OM GORAI NAGARI SAHAKARI PATSANSTHA MARYADIT MUMBAI,MUMBAI vs. JURISDICTION WARD 42(1)(3), MUMBAI,, KAUTILYA BHAVAN, MUMBAI
Before: SHRI SAKTIJIT DEY, V.P. & SHRI BIJAYANANDA, PRUSETH, AM
Per Saktijit Dey, VP:
Captioned appeals by the assessee arise out of two separate orders, both dated
06.01.2025, passed by National Faceless Appeal Centre (NFAC), Delhi pertaining to Assessment Years (AYs) 2018-19 and 2020-21. 2. The common dispute in both the appeals relate to disallowance of deduction claimed u/s. 80P(2)(d) r.w.s. 80P(4) of the Income Tax Act, 1961 (hereinafter called the ‘Act’) in respect of interest earned from Cooperative Banks.
3. Briefly the facts are, the assessee is a Cooperative credit society registered under Maharashtra Cooperative Societies Act, 1960/ In the return of income filed
Vs.
Income Tax Officer for the A.Y. 2018-19, the assessee had claimed deduction of an amount of Rs.1,35,04,101/-, being interest and dividend earned from various Cooperative
Banks. While completing the assessment, the AO declined to allow deduction on the ground that interest earned from Cooperative Banks is not allowable. The aforesaid decision of the AO was sustained by learned First Appellate Authority. In so far as A.Y. 2020-21 is concerned, though, the assessee did not claim identical deduction before AO, however, he claimed it before learned First Appellate Authority. The deduction so claimed was denied by learned First Appellate Authority on identical reasoning.
4. Before us, learned counsel appearing for the assessee submitted that the restriction imposed u/s. 80P(4) of the Act r.w.s. 80P(2)(d) is only with regard to allowability of deduction in case of cooperative Banks. He submitted, such restriction does not apply to a cooperative society. In support of such contention he relied upon the following decisions:
i)
Mavilayi Service Cooperative Bank Ltd. vs. CIT, Calicut [2021] 123
Taxmann.com 161 (SC) ii)
PCIT vs. Ashwinkumar Arban Cooperative Society Ltd. [2024] 168
taxmann.com 314 (Guj. HC).
iii)
PCIT vs. Shree Aradhana Urban Cooperative Credit Society Ltd. [2025] 172
Commissioner of Income Tax vs. Kangra Cooperative Bank Ltd. [2009] 183
Mumbai ITA No. 6547/Mum/2017. vi)
Ashok Tower “D” Cooperative Housing Society Ltd. vs. ITO, [2024] 163
taxmann.com 598 (Mum-Trib).
Per contra, learned DR strongly relied upon the observations of the AO and learned First Appellate Authority. 6. We have considered rival submissions in the light of the decisions relied upon and perused the materials on record. The short issue arising for consideration is whether deduction u/s. 80P(2)(d) r.w.s. 80P(4) of the Act can be allowed in respect of interest/dividend earned by a Cooperative Society through investment made in Cooperative Bank. 7. On perusal of judicial precedents cited before us by learned counsel for the assessee, we find unanimity in the view expressed by various High Courts and different benches of the Tribunal, while holding that interest earned from investment made in a cooperative Bank would qualify as deduction u/s. 80P(2)(d) of the Act. The following observations of Hon’ble Gujarat High Court in case of PCIT vs. Urban Cooperative Societies Ltd. (Supra) would suffice. “33. In view of the above dictum of law as well as the provisions of the Act which are considered we are of the opinion that the provisions of Vs. Income Tax Officer section 80P(2)(d) would be applicable in the facts of the case and the PCIT was not justified in invoking revisional powers under section 263 of the Act which is rightly reversed by the Tribunal holding that the cooperative bank is a cooperative society registered under the Gujarat State Cooperative Societies Act and in view of the various decisions of the Court, the Tribunal after following the same has come to the conclusion that the assessment was not erroneous allowing deduction of section 80P(2)(d) of the Act which is in consonance with the various decisions of the Court as a twin condition invoking section 263 as to the assessment being erroneous and prejudicial to the interest of the revenue are not being fulfilled.”
Even the Hon’ble Himachal Pradesh High Court in case of CIT vs. Kangra Cooperative Bank Ltd. has expressed identical view as under:-
“10. Faced with this situation, Ms. Vandana Kuthiala raised a plea that there is nothing on record to show that the