SHRI MAHAVEER NAGARI SAHAKARI PAT SAN KINI,MAHARASHTRA vs. INCOME TAX OFFICER WARD-1 ICHALKARANJI , ICHALKARANJI

The captioned appeal at the instance of assessee pertaining to A.Y. 2020-21 is directed against the order dated 30.07.2025 of National Faceless Appeal Centre (NFAC) Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Assessment Order dated 26.09.2022 passed u/s.143(3) r.w.s.144B of the Act.

When the case called for, none appeared on behalf of the assessee. However, assessee has filed written submissions on 15.09.2025 and has requested to decide the issues based upon the said written submission. Perusal of the same indicates that the sole grievance is that ld.CIT(A) erred in not granting the benefit of deduction u/s.80P(2)(d) of the Act for the interest earned on investments held with Cooperative Banks. In support, reliance has been placed on the decision of this Tribunal in the case of Shri Bhairavnath Multistate Cooperative Credit Society Ltd. (2024) 164 taxmann.com 382 (Pune-Trib.) wherein this Tribunal has held that the interest earned on investments with Cooperative Banks deserves to be allowed as deduction u/s.80P(2)(d) of the Act.

On the other hand, ld. Departmental Representative supported the orders of the lower authorities.

We have heard the ld. Departmental Representative and perused the record placed before us. Assessee is a Cooperative Society and Nil income declared in the return of income furnished for A.Y. 2020-21 on 09.01.2021. In the return, assessee has claimed deduction under Chapter VIA at Rs.35,79,183/-. After the return being selected for Complete Scrutiny under CASS to verify the genuineness of the deduction claimed under Chapter VIA and high creditors/liabilities shown in income-tax return, valid statutory notices were served. Ld. Assessing Officer (AO) observed that assessee has earned interest income of Rs.16,67,198/- from investments held with Shree Warna Sahakari Bank Ltd. Warananagar, Kini Branch. Ld. AO after making necessary discussion held that assessee is not eligible for deduction u/s.80P of the Act for the interest income earned from Cooperative Banks and added it under the head ‘Income from Other Sources’ and assessed the income at Rs.16,67,198/-.

Thereafter, assessee preferred appeal before ld.CIT(A). However, inspite of submissions filed by the assessee and also placing reliance on the settled judicial precedents dealt with by this Tribunal, ld.CIT(A) failed to allow the claim of the assessee and dismissed the assessee’s appeal.

In the appeal filed before this Tribunal, assessee has filed written submissions and has stated that in light of the decision of this Tribunal, the interest income earned from deposits/investments with Cooperative Banks is eligible for deduction u/s.80P of the Act.

This issue is no longer res integra by virtue of catena of decisions taking consistent view that interest income earned from deposits with Cooperative Banks is eligible for deduction u/s.80P(2)(d) of the Act. Recently, this Bench in the case of Annapurna Nagari Sahkari Pathsanstha Maryadit Yawal Vs. ITO in order dated 07.05.2025 has allowed the deduction claimed by the assessee u/s.80P(2)(d) of the Act observing as under :

Respectfully following the above decision and Rule of consistency, we hold that the interest income earned from investments with Cooperative Banks deserves to be allowed u/s.80P(2)(d) of the Act. Revenue authorities are directed to allow the alleged claim limited to the extent of the interest income earned during the year from the investments held with Cooperative Banks/Societies. Grounds of appeal raised by the assessee are allowed.

In the result, the appeal filed by the assessee is allowed as per terms indicated above.