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Facts
The assessee claimed a deduction under section 80P(2)(d) for interest income earned from deposits with Pune District Central Cooperative Bank Ltd. (PDCC). The Assessing Officer and CIT(A) denied this deduction, holding that PDCC was not a cooperative society eligible for such deduction.
Held
The Tribunal held that the issue is no longer res integra, citing numerous decisions that consistently allow deduction of interest income earned from cooperative banks under section 80P(2)(d). The Tribunal noted that PDCC is registered under the Maharashtra Cooperative Societies Act and is a cooperative bank.
Key Issues
Whether interest income earned from a cooperative bank, which is registered under the Cooperative Societies Act, is eligible for deduction under Section 80P(2)(d) of the Income Tax Act.
Sections Cited
80P(2)(d), 250, 143(3), 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
1. This appeal filed by the assessee pertaining to the assessment year 2020-21 is directed against the order dated 24.03.2025 giving effect to the order of CIT(A) passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) which inturn is arising out of the Assessment Order dated. 26.09.2022 passed u/s.143(3) r.w.s.144B of the Act.
In the instant appeal, assessee has raised following grounds of appeal :
“1. On the facts and in the circumstances of the case and in law Ld. A.O. erred in rejected Claim interest on deposits held in co-operative Bank under section 80P(2)(d) of Rs.17,51,124/- being Pune District Central Co- op Ltd, Pune is scheduled bank and not cooperative Bank which is bad in law because PDCC Bank is registered under the Maharashtra Cooperative Society Act, with the Divisional Joint Registrar Co-op Society Pune division having signed its registration certificate.Hence order passed in consequence to that may kindly be quashed.”
At the outset, Ld. Counsel for the assessee submitted that ld.CIT(A) erred in not allowing the claim of deduction u/s.80P(2)(d) of the Act for the interest income of Rs.17,51,124/- earned by the assessee from investments made with Pune District Central Cooperative Bank Ltd. (PDCC). He submitted that the issue stands squarely covered by plethora of decisions of this Tribunal placing reliance on the following decisions and ld. Departmental Representative did not controvert this contention.
Satara Z.P. Class Four Employess Co.op Credit Society Ltd. Vs. ITO in dated 07.01.2025 2. The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in dated 18.11.2021 3. Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd., Vs. ITO in ITA No.1365/PUN/2023, dated 01.01.2024
We have heard the rival contentions and perused the record placed before us. It is an admitted fact that impugned addition is regarding denial of deduction u/s.80P(2)(d) of the Act for the interest income earned from Cooperative Bank namely PDCC at Rs.17,51,124/-. Lower authorities have denied the deduction as PDCC is not a Cooperative Society. Before us, assessee has furnished paper book and referring to page 12 of the paper book our attention has been drawn to Certificate of Registration as per which Registrar of Cooperative Societies, Bombay Presidency has certified that PDCC Ltd, has been registered u/s.9 of the Act, 1992 and assessee is basically a Cooperative Bank registered under Maharashtra Cooperative Societies Act, 1960.
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 :
“5. We have heard the rival submissions and perused the record placed before us. There is no dispute to the fact that assessee has earned interest income of Rs.1,02,95,103/- from deposits/investments with Cooperative Banks. This fact has been accepted by the Assessing Officer in the assessment order also. Admittedly, assessee has not filed the requisite details before ld.CIT(A). We however considering the fact that the issue regarding allowability of deduction u/s.80P(2)(d) of the Act for the interest earned from Cooperative Banks is no longer res integra as the very same issue has been decided by this Tribunal in catena of decisions and in assesse’s own case for A.Y. 2020-21 holding that the assessee is eligible for deduction u/s.80P(2)(d) of the Act as the Cooperative Banks are basically Cooperative Societies. For the sake of brevity, the finding given in is reproduced below :
“7. We have heard both the sides and perused the record placed before us. In the instant case, the Assessing Officer disallowed the interest income of Rs.1,63,98,998/- earned out of the Fixed deposits/Investments made with Cooperative Banks treating the same as Income from Other Source. Ld.CIT(A) dismissed the appeal in limine without discussing anything on merits of the issues and on the ground that the assessee has not provided plausible explanation for admission of additional evidences.
Section 80P(2)(d) of the Act provides that the sum received in respect of any income by way of interest or dividend derived by Cooperative Society from its investment with any other Cooperative Society, the whole of such income is eligible for deduction u/s.80P of the Act. we find that this issue is no more res integra as the Coordinate Benches of this Tribunal has been consistently holding that the interest income earned out of the FDs/Investments kept with Cooperative Banks is allowable u/s.80P(2)(d) of the Act. We find that this Tribunal in case of Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd., Vs. ITO in dated 01.01.2024 dealing with similar issue after placing reliance on another decision of this Tribunal in the case of The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in dated 27.05.2022 has held that the interest earned from deposits with Cooperative Banks are also eligible for deduction u/s.80P(2)(d) of the Act as Cooperative Banks are basically Cooperative Societies only but have turned into Bank on getting necessary banking license.
Respectfully following the above referred decisions taking consistent view along with considering the facts of the case, where the assessee made investment with the Cooperative Banks we hold that the assessee is eligible for deduction u/s.80P(2)(d) of the Act for the interest income earned from Cooperative Banks at Rs.1,63,98,998/-. Findings of the ld. CIT(A) is set-aside and the Assessing Officer is directed to allow the claim made by the assessee. Effective grounds of appeal raised by the assessee are allowed.”
6. Respectfully following the same, we hold that deduction of Rs.1,02,95,103/- u/s.80P(2)(d) of the Act claimed by the assessee on the interest earned from deposits/Investments with Cooperative Banks deserves to be allowed. Relevant finding of ld.CIT(A) on merits is set aside and grounds of appeal No.5 to 8 raised by the assessee are allowed.”
Respectfully following the same, we hold that deduction claimed by the assessee on the interest income earned from deposits/Investments with PDCC u/s.80P(2)(d) of the Act at Rs.17,51,124/- deserves to be allowed. Impugned finding of ld.CIT(A) is set aside and effective Grounds of appeal raised by the assessee are allowed.
In the result, appeal of the assessee is allowed.
Order pronounced on this 16th day of June, 2025.