YESHWANTRAO CHAVAN NAGRI SAHAKARI PATSANSTHA,PANDHARPUR vs. INCOME TAX OFFICER WARD-2 PANDHARPUR, PANDHARPUR

ITA 2715/PUN/2026Status: HeardITAT Pune29 September 2026AY 2017-187 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee is eligible for deduction under Section 80P(2)(d) of the Income Tax Act on interest income earned from its investment in cooperative banks, which are also cooperative societies. The Tribunal relied on a coordinate bench decision in ITO Ward.-5, Sangli Vs. Shree Ganesh Nagari Sahakari Pat Sanstha Maryadit (ITA No.2375/PUN/2025 & C.O. No.49/PUN/2025), which in turn followed several other coordinate bench decisions and the jurisdictional Bombay High Court decision in Anna saheb Patil Mathadi Kamgar Sahkari Path pedhi Ltd. The Supreme Court's decision in Civil Appeal No.8719 of 2022, approving the Bombay High Court's judgment, was also cited. The Supreme Court 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 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, subject to the total claim being restricted to the original deduction claimed under Section 80P(2)(a)(i).

What were the facts?

The assessee, Yeshwantrao Chavan Nagri Sahakari Patsanstha, a credit co-operative society, filed its return for AY 2017-18 claiming a deduction of Rs. 34,10,098/- under Section 80P(2)(a)(i) of the Income Tax Act. The case was selected for scrutiny due to large deductions claimed under Chapter VI-A. The Assessing Officer (AO) denied the claim for deduction under Section 80P(2)(a)(i) and also did not allow any deduction for interest income of Rs. 73,11,176/- earned from cooperative banks. The AO assessed the total income at Rs. 34,10,098/-. The CIT(A) confirmed the AO's order. The assessee appealed to 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 were the issues?

1. Whether the assessee, a credit co-operative society, is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act on its income from providing credit facilities to its members? 2. Whether the assessee is eligible for deduction under Section 80P(2)(d) of the Income Tax Act on interest income earned from deposits with cooperative banks? Assessee's contentions: The assessee argued 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 alternatively under Section 80P(2)(d). The assessee relied on facts and judicial decisions. Revenue's contentions: 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 40(a)(ia),Section 143(2),Section 142(1),Section 80P(4)

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

For Appellant: Shri Pramod Shingte.AR
Hearing: 29.09.2026Pronounced: 29.09.2026

PER PAVAN KUMAR GADALE, JM: The assessee has filed the appeal against the order of the Addl/JCIT (A)-1, Visakhapatnam 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 Credit co- operative society engaged in the business of providing credit facilities

2

The order continues below.

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