VAKIL NAGARI SAHAKARI PATSANSTHA LIMITED ,OSMANABAD vs. ITO, WARD - 1, LATUR, LATUR

ITA 2711/PUN/2026Status: DisposedITAT Pune30 September 20268 pages
AI SummaryAllowed

What were the facts?

The assessee, Vakil Nagari Sahakari Patsanstha Limited, is a co-operative society engaged in lending loans to its members and accepting deposits from them. For Assessment Year 2022-23, it filed a return declaring Nil income after claiming a deduction of Rs. 10,43,205/- under Section 80P of the Income Tax Act, 1961. The Assessing Officer (AO) noted that the assessee had received interest of Rs. 28,47,095/- from deposits made with ICICI Bank, Solapur Janata Sahakari Bank Ltd., and Bank of Maharashtra. The AO disallowed the deduction under Section 80P(2)(a)(i) for this interest income, treating it as income from other sources. The Commissioner of Income Tax (Appeals) confirmed the AO's order. The assessee appealed to the Income Tax Appellate Tribunal (ITAT).

What did the Tribunal hold?

The Tribunal held that the interest income earned by the assessee, a co-operative credit society engaged in providing credit facilities to its members, from funds deposited with banks is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Tribunal relied on several judicial precedents, including the Supreme Court's decision in CIT vs. Karnataka State Co-operative Apex Bank, the Andhra Pradesh and Telangana High Court's decision in Vavveru Co-operative Rural Bank Ltd., and the Kerala High Court's decision in Pr.CIT Vs. Sahyadri Co-operative Credit Society Ltd. These decisions established that interest earned by co-operative societies on deposits made from their business income is considered business income and eligible for deduction under Section 80P(2)(a). The Tribunal noted that the facts of the present case were identical to those in the cited judgments. Therefore, the Tribunal directed the Assessing Officer to delete the addition of Rs. 28,47,095/-. No issue was expressly left undecided.

What were the issues?

1. Whether, in law, the interest income of Rs. 28,47,095/- received by the assessee, a co-operative society, on deposits made with banks is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961, or if it is taxable under Section 56 of the Act. Assessee's Contention (as per grounds of appeal): The assessee contended that the interest income received on bank deposits is eligible for deduction under Section 80P(2)(a)(i) and that the disallowance and taxation under Section 56 by the AO and confirmed by the CIT(A) are illegal and devoid of merits. The assessee sought deletion of the addition. Revenue's Contention (as per Ld. DR submission): The Learned Departmental Representative relied on the orders of the Assessing Officer and the Learned Commissioner of Income Tax (Appeals).

Which sections of the Income-tax Act were involved?

Section 80P,Section 80P(2)(a)(i),Section 56,Section 143(3),Section 144B,Section 250,Section 270A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI Dr. DIPAK P. RIPOTE & SHRI VINAY BHAMORE

For Respondent: Smt. Sonal L Sonkavde, Addl. CIT

PER Dr. DIPAK P. RIPOTE, A.M : This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi [Ld.CIT(A)], passed u/s. 250 of the Income Tax Act, 1961 (‘the Act’) for AY 2022-23 on 20.03.2026, emanating from the Assessment Order u/s 143(3) r.w.s 144B of the Act, dated 23.03.2024. 2. The assessee has raised the following grounds of appeal :

“1. DISALLOWANCE OF DEDUCTION U/S 80P FOR INTEREST RECEIVED OF Rs.28,47,095/-.

1.

1 In the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ['the Ld. CIT(A)'] has grossly erred in confirming the addition made by the Ld. AO denying deducti

The order continues below.

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