amend, alter, modify or delete any of the above grounds of appeal at or before the time of hearing.”

Society in the status of AOP had undertook a transaction of purchase of

ITA No. 832/Mum/2026; Ratnasindhu Co-op Credit Society Ltd. immovable property for Rs. 1,21,00,000/- and have made cash deposits of Rs.

35,93,000/- during the year under consideration. Consequently, the case of

assessee was re-opened u/s. 147. It is noticed by the revenue that the assessee

has not filed its return of income for assessment year 2018-19. However, in

response to notice u/s. 148 the return of income was filed on 30.04.2022

declaring total income at nil. During the assessment proceedings certain issues

were raised by the Assessing Officer which were responded by the assessee.

However, while composing the assessment, have made an addition of Rs.

6,15,310/- by denying the assessee’s claim u/s. 80P(2)(d) of the Act. The assessee

preferred an appeal before the Ld. CIT(A) wherein the assessee relied on the

Hon'ble Apex Court in the case of Totgars Cooperative Sales Society Ltd. Vs. ITO

(322) ITR 283 and the decision of Hon’ble Karnataka High Court in (395) ITR 611.

As per Ld. AO, the income of interest is taxable under the head “income from

other sources” u/s. 56 and not business income eligible for deduction u/s. 80P.

The assessee placed his reliance on various decisions by the ITAT, Mumbai and

had requested to allow deduction u/s. 80P of the Act. The Ld. CIT(A) on the issue

have not agreed with the contentions raised by the assessee following the

decision in the case of Totgars Cooperative Sales Society Ltd. (supra) and State

Bank of India Employees Cooperative Credit Society and Supply Society Ltd. Vs.

CIT (389) ITR 578 Gujarat and the Mobilized Service Cooperative Bank Ltd. Vs.

ITA No. 832/Mum/2026; Ratnasindhu Co-op Credit Society Ltd. CIT (414) ITR 67 (Kerala). The ground of appeal of the assessee, therefore, has

been dismissed.

preferred the present appeal before us. At the outset, the Ld. AR of the assessee

submitted that the allowability of deduction u/s. 80P(2)(d) on the interest

received by a Cooperative Society from other Cooperative Society or Cooperative

Banks is eligible for deduction and this issue has been decided by various

decisions made by ITAT, Mumbai. The Ld. AR placed his reliance on the following

decisions:

Based on aforesaid decisions, it was the submission that the interest received by

the assessee cooperative society on Fixed Deposits in Cooperative Banks would

be eligible for deduction u/s. 80P(2)(d) of the Act.

ITA No. 832/Mum/2026; Ratnasindhu Co-op Credit Society Ltd. 4. Per contra, the Ld. DR of the revenue supported the orders of the revenue

authorities.

available on record and the reasons relied upon by the assessee. Admittedly, in

present case as per assessee, the claim for deduction u/s. 80P(2)(d) was made

on the interest income earned from Cooperative Bank, which qualifies for

deduction u/s. 80P(2)(d). It is a settled position that such deductions are

consistently allowed to the Cooperative Societies following the principles laid

down by the Hon'ble High Courts. This issue was discussed in detail in the case

of M/s. Solitaires CHS Ltd. Vs. PCIT (supra). While dealing with the issues in 263

proceedings, the ITAT had held that the assessee Cooperative Society is entitled

for deduction u/s. 80P(2)(d), where it has earned interest income on its

investment held with Cooperative Banks. The relevant findings of the tribunal in

aforesaid case are as under:

“8. We shall now advert to the judicial pronouncements that have been relied upon by the Id. A.R. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec 80P(2)(d) on the interest income derived from its investments held with a co- operative bank is covered in favour of the assessee in the following cases:

(i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum)

(ii) M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017

ITA No. 832/Mum/2026; Ratnasindhu Co-op Credit Society Ltd. (iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO-Range-20(2)(2),

Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017

(iv) Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2) (1), Mumbai.

We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of

Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and

Hon'ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578

(Guj), had held, that the interest income earned by the assessee on its investments with a co-

operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still

further, we find that the CBDT Circular No. 14, dated 28.12.2006, also makes it clear beyond

any scope of doubt that the purpose behind enactment of sub-section (4) of Sec. 80P was that

the co-operative banks which were functioning at par with other banks would no more be

entitled for claim of deduction under Sec. 80P(4) of the Act. Insofar the reliance placed by the

Pr. CIT on the judgment of the Hon'ble Supreme Court in the case of Totgars Co-operative Sale

Society Ltd. vs. ITO (2010) 322 ITR 283 (SC) is concerned, we are of the considered view that

the same being distinguishable on facts had wrongly been relied upon by him. The adjudication

by the Hon'ble Apex Court in the aforesaid case was in context of Sec. 80P(2)(a)(i), and not on

the entitlement of a co-operative society towards deduction under Sec. 80P(2)(d) on the

interest income on the investments/deposits parked with a co-operative bank. Although, in all

fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr.

CIT Vs. Totagars co-operative Sale Society (2017) 395 ITR 611 (Karn), had concluded that a co-

operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same

time, we find, that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of

Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and

Hon'ble High Court of Gujarat in the case of State Bank of India Vs. CIT (2016) 389 ITR 578

(Guj), had observed, that the interest income earned by a co-operative society on its

ITA No. 832/Mum/2026; Ratnasindhu Co-op Credit Society Ltd. investments held with a co-operative bank would be eligible for claim of deduction under Sec

80P(2)(d) of the Act. We find that as held by the Hon'ble High Court of Bombay in the case of

K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), where there

is a conflict between the decisions of non-jurisdictional High Court's, then a view which is in

favour of the assessee is to be preferred as against that taken against him. Accordingly, taking

support from the aforesaid judicial pronouncement of the Hon'ble High Court of jurisdiction,

we respectfully follow the view taken by the Hon'ble High Court of Karnataka in the case of Pr.

Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR

74 (Karn) and Hon'ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016)

389 ITR 578 (Guj), wherein it was observed that the interest income earned by a co-operative

society on its investments held with a co-operative bank would be eligible for claim of deduction

under Sec.80P(2)(d) of the Act.

a possible view, and therein concluded that the assessee would be entitled for claim of

deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with

co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction

u/s 263 for dislodging the same. In fact, as observed by us hereinabove, the aforesaid view

taken by the A.O at the time of framing of the assessment was clearly supported by the order

of the jurisdictional Tribunal in the case of Land and Cooperative Housing Society Ltd. Vs. ITO

(2017) 46 CCH 52 (Mum). Accordingly, finding no justification on the part of the Pr. CIT, who in

exercise of his powers under Sec. 263, had dislodged the view that was taken by the A.O as

regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we 'set

aside' his order and restore the order passed by the A.O under Sec. 143(3), date 14.09.2016.”

settled principles as emerging from the aforesaid decisions, that the assessee

ITA No. 832/Mum/2026; Ratnasindhu Co-op Credit Society Ltd. would be eligible for deduction u/s. 80P(2)(d) on its interest income earned from

investments in Cooperative Societies or from Cooperative Banks registered

under the Cooperative Societies Act.

regarding the interest earned by the society is subject to verification. Therefore,

for that limited purpose, the Ld. AO is directed to make necessary verification

and allow the direction to the assessee society.

Order pronounced in the open court on 24-06-2026.

Sd/- Sd/- (NARENDER KUMAR CHOUDHRY) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated : 24-06-2026. Soumili Das, PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai 9