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Facts
The assessee society's appeals relate to disallowance of deduction claimed under Section 80P(2)(d) of the Income Tax Act on interest earned from deposits with cooperative banks. For AY 2015-16, the addition was made for interest on special fund investments. For AY 2020-21, the deduction was denied for interest earned from cooperative banks, which were considered akin to banking institutions and thus excluded by Section 80P(4).
Held
The Tribunal held that interest income earned from investments in cooperative banks is eligible for deduction under Section 80P(2)(d), irrespective of whether those banks have a banking license. For AY 2015-16, the matter was restored to the CIT(A) for verification of the claim regarding Vivad Se Vishwas Scheme settlement. For AY 2020-21, the disallowance was directed to be vacated.
Key Issues
Whether interest income earned by a cooperative society from investments in other cooperative banks, including those with banking licenses, is eligible for deduction under Section 80P(2)(d). Whether the Vivad Se Vishwas Scheme settlement by a counterparty impacts the assessee's claim for the subject year.
Sections Cited
143(3), 147, 148, 36(1)(va), 80P, 80P(2)(d), 80P(4), 56, 28
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad “B” Bench, Hyderabad
करदाता का प्रतततितित्व/ : Shri Lalith Kishore Sharma, Assessee Advocate. (Appeared through Represented by Hybrid mode) राजस्व का प्रतततितित्व/ : Dr. Sachin Kumar, Sr.DR Department Represented by सुिवाई समाप्त होिे की ततति/ : 30.07.2025 Date of Conclusion of Hearing घोर्णध की तधरीख/ : 20.08.2025 Date of Pronouncement O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M.
The captioned appeals filed by the assessee society are directed against the respective orders passed by the Addl/JCIT(A)- Cooperative Electric Supply Society Ltd. 2, Noida dated 30.08.2024 and Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 19.12.2024 for A.Ys. 2015-16 and 2020-21, respectively, which in turn arises from the orders passed by the Assessing Officer (for short “A.O.”) u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (for short “the Act”), dated 04.12.2019 for A.Y. 2015-16 and u/s 143(3) of the Act, dated 21.09.2022 for A.Y. 2020-21.
2. We shall first take up the appeal of the assessee society for A.Y. 2015-16 in ITA No.411/Hyd/2025. The assessee society has assailed the impugned order on the following grounds of appeal before us:
“1. On the facts and circumstances of the case, the Ld. AO failed to appreciate and honor the decision of the Hon'ble ITAT, Hyderabad in the case of the appellant where the same issue was discussed in detail and decided in favor of the assessee for as many as 15 years.
The Ld. AO failed to appreciate the decisions of the Hon'ble ITAT, Hyderabad 'B' Bench vide its Order Dt. 13/01/2010 reported in (2010) 127 ITD 238 (Hyd) for the batch of years from 1999-00 to 2006-07.
3. The Ld. AO further failed to observe that based on the erstwhile orders (referred above), the appellate authorities were judicious enough to allow the appeals in favor of the appellant in all the assessments where the additions with regard to Interest on Special Fund investments were made in the hands of the appellant for the Assessment Years 2007-08 to 2013-14.
4. The Ld. AO also failed to appreciate that the Department Appeals before the Hon'ble ITAT for the aforesaid assessment years viz., 2007-08 to 2013-14 were all dismissed considering the earlier decisions of the Hon'ble ITAT, 'B' Bench. Cooperative Electric Supply Society Ltd.
The Ld. AO also failed to appreciate the fact that the Appeal on the same ground for the subsequent assessment year ie., 2016-17 by the appellant was allowed in the first appeal itself and consequential effect duly given by the Department 6. The Appellant also brings to the kind attention of the Hon'ble members of the ITAT that the REC, Delhi being the counterparty on whom the assessments were made based on the decisions as being discussed herein, have opted to avail the benefit. under the Vivad se Vishwas Scheme of 2020 for the entire period from 1999-00 to 2017-18 and a confirmation from the REC is awaited. 7. The Appellant humbly prays that assessing the income in the hands of the appellant would amount to unjust enrichment on the part of the department and also double taxation of the same income since already offered by the counterparty viz., REC, Delhi and settled under the VSV Scheme, 2020.”
3. Succinctly stated, the assessee Co-operative Society had e- filed its return of income for A.Y. 2014–15 on 30.09.2015, declaring a loss of Rs. (-) 2,70,23,274/-. The return of income filed by the assessee Co-operative Society was initially processed as such under Section 143(1) of the Act. Thereafter, the A.O., taking cognizance of the fact that the assessee Co-operative Society had failed to deposit the employees’ share of contributions towards various welfare funds within the prescribed time period, which thus, rendered the same liable for disallowance under Section 36(1)(va) of the Act, initiated proceedings under Section 147 of the Act. The notice under Section 148 of the Act dated 30.01.2019 was served upon the assessee. Cooperative Electric Supply Society Ltd.
During the course of assessment proceedings, the A.O. observed that the assessee society, during the subject year, had received interest on the special fund deposits to the tune of Rs. 55,58,527/-, which was not offered to tax. As the assessee society failed to come forth with any explanation on the said issue, the A.O. made an addition of the aforesaid amount. Accordingly, the A.O., vide his order passed under Section 143(3) r.w.s. 147, dated 04.12.2019, determined the loss of the assessee society at Rs. (-) 1,79,96,902/-.
4. Aggrieved, the assessee society carried the matter in appeal before the CIT(A).
5. Apropos the addition of the interest on the subject Fixed Deposits of Rs. 55,58,527/- was concerned, the CIT(A) found no infirmity in the view taken by the A.O. and upheld the addition. For the sake of clarity, the observations of the CIT(A) are culled out as under : Cooperative Electric Supply Society Ltd.
The assessee society, being aggrieved with the order of the CIT(A), has carried the matter in appeal before us.
We have heard the learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.
8. Shri Lalith Kishore Sharma, Advocate, the learned Authorized Representative (for short “Ld.AR”) for the assessee society, at the threshold of hearing of the appeal, submitted that the solitary issue involved in the present appeal is squarely covered by the order passed in the assessee's own case for the preceding years. Cooperative Electric Supply Society Ltd. Elaborating on his contention, the Ld. AR submitted that the A.O., as in the preceding years, had, during the subject year, brought the interest income on the Special Reserve Fund (SRF) to tax in the hands of the assessee society. The Ld. AR submitted that the A.O. had lost sight of the fact that the Tribunal, in the assessee’s own case for the preceding years, i.e., A.Ys. 1999-2000 to 2006- 07, and A.Ys. 2007-08 to 2011-12 and A.Y. 2012-13 to 2013-14, had vacated the impugned additions made in the hands of the assessee society. The Ld. AR took us through the orders passed by the Tribunal in the assessee’s own case, viz., and others for A.Ys. 1999-2000 to 2006-07 (Pages 6–15 of the APB), dated 13.01.2010; ITA Nos.280 to 283/Hyd/2015 for A.Y. 2007-08 to 2011-12 (Pages 16 to 23 of APB), dated 19.06.2015 and and 1324/Hyd/2017 for A.Ys. 2012-13 and 2013-14 (Pages 24-30 of APB), dated 17.04.2018. The Ld. AR submitted that in all the aforementioned cases, the Tribunal had held that the impugned interest income was liable to be assessed in the hands of M/s. Rural Electrification Corporation (for short “M/s. REC”), but, as the assessee society had failed to place on record the details which Cooperative Electric Supply Society Ltd. could substantiate that the impugned interest income was assessed in the hands of M/s.REC, therefore, the matter was restored to the file of the CIT(A) for re-adjudication after verifying the assessee’s claim. The Ld. AR, to fortify his contention, has taken us through the order passed by the ITAT, Hyderabad Bench in the case of the assessee society in ITA No. 54/Hyd/2019 for A.Y. 2014-15, dated 16.02.2021. The Ld. AR further submitted that M/s.REC Limited had thereafter, to put an end to the litigation, wherein it was subjected to tax in respect of the interest income on the Special Reserve Funds opted for getting the same settled under the Vivad Se Vishwas Scheme, 2020 for the entire period from 1999-2000 to 2017-18. The Ld. AR to support his contention has taken us through the certificate issued by M/s. REC Limited (undated), wherein it was stated that it had in respect of taxability of interest income on Special Reserve Funds (SRF) opted for the Vivad Se Vishwas Scheme, 2020 [Page 5 of APB]. The Ld. AR, based on the aforesaid facts, submitted that as the Tribunal had held that the interest income on Special Reserve Funds is to be brought to tax in the hands of M/s. REC Limited, and as on date it is established that M/s. REC Limited (supra) Cooperative Electric Supply Society Ltd.
had, inter alia, for the subject year, i.e., A.Y. 2015-16, after having been assessed for the said income, opted under the Vivad Se Vishwas Scheme, 2020, therefore, the impugned addition made in the hands of the assessee cannot be sustained and is liable to be quashed.
9. Per contra, Dr. Sachin Kumar, the learned Senior Departmental Representative (for short “Ld. DR”) submitted that as the certificate of M/s.REC Limited, wherein it is stated that it has opted for the Vivad Se Vishwas Scheme, 2020, was not there before the authorities below, therefore, the same cannot be summarily accepted on the very face of it. Rather, the Ld. AR submitted that the assessee had at no stage brought the said fact to the notice of the authorities below.
10. We have given a thoughtful consideration to the facts involved in the present case in the backdrop of the orders of the authorities below.
Admittedly, it is a matter of fact discernible from the record that the Tribunal in the assessee’s own case for the preceding years, as mentioned above, had concluded that the impugned Cooperative Electric Supply Society Ltd. interest income, as in earlier years, is to be assessed in the hands of M/s. REC Limited. For the sake of clarity, the observations of the Tribunal, while disposing of the appeal of the assessee viz. The Cooperative Electric Supply Society Limited Vs. ITO, Ward -1, Karimnagar in dated 16.02.2021 for A.Y. 2014-15 are culled out as under :
4. We have given our thoughtful consideration to rival pleadings against and in support of impugned interest income addition. Suffice to, it is noticed that the impugned interest income has continued to be assessed in M/s REC's hands only in all the earlier AYs. There is further no indication in the case records that any change has taken place in the Fixed Deposit Instrument holder's name(s) in the relevant previous year. The fact remains that the assessee has failed to place on record the corresponding details that the impugned interest income has also been assessed in M/s REC's hands in levant previous year. We therefore conclude that the instant sole issue requires necessary factual verification to this limited extent at the CIT(A)'s end. We accordingly restore this sole substantive issue back to CITA(A) for his fresh appropriate adjudication within three effective opportunities of hearing subject to all just exceptions.
Although, the Ld. AR had produced before us a certificate issued by M/s.REC Ltd., wherein it is stated that, in respect of the taxability of the interest income on Special Reserve Funds from A.Ys. 1999-2000 to 2016–17, it had opted to get the same settled under the Vivad Se Vishwas Scheme, 2020, we find that the said certificate was never produced before the authorities below. We may herein observe that, as the aforesaid certificate (undated) is Cooperative Electric Supply Society Ltd. an additional evidence, therefore, the assessee society ought to have filed an application seeking permission to place the same on record under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963.
Be that as it may, we are of the firm conviction that, as the assessee society had not placed any irrefutable material/ documentary evidence on record which could substantiate that the subject interest income had been assessed in the hands of M/s.REC Ltd., therefore, the matter, in all fairness, requires to be restored to the file of the CIT(A), who is directed to verify the aforesaid claim of the assessee. In case the claim of the assessee society that the interest income has been assessed in the hands of M/s.REC Ltd. is found to be in order, then the impugned addition in the hands of the assessee shall stand vacated.
Resultantly, the appeal filed by the assessee society is allowed for statistical purposes in terms of our directions hereinabove. Cooperative Electric Supply Society Ltd.
We shall now take up the appeal filed by the assessee society for A.Y. 2020-21 in . The assessee society has assailed the impugned order on the following grounds of appeal before us:
“1. On the facts and circumstances of the case, the Ld. AO failed to appreciate and honor various decisions of the Hon'ble High Courts and Tribunals where in it was clearly upheld that a Co-operative Bank is also a Co-operative Society.
2. The Ld. AO as well as the CIT (A) erred in making a distinction between the applicability of provisions under sec. 80P(4) for a Co- operative Bank claiming deductions under sec. 80P and the deductions available to other Co-operative Societies by investing its funds in a Co- operative Bank.
Both the Orders of the Ld. AO are bad in law in as much as the decision of the Hon'ble Apex Court in the case of Totgar's Credit Co- operative Society was mis-interpreted and generalized whereas the decision was rendered with a clear comment that the Hon'ble Supreme court is confining its decision to the facts of the said case.”
Succinctly stated, the assessee society, which is formed by the Government initiative as a pilot project in the year 1969 with the objective of transmission of power in the interior mandals and villages of the present Siricilla District, had filed its return of income for A.Y. 2020-21 declaring an income of Rs.17,74,660/-.
During the course of assessment proceedings, the A.O. observed that the assessee society had invested its funds in fixed Cooperative Electric Supply Society Ltd. deposits with the Telangana State Cooperative Apex Bank Limited, (TSCAB) Hyderabad, and Karimnagar District Cooperative Central Bank Limited, Karimnagar, and had earned interest income of Rs. 2,52,93,158/- from the said investments/ deposits, etc. The A.O. observed that the assessee society had claimed a deduction under Section 80P(2)(d) of the Act of Rs. 1,53,45,576/- in respect of its aforesaid interest income.
The A.O., holding a firm conviction that the assessee society was not entitled to claim deduction under Section 80P(2)(d) of the interest income earned on its deposits with cooperative banks, thus, called upon it to put forth an explanation on the said issue. As the explanation of the assessee did not find favour with the A.O., he declined its entire claim of deduction of interest income received from the cooperative banks under Section 80P(2)(d) of the Act amounting to Rs. 1,53,45,576/-. Accordingly, the A.O. vide his order under Section 143(3) r.w.s. 147 of the Act dated 21.09.2022, determined the income of the assessee society at Rs.1,71,20,236/-
Aggrieved, the assessee society carried the matter in appeal before the CIT(A). As the assessee society, despite sufficient opportunity, did not participate in the proceedings before the first Cooperative Electric Supply Society Ltd. appellate authority, therefore, the latter proceeded with and disposed the appeal, vide an ex-parte order. On merits, the CIT(A), not finding any infirmity in the view taken by the A.O., who had declined the assessee’s claim for deduction under Section 80P(2)(d) of the Act upheld the same by observing as under : Cooperative Electric Supply Society Ltd. Cooperative Electric Supply Society Ltd. Cooperative Electric Supply Society Ltd. Cooperative Electric Supply Society Ltd. Cooperative Electric Supply Society Ltd.
The assessee society, being aggrieved by the order of the CIT(A), has carried the matter in appeal before us.
We have heard the learned Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Cooperative Electric Supply Society Ltd.
Shri Lalith Kishore Sharma, Advocate, the learned Authorized Representative (for short, “Ld.AR”) for the assessee society, at the threshold of hearing of the appeal, submitted that both the authorities below had wrongly disallowed the assessee’s claim for deduction under Section 80P(2)(d) of the Act. Elaborating on his contention, the Ld. AR submitted that, as the assessee society had received interest income on its investments/deposits made/lying with cooperative banks viz., Telangana State Cooperative Apex Bank Limited, (TSCAB) Hyderabad and Karimnagar District Cooperative Central Bank Limited, Karimnagar, therefore, it was duly entitled to claim deduction on the said interest income under Section 80P(2)(d) of the Act.
Per contra, Dr. Sachin Kumar, the learned Senior Departmental Representative (for short “Ld. DR”) relied upon the orders of the lower authorities.
We have given a thoughtful consideration to the issue in hand before us, i.e., whether or not the assessee society is entitled for claiming deduction of the interest income received on its investments/deposits with the cooperative banks. Cooperative Electric Supply Society Ltd.
We find that the aforesaid issue is squarely covered by the order passed by the ITAT G-Bench, Mumbai, in the case of M/s. Solitaire CHS Ltd. v. PCIT-26, Mumbai, in dated 29.01.2019. The Tribunal in its aforesaid order, after deliberating at length on the said issue, i.e., the entitlement of the assessee co-operative society for claim of deduction of the interest income received on its fixed deposits with the co-operative bank under Section 80P(2)(d) of the Act, had held as under:
“6. We have heard the authorised representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. Our indulgence in the present appeal has been sought, for adjudicating, as to whether the claim of the assessee for deduction under section 80P(2)(d) in respect of interest income earned from the investments/deposits made with the co-operative banks is in order, or not. In our considered view, the issue involved in the present appeal revolves around the adjudication of the scope and gamut of sub-section (4) of Sec. 80P as had been made available on the statute, vide the Finance Act 2006, with effect from 01.04.2007. On a perusal of the order passed by the Pr. CIT under Sec. 263 of the Act, we find, that he was of the view that pursuant to insertion of sub-section (4) of Sec. 80P, the assessee would no more be entitled for claim of deduction under Sec. 80P(2)(d) in respect of the interest income that was earned on the amounts which were parked as investments/deposits with co- operative banks, other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. Observing, that the co-operative banks from where the assessee was in receipt of interest income were not co-operative societies, the Pr. CIT was of the view that the interest income earned on such investments/deposits would not be eligible for deduction under Sec. 80P(2)(d) of the Act. Cooperative Electric Supply Society Ltd.
7. After necessary deliberations, we are unable to persuade ourselves to be in agreement with the view taken by the Pr. CIT. Before proceeding any further, we may herein reproduce the relevant extract P a g e |4 M/s Solitaire CHS Ltd. Vs. Pr. Commissioner of Income-tax-26 of the aforesaid statutory provision, viz. Sec. 80P(2)(d), as the same would have a strong bearing on the adjudication of the issue before us. "80P(2)(d) (1). Where in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub- section (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee. (2). The sums referred to in sub-section (1) shall be the following, namely :- (a)............................................................................................ (b)............................................................................................ (c)............................................................................................
(d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co- operative society, the whole of such income;" On a perusal of Sec. 80P(2)(d), it can safely be gathered that interest income derived by an assessee co-operative society from its investments held with any other co-operative society shall be deducted in computing its total income. We may herein observe, that what is relevant for claim of deduction under Sec. 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co- operative society with any other co-operative society. We are in agreement with the view taken by the Pr. CIT, that with the insertion of sub-section (4) of Sec. 80P, vide the Finance Act, 2006, with effect from 01.04.2007, the provisions of Sec. 80P would no more be applicable in relation to any co-operative bank, other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. However, at the same time, we are unable to subscribe to his view that the aforesaid amendment would jeopardise the claim of deduction of a co-operative society under Sec. 80P(2)(d) in respect of its interest income on investments/deposits parked with a co- operative bank. In our considered view, as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. Sec. 80P(2)(d) would be duly available. We find that the term „co- operative society‟ had been defined under Sec. 2(19) of the Act, as under:- "(19) "Co-operative society" means a cooperative society registered under the Co-operative Societies Act, 1912 (2 of 1912), or under any Cooperative Electric Supply Society Ltd. other law for the time being in force in any state for the registration of co-operative societies;" We are of the considered view, that though the co-operative banks pursuant to the insertion of sub- section (4) to Sec. 80P would no more be entitled for claim of deduction under Sec. 80P of the Act, but as a co- operative bank continues to be a co-operative society registered under the Co-operative P a g e |5 M/s Solitaire CHS Ltd. Vs. Pr. Commissioner of Income-tax-26 Societies Act, 1912 (2 of 1912), or under any other law for the time being in force in any State for the registration of co-operative societies, therefore, the interest income derived by a co-operative society from its investments held with a co- operative bank would be entitled for claim of deduction under Sec.80P(2)(d) of the Act.
We shall now advert to the judicial pronouncements that have been relied upon by the ld. A.R. We find that the issue that a co-operative society would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income derived from its investments held with a co- operative bank is covered in favour of the assessee in the following cases: (i) Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum) (ii) M/s C. Green Cooperative Housing and Society Ltd. Vs. ITO-21(3)(2), Mumbai (ITA No. 1343/Mum/2017, dated 31.03.2017 (iii) Marvwanjee Cama Park Cooperative Housing Society Ltd. Vs. ITO- Range-20(2)(2), Mumbai (ITA No. 6139/Mum/2014, dated 27.09.2017. (iv). Kaliandas Udyog Bhavan Pemises Co-op. Society Ltd. Vs. ITO, 21(2)(1), Mumbai We further find that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon'ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had held, that the interest income earned by the assessee on its investments with a co-operative bank would be eligible for claim of deduction under Sec. 80P(2)(d) of the Act. Still further, we find that the CBDT Circular No. 14, dated 28.12.2006, also makes it clear beyond any scope of doubt that the purpose behind enactment of sub-section (4) of Sec. 80P was that the co-operative banks which were functioning at par with other banks would no more be entitled for claim of deduction under Sec. 80P(4) of the Act. Insofar the reliance placed by the Pr. CIT on the judgment of the Hon'ble Supreme Court in the case of Totgars Co-operative Sale Society Ltd. vs. ITO (2010) 322 ITR 283 (SC) is concerned, we are of the considered view that the same being distinguishable on facts had wrongly been relied upon by him. The adjudication by the Hon‟ble Apex Court in the aforesaid case was in context of Sec. Cooperative Electric Supply Society Ltd.
80P(2)(a)(i), and not on the entitlement of a co-operative society towards deduction under Sec. 80P(2)(d) on the interest income on the investments/deposits parked with a co-operative bank. Although, in all fairness, we may herein observe that the Hon'ble High Court of Karnataka in the case of Pr. CIT Vs. Totagars co-operative Sale Society (2017) 395 ITR 611 (Karn), had concluded that a co-operative society would not be entitled to claim of deduction under Sec. 80P(2)(d). At the same time, we find, that the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon'ble High Court P a g e |6 M/s Solitaire CHS Ltd. Vs. Pr. Commissioner of Income-tax-26 of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), had observed, that the interest income earned by a co-operative society on its investments held with a co- operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act. We find that as held by the Hon'ble High Court of Bombay in the case of K. Subramanian and Anr. Vs. Siemens India Ltd. and Anr (1985) 156 ITR 11 (Bom), where there is a conflict between the decisions of non-jurisdictional High Court‟s, then a view which is in favour of the assessee is to be preferred as against that taken against him. Accordingly, taking support from the aforesaid judicial pronouncement of the Hon‟ble High Court of jurisdiction, we respectfully follow the view taken by the Hon'ble High Court of Karnataka in the case of Pr. Commissioner of Income Tax and Anr. Vs. Totagars Cooperative Sale Society (2017) 392 ITR 74 (Karn) and Hon'ble High Court of Gujarat in the case of State Bank Of India Vs. CIT (2016) 389 ITR 578 (Guj), wherein it was observed that the interest income earned by a co- operative society on its investments held with a co- operative bank would be eligible for claim of deduction under Sec.80P(2)(d) of the Act.
Be that as it may, in our considered view, as the A.O while framing the assessment had taken a possible view, and therein concluded that the assessee would be entitled for claim of deduction under Sec. 80P(2)(d) on the interest income earned on its investments/deposits with co-operative banks, therefore, the Pr. CIT was in error in exercising his revisional jurisdiction u/s 263 for dislodging the same. In fact, as observed by us hereinabove, the aforesaid view taken by the A.O at the time of framing of the assessment was clearly supported by the order of the jurisdictional Tribunal in the case of Land and Cooperative Housing Society Ltd. Vs. ITO (2017) 46 CCH 52 (Mum). Accordingly, finding no justification on the part of the Pr. CIT, who in exercise of his powers under Sec. 263, had dislodged the view that was taken by the A.O as regards the eligibility of the assessee towards claim of deduction under Sec. 80P(2)(d), we „set aside‟ his order and restore the order passed by the A.O under Sec. 143(3), date 14.09.2016. Cooperative Electric Supply Society Ltd.
Resultantly, the appeal filed by the assessee is allowed.”
As the facts involved in the present appeal remain the same as were there before the Tribunal in the aforesaid case of M/s. Solitaire CHS Ltd. Vs. Pr.CIT (supra), we respectfully follow the same. We thus, in terms of our aforesaid deliberations, conclude that the assessee society duly entitled to claim deduction of the interest income on its investments/deposits with the aforementioned co-operative banks under Section 80P(2)(d) of the Act. Accordingly, we direct the A.O. to vacate the disallowance of the claim of the assessee society for deduction u/s 80P(2)(d) of Rs. 1,53,45,576/-.
Resultantly, the appeal filed by the assessee society is allowed in terms of our aforesaid observations.
To sum up, the appeal of the assessee society i.e. for A.Y. 2015-16 is allowed for statistical purposes and A.Y. 2020-21 is allowed in terms of our aforesaid observations. Cooperative Electric Supply Society Ltd.
Order pronounced in the Open Court on 20th August, 2025. (श्री मिुसूदन सावडिया) (श्री रवीश सूद) (MADHUSUDAN SAWDIA) (RAVISH SOOD) लेखा सदस्य/ACCOUNTANT MEMBER न्यायिक सदस्य/JUDICIAL MEMBER Hyderabad, dated 20.08.2025. TYNM/sps