THE VIDYA CO-OPERATIVE HOUSING SOCIETY LIMITED,MUMBAI vs. INCOME TAX OFFICER WARD 27(3)(1) MUMBAI, MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “J (SMC)” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.2073/MUM/2026 (AY:2018-19) The Vidya Co-Operative vs. Income Tax Officer Ward 27(3)(1), Housing Society Limited, It-Office, Vashi Railway Station Plot No 28, Vidya Office In Garage, Building, Navi Mumbai-400703. Pestom Sagar, Road No 4, Tilak Nagar, Chembur, Mumbai-400089. PAN/GIR No: AAAAT9838Q (Appellant) (Respondent) Assessee by Shri Anish Shah Revenue by Shri Aditya Rai ( SR. DR) Date of Hearing 27.04.2026 Date of Pronouncement .06.2026 O R D E R PER BIJYANANDA PRUSETH, AM:

This appeal filed by the assessee emanates from the order passed under

section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the National Faceless

Appeal Centre [in short, ‘CIT(A)’], dated 03.12.2025 for the assessment year

(AY) 2018-19.

“1) On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax Appeals erred in confirming the denial of the deduction in respect of interest from Co-operative banks amounting to Rs. 3,73,720/-u/s 80P(2)(d) and in dismissing the appeal. Your appellant states that justice be done by granting deduction allowable u/s. 80P(2)(d) denied by the learned A.O. by coming to the conclusion that co- operative bank is not a co-operative society though co-operative banks operate under Co-operative Societies Act. 2) The learned CIT(A) erred in holding that interest from co-operative banks is includible in total income under the head Income from other sources and not eligible for deduction u/s 80P(2)(d).

3) On the facts and in the circumstances of the case and in law the learned AO erred in appreciating the fact that though co-operative bank pursuant to the insertion of Sub-section (4) of Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but however, as a co-operative bank continues to be a co-operative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any state for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co-operative bank, would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. 4) The learned CIT(A) erred in holding that the interest earned from Saraswat Co- Op Bank Ltd is not eligible for deduction u/s 80P(2)(d) which has been done by holding a different view that judicial pronouncement of other jurisdictional tribunal benches. 5) Your appellant craves leave to add to, amend, alter or delete any of the above grounds as may be advised.”

the AY 2018-19 on 31.10.2018 declaring total income at Rs.13,440/-. The same

was revised on 22.03.2019 declaring total income at Rs.Nil. The appellant had

claimed deduction u/s 80P(2)(d) of the Act of Rs.3,73,720/-. The deduction

pertains to interest income received from co-operative banks. The return was

processed u/s 143(1) of the Act on 22.10.2019, wherein deduction u/s 80P(2)(d)

was not allowed and demand of Rs.1,42,640/- was raised. The rectification

request u/s 154 of the Act against intimation u/s 143(1) was rejected.

The CIT(A) dismissed the appeal by observing that since Mumbai District Central

Co-op. Bank, Shamrao Co-op. Bank, Saraswat Co-op. Bank function at power with

Commercial Banks and allowing benefit of deduction u/s 80P(2)(d) to the interest

earned on deposits with co-operative bank would in fact divert the resources of co-operative sector to mainstream co-operative banking sector. The purpose of

the section 80P(2)(d) was retaining and circulation of funds within the co-

operative movement. It was to encourage co-operative societies with surplus

funds to lend and invest with other co-operative societies, which are not

cooperative bank, in need of funds. Hence, the income received by the assessee

from Sarswat Cooperative bank was found ineligible for deduction u/s 80P(2)(d).

Accordingly, the appeal was dismissed.

Tribunal. The Ld. AR submitted that the issue is fully covered by the decision of

the CIT(A) in the subsequent AY 2021-22 dated 13.03.2026, wherein such

deduction from Maharashtra State Co-op. Bank Ltd. and Saraswat Cooperative

Bank was allowed by the CIT(A). He also relied on the decisions of the coordinate

Bench in case of Sambhau Tirth Co-operative Housing Society Ltd. vs. DCIT (2026)

185 taxmann.com 332 (Mum-Trib.), Chitrapur Co-operative Housing Society Ltd.

vs. ITO, (2026) 184 taxmann.com 657 (Mum.-Trib.) and Nityanand Nagar Vibhag-

IV Co-operative Housing Society Ltd. vs. ITO in ITA No.494/Mum/2026 dated

12.03.2026.

also deliberated on the decisions relied upon by the Ld. AR. We find that the

CIT(A), in appellants own case for the subsequent assessment year 2021-22, has allowed the deduction of Rs.3,48,350/- u/s 80P(2)(d) in respect of interest income

from deposit with co-operative banks namely, Maharashtra State Co-operative

Bank Ltd. and Saraswat Co-operative Bank Ltd. The relevant part of the CIT(A) is

reproduced below for ready reference:

6.1. Ground Nos. 1 and 2: Disallowance of Rs.3,48,350/- under section 80(P)(2)(d) of the IT Act: 6.1.1. From the facts on record, it is seen that during the year under consideration the Appellant has received interest income of Rs. 3,48,350/- on Savings Bank Account held with a Co-operative Bank on which the latter has claimed chapter VIA deduction under section 80P of the Act. The AO, CPC has treated the interest income received from Cooperative Bank as ineligible for deduction under section 80P(2)(d) of the IT Act and added the same to the total income of the Appellant. 6.1.2. This ground of appeal is with respect to disallowance of deduction u/s 80P(2)(d) by the AO. The Appellant is contesting the disallowance of deduction u/s 80P(2)(d) on interest income from deposits held with Co- operative Banks Maharashtra State Co-operative Bank Ltd and Saraswat Co- operative bank td on the ground that the cooperative bank is essentially a cooperative society Appellant relied upon the Jurisdictional Tribunal's decision in support of its claim. The details of the case and the relevant excerpts from the decision is as follows "ITA No.1535 to 1537/Mum/2022 Α.Υ. 2014-15 to 2016-17 Mittal Court Premises Co-op. Soc. Ltd. 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 cooperative society on its investments held with a cooperative bank would be eligible for claim of deduction under Sec.80P(2) (d) of the Act." 6.1.3. Cooperative Banks are also cooperative societies as they are registered under the respective state cooperative societies Act. As a result, it is being contended that deduction under section 80P(2)(d) is also applicable on interest received from Cooperative Banks as they were cooperative societies. 4

6.1.4. The issue has been settled by the coordinate Bench of the Mumbai Tribunal on similar facts and circumstances of the case and wherein the interest earned from Co-operative Banks was held allowable u/s.80P2(d) of the Act. In view of the above and respectfully following the jurisdictional Tribunal's decision, interest income from Maharashtra State co-operative Bank Itd and Saraswat Co-op. Bank Ltd is eligible for deduction u/s 80P(2)(d). Accordingly, the appeal filed on ground 1 and 2 are allowed.”

7.1 The facts of the impugned AY 2018-19 are similar to those reproduced

above. We also find that co-ordinate Benches of this Tribunal in the cases

mentioned above have also decided the issue in favour of the assessee

concerned. Hence, following the above decisions, the ground is allowed.

Order is pronounced on .05.2026.

(SANDEEP GOSAIN) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER *Aniket Chand; Sr. PS MUMBAI Date: .05.2026 Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File

By Order Assistant Registrar ITAT, MUMBAI Date Initial 1. Draft dictated on (dictation sheet is enclosed with main file.) } PS 2. Draft placed before author PS 3. Draft proposed & placed before the second member 4. Draft discussed/approved by Second Member.