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Facts
The assessee, a cooperative society, appealed against an order disallowing deduction of Rs. 28,39,082/- on interest income earned from fixed and saving deposits with cooperative banks. The CIT(A) dismissed the appeal due to non-compliance.
Held
The Tribunal held that the assessee is eligible for deduction of interest income earned from cooperative banks, following Gujarat High Court and Tribunal precedents. However, the quantification of the deduction needs to be re-verified by the AO.
Key Issues
Whether interest income earned by a cooperative society from deposits with cooperative banks is eligible for deduction under Section 80P(2)(d) of the Income Tax Act.
Sections Cited
143(3), 80P(2)(a)(i), 80P(2)(d), 263, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
(Assessment Year: 2018-19) Sahkari Sanstha Shiksha Income Tax Officer 4(3), Vibhag, Indore 89, Nagar Nigam Road, Vs. Indore (Appellant / Assessee) (Respondent/ Revenue) PAN: AADAS8639M Assessee by Shri Jayant Jain, AR Revenue by Ms. Ila Parpar, CIT-DR with Shri Nihar Sahu Date of Hearing 23.10.2025 Date of Pronouncement 24.10.2025 O R D E R
Per Dr. Manish Borad, AM:
This appeal by the assesse is directed against the order dated 31.01.2025 of the Commissioner of Income Tax (Appeals), NFAC, Delhi for A.Y.2018-19 which is arising from the assessment order u/s 143(3) of the Act dated 02.03.2021 framed by National e- Assessment Centre, Delhi.
The assessee has raised issues on merits against the addition of Rs.28,39,080/-, Ld. Counsel for the assessee at the outset authorities because the assessee failed to respond to the notices of hearing issued by Ld. CIT(A) who as a result has dismissed the assessee’s appeal in limine for non compliance. Reliance placed on the decisions of this Tribunal in assessee’s own case v/s ITO, Assessment Unit, Delhi for Assessment Year 2020-21 in order dated 26.08.2025 and also in the case of Pr.
CIT-1 v/s Bhopal Dugdh Sangh Sahakari Maryadit in order dated 16.01.2024.
On the other hand Ld. Departmental Representative supported the order of Ld. CIT(A).
We have heard the rival contentions and perused the record placed before us. We observe that the assessee is a co-operative society and after the case of the assessee for Assessment Year 2018-19 selected for limited scrutiny the Ld. A.O has disallowed the deduction u/s 80P(2)(a)(i) of the Act at Rs.28,39,082/- by observing that interest on FDR at Rs.23,01,359/- and interest on saving deposit at Rs.5,37,723/- are liable to be taxed under the head income from other sources and deduction u/s 80P(2)(a)(i) of the Act is not allowable. Further in the appeal filed before the appellate us the the assessee has placed reliance on the decisions of this tribunal in assessee’s case for Assessment Year 2020-21 vide dated 26.08.2025 wherein also similar type of disallowance has been made and this tribunal restored the issue to the file of jurisdictional A.O observing as follows:-
4. I have heard rival contentions and perused the records placed before me. The assessee is a cooperative society and assessment for Assessment Year 2020-21 completed u/s 143(3) r.w.s. 144B of the Act assessing income of Rs.25,34,866/-. The issue under consideration related to denial of deduction u/s 80P(2)(d) of the Act at Rs.20,85,916/- which has been done at the end of Ld. A.O and further affirmed by Ld. CIT(A). Before me for the assessee has demonstrated that the assessee has earned invest of Rs.17,72,316/- on the fixed deposits held with Cooperative banks and interest of Rs.2,68,571/- on saving bank balance from cooperative banks. In total interest of Rs.20,40,887/- has been shown to have been received from investments/deposits with cooperative banks namely Shivalik Mercantile Cooperative Bank Lt and Jila Sahakari Bank Maryadit.
I observe that the Hon’ble High Court of Gujarat in the case of Rajkot Lodhika Sahakari Kharid Vechan Sangh Ltd after duly considering the judgment of Hon’ble High Court in the case of Principle CIT V/s Ashwin Urban Cooperative Society Ltd Tax Appeal No.221 of 2022 affirmed the decision of the Tribunal quashing the revisional order u/s 263 of the Act and further affirmed the views of the Tribunal that the assessee society is registered under the Gujarat State Cooperative Act and therefore the interest income earned from investment with cooperative banks is also eligible or deduction u/s 80P(2)(d) of the Act. Similar view has also been taken by this Tribunal in the case of Indore Sahakari Dugdh Sangh (supra). Therefore respectfully following the decisions referred herein above I am inclined to hold that the assessee is eligible for deduction of interest income earned from investments/deposits held with Cooperative banks. However so far as the quantification of deduction allowable to assessee u/s 80P(2)(d) of the Act, I hold that Ld. Jurisdictional Assessing Officer shall grant the deduction u/s 80P(2)(d) of the Act referred (supra) after carrying out necessary verification because while carrying out the assessment proceedings Ld. A.O while making the addition of Rs.20,85,966/- has 3 Sahkarikarya Sanstha Shiksha Vibhag observed that the interest has been received from saving bank and fixed deposits of SBI, Axis Bank, Bank of India and Bandhan Bank. On the other hand the assessee has pleaded before me that the interest of Rs.20,40,887/- has been received from cooperative banks towards FDR and saving bank interest. Therefore it becomes necessary to conduct necessary verification. So principally the issue raised by the assessee of getting deduction u/s 80P(2)(d) of the Act for interest income earned through cooperative bank stands allowed however same shall be granted after due verification by Ld. Jurisdictional Assessing Officer for which reasonable opportunity of hearing shall be granted to the assessee for placing necessary evidences. In the result appeal of the assessee is allowed for statistical purpose.
In the result appeal of the assessee is allowed for statistical purpose”.
5. Respectfully following the above decision and taking consistent view since the issues and facts raised in the instant appeal are similar, we hereby restore the issue on merits to the file of Jurisdictional A.O for necessary adjudication in the light of the decisions referred (supra). Needless to mention that Ld. J.A.O shall examine the issues after affording reasonable opportunity of hearing to the assessee. Accordingly the finding of Ld. CIT(A) is set aside and the issue raised in the instant appeal on merits are restored to the file of Ld. J.A.O for denovo adjudication to be carried out in accordance with the law. Effective grounds of appeal on merits are allowed for statistical purpose. purpose. Order pronounced in the open court on 24.10.2025. Sd/- Sd/-