DUDDUKURU PRIMARY AGRICULTURAL COOPERATIVE CREDIT SOCIETY LIMITED,DUDDUKURU vs. ITO, WARD - 1, TADEPALLIGUDEM

ITA 258/VIZ/2026Status: DisposedITAT Visakhapatnam16 October 2026AY 2015-1618 pages
AI SummaryAllowed

What were the facts?

The assessee, Duddukuru Primary Agricultural Cooperative Credit Society Limited, filed its return for Assessment Year 2015-2016 on April 14, 2022, in response to a notice under Section 148. The society claimed a deduction of Rs. 13,74,347/- under Section 80P, reporting NIL income. The Assessing Officer (AO) completed the assessment under Section 147 read with Section 143(3), determining the total income at Rs. 17,85,708/-. The AO denied the deduction under Section 80P(2)(a)(i) for the entire income, including interest earned from other cooperative banks, treating it as 'Income from Other Sources'. The assessee appealed to the CIT(A), who confirmed the AO's action. The assessee is now before the ITAT challenging the CIT(A)'s order.

What did the Tribunal hold?

The Tribunal held that the interest income earned by the assessee cooperative society from a Cooperative Bank is eligible for deduction under Section 80P(2)(d) of the Income Tax Act. The Tribunal reasoned that the term 'Co-operative Society' is a genus, and a 'Co-operative Bank' is a species within that genus. Therefore, a Cooperative Bank is included within the definition of 'Co-operative Society'. The Tribunal noted that Section 56(1)(ccv) of the Banking Regulations Act, 1949, defines a primary Cooperative Society bank as a Cooperative Society. Consequently, interest earned from a Cooperative Society Bank is deductible from the gross income of a cooperative society. The Tribunal distinguished the Supreme Court's decision in Totgar's Co-operative Sale Society Ltd. v. ITO, stating it dealt with Section 80P(2)(a)(i), whereas the present case concerns Section 80P(2)(d). The Tribunal also referred to various High Court and ITAT decisions supporting this view. The addition made by the Assessing Officer was deleted. The appeal of the assessee was allowed.

What were the issues?

1. Whether the interest income earned on statutory reserve fund deposits, amounting to Rs. 17,85,708/-, is to be treated as 'Income from Other Sources' and consequently denied deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961, despite the society being statutorily required to maintain such a fund and invest it in a specified manner. Assessee's Contention: The interest earned on mandatory statutory deposits is intrinsically linked to the society's business activities and qualifies for deduction under Section 80P(2)(a)(i). The CIT(A) erred in mechanically applying the ratio of the Supreme Court's decision in Totgar's Co-operative Sale Society Ltd. v. ITO without appreciating the distinguishing facts. The assessee also relied on Kerala High Court's decision in Chirakkal Service Co-operative Bank Ltd. and ITAT, Chennai Bench's decision in M/s. DAEE Coop T & C Society vs. Asst CIT, and a Visakhapatnam ITAT order in the case of M/s. Gowripatnam Primary Co-operative Credit Society for the same assessment year. The assessee further argued that the restrictive provisions of Section 80AC, requiring filing under Section 139(1) for deduction, were introduced prospectively from AY 2018-19, and a return filed under Section 148 is valid for claiming deductions for AY 2015-16. Revenue's Contention: The learned DR relied upon the orders of the authorities below.

Which sections of the Income-tax Act were involved?

Section 80P,Section 80P(2)(a)(i),Section 80P(2)(d),Section 148,Section 147,Section 143(3),Section 56,Section 28,Section 80AC,Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM SMC-BENCH, VISAKHAPATNAM

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G

Pronounced: 16.10.2026

PER VIJAY PAL RAO, VICE PRESIDENT:

This appeal by the assessee is directed against the Order dated 28.01.2026 of the learned CIT(A)-National Faceless Appeal Centre [in short "NFAC"], Delhi, for the assessment year 2015-2016. 2. The assessee has raised the following grounds of appeal:

1.

“The learned CIT(A) erred in law and on facts in confirming the addition of Rs. 17,85,7

The order continues below.

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