DHANASHRI MULTI STATE COOPERATIVE CREDIT SOCIETY LTD,MANGALVEDHA vs. ITO WARD 1, PANDHARPUR

ITA 2753/PUN/2026Status: DisposedITAT Pune30 September 2026AY 2017-185 pages
AI SummaryAllowed

What were the facts?

The assessee, Dhanashri Multi State Cooperative Credit Society Ltd., filed its return for Assessment Year 2017-18 declaring Nil income after claiming deduction under Section 80P(2)(a)(i) of the Income Tax Act. The Assessing Officer (AO), vide order dated 12.12.2019 passed under Section 143(3), determined the taxable income at Rs. 20,59,465/- by disallowing the deduction claimed on interest income earned from investments in nationalized banks. The assessee's appeal before the Ld. CIT(A) was dismissed. The present appeal is filed by the assessee against the order of the Ld. CIT(A).

What did the Tribunal hold?

The Tribunal noted that coordinate benches of the Tribunal had previously allowed deduction under Section 80P(2)(a)(i) for interest income earned by the assessee from its investments with nationalized banks in the assessee's own cases for Assessment Years 2015-16, 2016-17, and 2018-19. The assessee relied on the decision in its own case for AY 2016-17 and 2018-19 (ITA Nos. 266 & 267/PUN/2024, dated 21.03.2024), which in turn relied on the decision of The Vavveru Co-operative Rural Bank Ltd. vs. Chief Commissioner of Income-tax [2017] 88 taxmann.com 728 (Andhra Pradesh and Telangana). Following these precedents, the Tribunal set aside the order of the Ld. CIT(A) and directed the Assessing Officer to allow the deduction of Rs. 20,59,465/- under Section 80P(2)(a)(i) regarding the interest income earned from investments in nationalized banks. The Tribunal allowed the grounds of appeal raised by the assessee. Issues 2, 3, and 4 were not expressly decided as the primary ground concerning Section 80P(2)(a)(i) was allowed.

What were the issues?

1. Whether, on the facts and in law, the Assessing Officer erred in rejecting deduction under Section 80P(2)(a)(i) for Rs. 20,59,465/-, being interest income from investments in nationalized banks, which the assessee contends is an integral part of its business. Assessee's Contention: Interest earned from investments in nationalized banks is an integral part of the society's business, and therefore, eligible for deduction under Section 80P(2)(a)(i). Revenue's Contention: Not recorded in the judgment. 2. Whether, on the facts and in law, the Assessing Officer erred in treating the interest received from investment of Rs. 20,59,465/- as income from other sources, rejecting the assessee's contention that it is integral to its business activity. Assessee's Contention: The interest income is an integral part of the society's business activity and should not be treated as income from other sources. Revenue's Contention: Not recorded in the judgment. 3. Without prejudice, whether the Assessing Officer erred in not allowing deduction under Section 80P(2)(d) on interest income received from other co-operative societies. Assessee's Contention: Deduction under Section 80P(2)(d) should be allowed on interest income from other co-operative societies. Revenue's Contention: Not recorded in the judgment. 4. Without prejudice, whether the Assessing Officer erred in treating entire interest income as interest income received from other co-operative society or bank without allowing deduction on account of interest/administrative expenses. Assessee's Contention: Deduction for interest/administrative expenses should be allowed against the interest income. Revenue's Contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 80P(2)(a)(i),Section 80P(2)(d),Section 143(3),Section 142(1),Section 143(2)

AI-generated summary — verify with the full judgment below

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

Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE

For Appellant: Shri Pramod S. Shingte
For Respondent: Shri Sandeep Jumale
Hearing: 04.08.2026Pronounced: 30.09.2026

PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 19.03.2026 passed by Ld. Addl./JCIT(A), Jodhpur [‘Ld. CIT(A)’] for the assessment year 2017-18. 2. The appellant has raised the following grounds of appeal :- “1. On the facts and the circumstances of the case and in law, the learned Assessing Officer erred in rejecting deduction u/s 80P(2)(a)(i) for a sum of Rs. 20,59,465/- being part of the book

2 profit of appellant society without appreciating the fact that earning of interest is an integral part of society’s business and appellant prays for allowing such deduction.

2.

On the facts and the circ

The order continues below.

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