SHRI GAJANAN NAGARI SAHAKARI PAT SANSTHA LIMITED,KOLHAPUR vs. ITO WD-2(1) , KOLHAPUR

ITA 2768/PUN/2026Status: DisposedITAT Pune30 September 2026AY 2018-197 pages
AI SummaryAllowed

What were the facts?

The assessee, Shri Gajanan Nagari Sahakari Pat Sanstha Ltd., filed its return for AY 2018-19, claiming a deduction of Rs. 76,53,839/- under Section 80P(2)(a)(i) of the Income Tax Act. The case was selected for scrutiny under the e-assessment Scheme. The Assessing Officer (AO) denied the deduction under Section 80P(2)(a)(i) and did not allow an alternate claim for interest income from cooperative banks. The AO assessed the total income at Rs. 79,92,650/-. The assessee appealed to the CIT(A)/NFAC, which confirmed the AO's order. The assessee then filed an appeal before the ITAT challenging the denial of deduction under Section 80P(2)(a)(i) and, alternatively, under Section 80P(2)(d) on interest income from cooperative banks.

What did the Tribunal hold?

The Tribunal noted that the core issue of allowance of deduction under Section 80P(2) of the Income Tax Act to a primary credit cooperative society on interest and dividend income earned from investments with other cooperative banks had been decided by coordinate benches of the Tribunal and the jurisdictional Bombay High Court. Crucially, the Tribunal referred to a Supreme Court decision in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT, which held that primary agricultural credit societies cannot be termed as Co-operative Banks under the Banking Regulation Act and are therefore entitled to exemption under Section 80P(2). The Supreme Court had dismissed the Revenue's appeal in a similar matter. Following this precedent, the Tribunal held that the issue of allowance of deduction under Section 80P(2) in favour of primary credit cooperative societies had attained finality. Consequently, the Tribunal set aside the order of the CIT(A) and directed the AO to allow deduction under Section 80P(2)(d) on interest income from cooperative banks, restricted to the original deduction claimed under Section 80P(2)(a)(i). The grounds of appeal were allowed in favour of the assessee.

What were the issues?

1. Whether the assessee, a cooperative credit society, is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act on its income from business activities. 2. Whether the assessee is eligible for an alternate claim of deduction under Section 80P(2)(d) of the Income Tax Act on interest income earned from deposits with cooperative banks. The assessee contended that the CIT(A) erred in confirming the AO's action in treating interest income from cooperative banks as not eligible for deduction under Section 80P(2)(a)(i) and also denied the alternate claim under Section 80P(2)(d). The assessee relied on facts and judicial decisions. The Revenue relied on the order of the CIT(A).

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 80P(2)(d),Section 143(3),Section 250,Section 80P(4),Section 143(3A),Section 143(3B)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE,

Before: DR. MANISH BORAD & SHRI PAVAN KUMAR GADALE

Hearing: 30.09.2026Pronounced: 30.09.2026

PER PAVAN KUMAR GADALE, JM: The assessee has filed the appeal against the order of the CIT(A)/NFAC, Delhi passed u/sec 143(3) and u/sec 250 of the Income Tax Act. The assessee has raised the grounds of appeal challenging the action of the CIT(A) in denial of claim of deduction u/sec80P(2)(a)(i) of the Act made by the Assessing Officer and without prejudice alternate relief u/sec80P(2)(d) of the Act on interest income from cooperative banks.

2.

The brief facts of the case are that, the assessee is a co-operative credit society registered under the Maharashtra Co-Operative Societies Act 1961 and is engaged in the business of accepti

The order continues below.

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