SUVARNAKARARA CO-OPERATIVE SOCIETY LIMITED,KUMTA vs. INCOME TAX OFFICER, WARD - 2, KARAWAR

ITA 209/PAN/2025Status: DisposedITAT Panaji07 October 2026AY 2018-198 pages
AI SummaryAllowed

What were the facts?

The assessee, Suvarnakarara Cooperative Society Limited, filed appeals against the orders of the NFAC, Delhi, which upheld the disallowance of deduction under Section 80P of the Income Tax Act, 1961. The disallowance pertained to interest income earned from investments held with Scheduled Banks and Cooperative Banks for Assessment Years 2017-18, 2018-19, and 2020-21. The Assessing Officer disallowed the deduction, relying on the Supreme Court judgment in M/s. Citizen Cooperative Society. The assessee claimed deduction under Section 80P(2)(d) for interest from Cooperative Banks and under Section 80P(2)(a)(i) for interest from Nationalised Banks. The amounts claimed were Rs. 1,06,42,470/-, Rs. 1,10,77,584/-, and Rs. 1,03,71,115/- for the respective assessment years.

What did the Tribunal hold?

The Tribunal held that the interest income earned from Cooperative Banks is eligible for deduction under Section 80P(2)(d). The Tribunal noted that the issue is no longer res integra, citing numerous decisions of coordinate benches, including the Goa PWD Staff Co Op Credit Society vs. Income Tax Officer. The Tribunal emphasized that Section 80P(4) applies only when the claimant assessee is a cooperative bank, which is not the case here. The Tribunal also referred to the Supreme Court judgment in Mavilayi Service Co-operative Bank Ltd., stating that Section 80P(4) excludes only cooperative banks with an RBI license. For interest income earned from Nationalised Banks, the Tribunal held it to be eligible for deduction under Section 80P(2)(a)(i). The Tribunal reasoned that these deposits were made for liquidity norms, safety of members' funds, and operational requirements, constituting business income, and not a deposit of surplus funds. Consequently, the impugned orders of the CIT(A) were set aside, and the disallowance was reversed in entirety.

What were the issues?

1. Whether the interest income earned by the assessee, a cooperative society, from deposits held with Cooperative Banks is eligible for deduction under Section 80P(2)(d) of the Income Tax Act, 1961, despite the payer being a cooperative bank and the potential applicability of Section 80P(4). Assessee's contention: The interest income earned from cooperative banks is deductible under Section 80P(2)(d) as the issue is covered by numerous decisions of coordinate benches. The assessee also argued that Section 80P(4) is not applicable as the assessee is a cooperative society and not a cooperative bank. Revenue's contention: The revenue relied on the orders of the CIT(A) and the Supreme Court judgment in M/s. Citizen Cooperative Society, implying that the assessee society does not qualify for deduction under Section 80P. 2. Whether the interest income earned by the assessee from deposits held with Scheduled Banks (Nationalised Banks) is eligible for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961. Assessee's contention: The interest income from nationalised banks is eligible for deduction under Section 80P(2)(a)(i) as these deposits were made for maintaining liquidity norms, safety of members' funds, and operational requirements, not as surplus funds. Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 80P,Section 80P(2)(d),Section 80P(2)(a)(i),Section 80P(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PANAJI DB BENCH, PANAJI

Before: DR.MANISH BORAD & SHRI VINAY BHAMORE

For Appellant: Shri Raghavendra (virtual)
For Respondent: Shri Mayur Kamble, Sr. DR
Hearing: 19.08.2026Pronounced: 07.10.2026

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

The captioned appeals at the instance of assessee pertaining to A.Ys. 2017-18, 2018-19 and 2020-21 are directed against the separate orders dated 31.05.2025 of ld. NFAC, Delhi emanating out of respective Assessment Orders passed u/s.143(3) of the Income Tax Act, 1961 (in short ‘the Act’).

2.

The common issue raised in these three appeals is against the disallowance made by the Assessing Officer u/s.80P of the Act for the interest income earned from the investments held with Scheduled Banks/Cooperative Banks.

3.

At the outset, ld. Counsel for the assessee submitted tha

The order continues below.

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