DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 3(2), GANGTOK vs. DENZONG AGRICULTURAL CO-OPERATIVE SOCIETY LIMITED, GANGTOK

ITA 3160/KOL/2025Status: DisposedITAT Kolkata22 September 2026AY 2017-1814 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal dismissed four appeals filed by the Revenue on the grounds that the tax effect was below the monetary limit prescribed by CBDT circulars, and no exceptional clauses were invoked. For the lead case (ITA No. 3163/2025), the Tribunal upheld the order of the CIT(A) which allowed the deduction under Section 80P(2)(d). The Tribunal found no infirmity in the CIT(A)'s order, noting that the assessee is a cooperative society and the interest income was earned from investments in entities registered as cooperative societies under the Sikkim Cooperative Societies Act, 1978. The Tribunal relied on judicial decisions, including that of the ITAT Chandigarh, which held that interest income earned by a cooperative society from deposits with cooperative banks is eligible for deduction under Section 80P(2)(d). The Tribunal did not find merit in the Revenue's arguments regarding Section 80P(4) or the procedural objections raised concerning delay condonation and admission of fresh evidence, implicitly finding the CIT(A)'s actions justified. The addition of Rs. 2,04,46,919/- was deleted.

What were the facts?

The appeals by the Revenue were against orders of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Years (AY) 2017-18, 2018-19, and 2020-21, concerning the assessee, Denzong Agricultural Co-operative Society Limited. The primary dispute revolved around the eligibility of deduction under Section 80P(2)(d) of the Income Tax Act, 1961, for interest income earned by the assessee from investments in cooperative banks. The Revenue argued that the assessee, being a cooperative bank itself, was barred from claiming this deduction under Section 80P(4). Several appeals were dismissed by the Tribunal due to being below the monetary limit prescribed by CBDT circulars. The lead case, ITA No. 3163/2025 for AY 2020-21, involved a disallowance of Rs. 2,04,46,919/- under Section 80P(2)(d) by the Assessing Officer (AO), which was later allowed by the CIT(A).

What were the issues?

1. Whether the assessee, a cooperative society, is eligible for deduction under Section 80P(2)(d) of the Income Tax Act, 1961, on interest income earned from investments in other cooperative banks, despite Section 80P(4) of the Act. Assessee's Contention: The assessee argued that it is a cooperative society registered under the Sikkim Cooperative Societies Act, 1978, and the interest income was earned from investments made with other entities also registered as cooperative societies under the same Act. The CIT(A) had allowed the deduction, relying on judicial pronouncements, including a decision by the ITAT Chandigarh in similar facts. Revenue's Contention: The Revenue contended that the assessee is a 'co-operative bank' due to its RBI license and scheduled status, making it ineligible for deduction under Section 80P(4). They argued that the CIT(A) erred in deleting the disallowance by misapplying a literal interpretation of Section 80P(2)(d) and ignoring the overarching bar of Section 80P(4). The Revenue also argued that the CIT(A) erred in condoning a significant delay in the assessee's appeal and in admitting fresh evidence without following Rule 46A of the Income Tax Rules, 1962.

Which sections of the Income-tax Act were involved?

Section 80P,Section 80P(2)(d),Section 80P(4),Section 144,Section 263,Section 270A,Section 250,Section 144B,Section 56,Section 249(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

Per Pradip Kumar Choubey, Judicial Member:

This appeal filed by the assessee is directed against the order dated 10.10.2025& 08.10.2025 of the Office of the National Faceless Appeal Centre (NFAC), Delhi passed under Section 144& 144r.w.s263 & 270A of the Assessment Year 2017-18, 2018-19, 2020-21 of the Income-Tax Act, 1961 (hereinafter referred to as “the Act”). The aforesaid appeals have been dir

The order continues below.

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