PEDAPUDI PRIMARY AGRL COOP CREDIT SOCIETY LIMITED NO C 709,PEDAPUDI vs. INCOME TAX OFFICER, WARD-1, KAKINADA

आदेश / ORDER PER UDAYAN DAS GUPTA, JUDICIAL MEMBER: This appeal is filed by the assessee against order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter in short “Ld. CIT(A)”] passed under section 250 of Income Tax Act, 1961 [hereinafter in short “the Act”] dated 25.11.2025 which has emanated from the order of the Ld. Assessing

ITA 161/VIZ/2026 PEDAPUDI PRIMARY AGRL COOP CREDIT SOCIETY LIMITED NO C 709 Officer [hereinafter in short “Ld.AO”] dated 02.09.2022 passed under section 143(3) r.w.s. 144B of the Act

“1. The order of the Learned CIT (A), NFAC is arbitrary, erroneous, contrary to law and facts of the case, and liable to be set aside. 2. The Learned CIT (A) erred in confirming the disallowance of deduction under Section 80P(2)(d) / 80P(2)(a)(i) in respect of interest income earned from deposits with District Central Co-operative Bank of INR 10,47,951. 3. The Learned CIT(A) failed to appreciate that DCCB is a co-operative society and failed to follow the binding decision of the Hon'ble Andhra Pradesh High Court in Vavveru Co-operative Rural Bank Ltd. (396 ITR 371) and the decision of the Hon'ble ITAT, Visakhapatnam Bench in G.Medapadu PACS (ITA Nos. 573 & 574/Viz/2025). 4. The appellant craves leave to add, amend, alter or delete any of the above grounds at the time of hearing.”

ITA 161/VIZ/2026 PEDAPUDI PRIMARY AGRL COOP CREDIT SOCIETY LIMITED NO C 709 the surplus so generated is deposited in District Cooperative banks and has earned interest income during the year from deposits of its surplus funds available with the assessee , in District cooperative banks amounting to Rs. 10.47 lakhs, and the said amount has been claimed as a deduction u/s 80P(2)(a)(i) of the Act , which has been disallowed ignoring the alternate claim of deduction u/s 80P(2)(d) of the Act.

ITA 161/VIZ/2026 PEDAPUDI PRIMARY AGRL COOP CREDIT SOCIETY LIMITED NO C 709 laid down in the case of “Totgars Cooperative Sale Society Ltd.”( supra ) , and has also considered the judgment of Hon’ble Gujrat High Court in the case of “Ashwin Kumar Urban Co-operative Society Ltd. 11 TMI 971 (Guj HC) and has observed as follows :

“9.2 The relevant part of the order is reproduced as under: 13. Now we must look at section 80P(2)(d), which reads as follows: - “……. (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income; ……...” 14. It is a matter of record that SIMFED earned interest from investments made in two co-operative banks, namely, Sikkim State Cooperative Bank Limited and Citizens Urban Co-operative Bank Limited, both registered as co-operative societies under the Sikkim Co-operative Societies Act, 1978. As stated hereinbefore, these investments were made from the surplus funds and statutory reserves of SIMFED as required under sections under the relevant provisions of Sikkim Cooperative Societies Act, 1978, more specifically, sections 57 to 66, under Chapter V of the Sikkim Cooperative Societies Act, 1978, which mandates prudent management and investment of funds only in approved securities of co-operative banks approved by the Registrar. 15. In our view, a plain reading of the provisions of law quoted above, clearly reveals that the learned Tribunal misinterpreted the provision of section 80P(4) of the Income Tax Act, 1961, which specifically excludes co-operative banks (other than a primary agricultural credit society or a primary co- operative agricultural and rural development bank) and erroneously applied it in respect of SIMFED, thereby disentitling it from claiming benefit under section 80P of the Income Tax Act, 1961. As such, the first substantial question of law is answered in favour of the assessee. 16. So far as the second substantial question of law as framed by us is concerned, we are of the view that the Hon’ble High Court of Gujarat in the case of PCIT vs. Ashwin Kumar Urban Cooperative Society Ltd. reported in (2024) 168 taxmann.com 314 (Gujarat), has squarely answered this question in favour of the assessee by observing inter alia that the Hon’ble Supreme Court’s decision rendered in Totgars’ Cooperative Sale Society Ltd. (supra)

ITA 161/VIZ/2026 PEDAPUDI PRIMARY AGRL COOP CREDIT SOCIETY LIMITED NO C 709 was not applicable in the facts of that case — which is identical to the instant case — as the eligibility of deduction of interest in the facts of the instant case has to be decided under section 80P(2)(d) and not under section 80P(2)(a)(i). Totgars’ Cooperative Sale Society Ltd. (supra) was primarily concerned with section 80P(2)(a)(i) and retained members’ funds shown as liability to deny deductions under section 80P(2)(d). The facts of the Totagars’ Cooperative Sale Society Ltd (supra) — as well as the applicability of the statutory provisions insofar as in our case is concerned — are factually and materially different. As such, the second substantial question of law as framed by us is also answered in favour of the assessee. 17. Now, so far as the two judgments referred to by the learned Deputy Solicitor General of India are concerned, namely, Totgars’ Cooperative Sale Society Ltd. versus Income Tax Officer, Karnataka reported at (2010) 3 Supreme Court Cases 223 = (2010) 322 ITR 283 and the Principal Commissioner of Income-tax & Another vs. Totagars Co-operative Sale Society (and vice versa) by Karnataka High Court, reported at (2017) 395 ITR 611, we have already held earlier that the judgment of the Hon’ble Supreme Court’s judgment in Totgars’ Cooperative Sale Society Ltd (supra) is not applicable in the facts of our case. So far as judgment of the Karnataka High Court is concerned — which was relied upon by the learned Income Tax Appellate Tribunal, while rendering its impugned judgment and order dated 18th June, 2025 — the Gujarat High Court in Ashwin Kumar Urban Co-operative Society Ltd. (supra) has considered the said Karnataka High Court judgment and has clearly held the same to be distinguishable and not applicable in a similar fact situation as our present case. 18. We are, therefore, of the view that in the facts of the instant case, the assessee is entitled to claim deduction under section 80P(2)(d) of the Income Tax Act, 1961. 19. For reasons stated above, the impugned judgment and order dated 18th June, 2025, passed by the learned Income Tax Appellate Tribunal in I.T.A. Nos.: 1582/KOL/2024 in respect of the Assessment Year: 2018-19, is liable to be set aside and is accordingly set aside. 20. Tax Appeal No. 02 of 2025 is accordingly allowed.”

As such, respectfully following the law laid down by the Hon’ble Sikkim High 9. Court (which is the most recent decision being delivered on December 10th, 2025, on the issue ) regarding claim of deduction u/s 80P(2)(d) of the Act, in the matter of

ITA 161/VIZ/2026 PEDAPUDI PRIMARY AGRL COOP CREDIT SOCIETY LIMITED NO C 709 interest earned by cooperative societies from investments made in cooperative banks , and also considering the decision of the Hon’ble Punjab and Haryana High court in the case of CIT vs Doaba Cooperative Sugar Mills Ltd [1998] 230 ITR 774 and, and also considering the views of Hon’ble Chandigarh Bench in the case of the Jagraon Co-operative Marketing Cum Processing Society Ltd., order dated 25.9.2024, on identical issue, and the views expressed in the case of Mullanpur Garibdas Cooperative [2024] 163 taxmann.com 50 (Chandigarh) and in the case of Jagadhri Cooperative 159 taxmann.com 1253 ( Chandigarh ), we hold that the assessee cooperative Society is entitled to deduction u/s 80P(2)(d) of the Act on interest earned from deposits made in cooperative banks and as such, the deduction claimed by the assessee is to be allowed.

Order pronounced in the open court on 19th June, 2026.

Sd/- Sd/- OMKARESHWAR CHIDARA UDAYAN DAS GUPTA ACCOUNTANT MEMBER JUDICIAL MEMBER Visakhapatnam Dated:19.06.2026 Giridhar, Sr.PS

ITA 161/VIZ/2026 PEDAPUDI PRIMARY AGRL COOP CREDIT SOCIETY LIMITED NO C 709 Copy to: PEDAPUDI PRIMARY AGRL COOP CREDIT SOCIETY LIMITED NO C 709, 1 10-75, MAIN ROAD, KAKINADA-533006, ANDHRA PRADESH

INCOME TAX OFFICER, WARD-1, 2 KAKINADA, KAKINADA-533001, ANDHRA PRADESH

3 THE PCIT / CIT, 4 THE D.R., ITAT, VISAKHAPATNAM BENCH 5 GUARD FILE