KARAD PATAN TALUKA MADHYAMIK SHALA SEVAKANCHI SAHAKARI PATHSANSTHA ,KARAD vs. ITO WARD 2 SATARA, SATARA

IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH “A”, PUNE

BEFORE SHRI R. K. PANDA, VICE PRESIDENT
AND SHRI VINAY BHAMORE, JUDICIAL MEMBER

आयकर अपील सं. / ITA No.1135/PUN/2025
िनधाŊरण वषŊ / Assessment Year : 2020-21

Karad
Patan
Taluka
Madhyamik
Shala
Sevekanchi
Sahakari
Pathsanstha,
Gala No.9, 10, Malai Towers,
Kolhapur Naka, Karad,
Dist. Satara- 415110. PAN : AABTK7825L
Vs. ITO, Ward-2, Satara.

Appellant

Respondent

आदेश / ORDER

PER VINAY BHAMORE, JM:

This appeal filed by the assessee is directed against the order dated 28.02.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2020-21. 2. Facts of the case, in brief, are that the assessee is primary credit co-operative society duly registered under the Maharashtra
State Cooperative Societies Act, 1960 and engaged in the activity
Assessee by :
Shri Satish Nade
Revenue by :
Shri Deepak Kumar Kedia (Virtual)

Date of hearing
:
15.10.2025
Date of pronouncement
:
28.11.2025
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of providing credit facilities to its members and also accepting deposits from them. The return of income was furnished declaring
Nil income after claiming deduction of Rs.1,06,20,272/- u/s 80P(2)(a)(i) of the IT Act. The case was selected for scrutiny and notice u/s 142(1) and show cause notices were also issued to the assessee. After considering the reply of the assessee, the Assessing
Officer was of the view that the assessee is carrying on banking business and therefore in the light of section 80P(4) of the IT Act, is not entitled to claim deduction u/s 80P(2)(a)(i) of the IT Act.
Accordingly, vide order dated 21.09.2022 assessment order was passed u/s 143(3) r.w.s. 144B of the IT Act by determining total income of the assessee at Rs.1,06,20,270/- as against the Nil income returned by the assessee. The above said income includes addition of Rs.1,06,20,272/- on account of disallowance of deduction u/s 80P(2)(a) (i) of the IT Act.
3. Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. After considering the reply of the assessee, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee by relying on the judgement passed by Hon’ble Supreme Court in the case of CIT vs. Mavilayi Service
Cooperative Bank Ltd. [2020] 431 ITR 305 Supreme Court,
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wherein it was held that cooperative banks are not eligible for claiming deduction u/s 80P(2)(a)(i) of the IT Act since they are engaged in the business of banking.
4. It is the above order against which the assessee is in appeal before this Tribunal.
5. Ld. AR appearing from the side of the assessee submitted before us that the order passed by Ld. CIT(A)/NFAC is not justified. Ld. AR submitted before the bench that the assessee being primary credit co-operative society is entitled to claim deduction u/s 80P(2)(a)(i) of the IT Act and the issue is squarely covered by the judgement of Hon’ble Bombay High Court passed in the case of Principal Commissioner of Income-tax vs.
Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd. ITA
No.933/2017 dated 14-10-2019 which was subsequently approved by Hon’ble Supreme Court. In this regard, Ld. AR relied on the judgement passed by Hon’ble Supreme Court in the case of Principal Commissioner of Income-tax vs. Annasaheb Patil
Mathadi Kamgar Sahakari Pathpedi Ltd. [2023] 150 taxmann.com
173 (SC). Accordingly, Ld. AR requested before the bench to allow deduction u/s 80P(2)(a)(i) of the IT Act.
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6. Ld. DR appearing from the side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same.
7. We have heard Ld. counsels from both the sides and perused the material available on record including the case laws relied on by both the parties. In this regard, we find that the assessee is a primary credit co-operative society and is engaged in the activity of providing credit facilities to its members and also accepting deposits from them. During the period under consideration, the assessee primary credit co-operative society claimed deduction of Rs.1,06,20,272/- u/s 80P(2)(a)(i) of the IT Act which was denied by the Assessing Officer by treating the assessee as a cooperative bank doing banking business in the light of provisions of section 80P(4) of the IT Act. Ld. CIT(A)/NFAC also confirmed the order passed by the Assessing Officer by placing reliance on the judgement passed by Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. vs. CIT [2021] 123
taxmann.com 161. In this regard, it was the contention of Ld.
counsel of the assessee that the issue is squarely covered in favour of the assessee credit co-operative society by the judgement of Hon’ble Bombay High Court passed in the case of Principal
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Commissioner of Income-tax vs. Annasaheb Patil Mathadi Kamgar
Sahakari Pathpedi Ltd. ITA No.933/2017 dated 14-10-2019 which was confirmed by Hon’ble Supreme Court by dismissing the SLP filed by the Revenue in the case of Principal Commissioner of Income-tax vs. Annasaheb Patil Mathadi Kamgar Sahakari
Pathpedi Ltd. [2023] 150 taxmann.com 173 (SC) wherein Hon’ble
Supreme Court dismissed the SLP filed by the revenue and held that the assessee being a primary credit co-operative society is entitled to claim deduction u/s 80P(2)(a)(i) of the IT Act by observing as under :-
“1. Feeling aggrieved and dissatisfied with the impugned order dated
14-10-2019 passed by the High Court of Judicature at Bombay in ITA
No. 933/2017, by which the High Court has dismissed the said appeal preferred by the Revenue, relying upon its earlier decision in the case of Quepem
Urban
Co-operative
Credit
Society Ltd. v. Asstt.
CIT [2015] 58 taxmann.com 113 (Bom.), the Revenue has preferred the present appeal.
2. The High Court considered the following question of law -
"Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified as claimed by the assessee on the ground that the assessee, a co-operative credit society and is not a bank for the purpose of Section 80P(4) of the Act?"
3. Apart from the fact that against the relied upon decision in the case of M/s. Quepem Urban Co-operative Credit Society Ltd. (supra),the Special Leave Petition has been dismissed, having heard learned counsel appearing on behalf of the respective parties, the issue involved in the present appeal is squarely covered against the Revenue in view of the decision of this Court in Mavilayi Service Co- operative Bank Ltd. v. CIT [2021] 123 taxmann.com 161 This Court, in the aforesaid decision has specifically observed and held that primary Agricultural Credit Societies cannot be termed as Co- operative Banks under the Banking Regulation Act and, therefore,
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such credit societies shall be entitled to exemption under section 80(P)(2) of the Income-tax Act, 1961. 4. Ms. Aakansha Kaul, learned counsel appearing on behalf of the appellant/Revenue has tried to submit that the respondent/Assessee will fall under the definition of Co-operative Bank as their activity is to give credit/loan. However, it is required to be noted that merely giving credit to its members only cannot be said to be the Co- operative Banks/Banks under the Banking Regulation Act. The banking activities under the Banking Regulation Act are altogether different activities. There is a vast difference between the credit societies giving credit to their own members only and the Banks providing banking services including the credit to the public at large also.
5. There are concurrent findings recorded by CITA, ITAT and the High Court that the respondent/Assessee cannot be termed as Banks/Cooperative Banks and that being a credit society, they are entitled to exemption under section 80(P)(2) of the Income-tax Act.
Such finding of fact is not required to be interfered with by this Court in exercise of powers under Article 136 of the Constitution of India.
Even otherwise, on merits also and taking into consideration the CBDT Circulars and even the definition of Bank under the Banking
Regulation Act, the respondent/Assessee cannot be said to be Co- operative Bank/Bank and, therefore, Section 80(P)(4) shall not be applicable and that the respondent/Assessee shall be entitled to exemption/benefit under section 80(P)(2) of the Income-tax Act.
6. In view of the above and for the reasons stated hereinabove, the present appeal deserves to be dismissed and is accordingly dismissed, answering the question against the Revenue and in favour of the Assessee.
7. The Appeal is accordingly dismissed. No costs.”

पुणे / Pune; ᳰदनांक / Dated : 28th November, 2025. Sujeet
आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to :
1. अपीलाथᱮ / The Appellant.
2. ᮧ᭜यथᱮ / The Respondent.
3. The Pr. CIT concerned.
4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच,
पुणे / DR, ITAT, “A” Bench, Pune.

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Senior Private Secretary

आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.