BABANRAO AWATADE NAGARI BIGARSHETISAHAKARI PATSANSTHA MARYADIT MANGALWEDHA,SOLAPUR vs. INCOME-TAX OFFICER WARD -1, PANDHARPUR

The only issue raised in this appeal is against the denial of deduction u/s.80P(2)(a)(i) on the interest income of Rs.32,59,760/-.

The factual matrix of the case is that the assessee is a credit cooperative society registered under Maharashtra Cooperative Societies Act, 1960. It is engaged in the business of accepting of deposits and providing credit facilities to its members. A return was filed declaring total income at Nil. During the course of assessment proceedings, the Assessing Officer (AO) observed that the assessee earned interest on bank deposits amounting to Rs.32,91,008/- from various Cooperative Banks and claimed as deductible u/s.80P(2)(a)(i) of the Act. The AO and the ld. CIT(A) denied the deduction u/s.80P(2)(d) of the Act, against which the assessee has come up in appeal before the Tribunal

After considering the rival submissions and perusing the relevant material on record, it is seen that the assessee is a co- operative society which earned interest from various Co-operative Banks. It is seen that the Pune Benches of the Tribunal in Rena Sahakari Sakhar Karkhana Ltd. Vs. Pr.CIT (ITA No.1249/PUN/2018) has held, vide its order dated 07-01-2022, that though co-operative banks, other than primary agricultural credit society or a primary co-operative agricultural and rural development bank, are not eligible for deduction pursuant to insertion of section 80P(4) w.e.f. 1.4.2007, but this provision does not dent the otherwise eligibility u/s 80P(2)(d) of the Act of a co- operative society on interest income on investments/deposits parked with a co-operative bank, which is a registered co-operative society as per section 2(19) of the Act, defining co-operative society to mean a co-operative society registered under the Co-operative Societies Act, 1912 or under any law for the time being in force. The assessee is also a Co-operative society and registered under the Maharashtra Cooperative Societies Act.

Therefore, respectfully following the decision of the Division Bench, I overturn the impugned order and direct to grant deduction u/s.80P(2)(d) of the Act on the amount of interest earned from various Co-operative Banks.

In the result, the appeal is allowed.