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Facts
The assessee, a credit cooperative society, failed to file returns for AY 2020-21 and 2021-22. The Assessing Officer (AO) reopened assessments and disallowed deduction under section 80P(2)(d) for interest received from cooperative banks. The Commissioner of Income Tax (Appeals) upheld this disallowance, also citing the delayed filing of returns.
Held
The Tribunal ruled that Section 80P(4) is not applicable as the assessee is a cooperative society, not a cooperative bank dealing with the general public. It also noted that the delay in filing the return was condoned. Consequently, the deduction under Section 80P(2)(d) for interest income from cooperative banks was allowed.
Key Issues
Eligibility of deduction u/s. 80P(2)(d) for interest from cooperative banks and the impact of delayed return filing when condoned.
Sections Cited
80P(2)(d), 80P(4), 139(1), 80AC, 250, 119(2)(b), 148
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Income Tax Appellate Tribunal, C BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & MS. PADMAVATHY.S
The Triplicane Cooperative Credit The Income Tax Officer, Society Ltd., Vs. Ward-9(1), Old No.35, New No.73, Chennai. Bharathi Salai, Triplicane, Chennai – 600 005. PAN: AAABT 2681E (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� की ओर से/ Appellant by : Mr. B. Suresh, C.A ��थ� की ओर से /Respondent by : Ms. R. Anitha, Addl. CIT सुनवाई की तारीख/Date of Hearing : 12.02.2026 घोषणा की तारीख /Date of Pronouncement : 17.02.2026 आदेश / O R D E R PER PADMAVATHY.S, A.M: These appeals by the assessee are against the separate orders of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") both dated 13.08.2025 for Assessment Year (AY) 2020-21 and 2021-22. The common issue contended in both these appeals pertain to the denial of deduction u/s.80P(2)(d) for the interest received from Chennai Central Cooperative Bank Ltd. The Triplicane Coop Credit Society Ltd. :- 2 -:
The assessee is a credit cooperative society registered under Tamilnadu Cooperative Society Act. The assessee did not file the return of income for the years under consideration. The AO noticed that the assessee has made certain cash deposits into the bank account and therefore reopened the assessment by issue of notice u/s.148 of the Act. The assessee in response to notice u/s.148 filed the return of income and in the said return of income the assessee claimed deduction u/s.80P(2)(d) towards interest received from deposits held with Chennai Central Cooperative Bank Ltd. The AO held that the interest received from Cooperative banks is not eligible for deduction u/s.80P(2)(d) and accordingly denied the deduction claimed by the assessee under the said section. The CIT(A) confirmed the disallowance. The CIT(A) further held that the deduction cannot be allowed since the assessee did not file the return of income within the sue dates specified u/s.139(1) and as per the provisions of section 80AC the deduction claimed cannot be allowed. The assessee in appeal against the order of the CIT(A) before the Tribunal.
We heard the parties and perused the material on record. The assessee claimed deduction u/s.80P(2)(d) towards interest earned from deposits with Chennai Central Cooperative Bank Ltd. The deduction is denied on the ground that the interest income from cooperative banks cannot be claimed as deduction u/s.80P(2)(d) and also for the reason that the assessee as per the provisions of section 80AC cannot be allowed the deduction since the return of income is not filed within the due dates specified u/s.139(1). With regard to the issue of allowability of deduction under section 80P(2)(d) in respect of interest income earned from deposits with co-operative banks, we notice that the Hon’ble Supreme Court in Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 123 taxmann.com 161 (SC), while analysing the scope of section The Triplicane Coop Credit Society Ltd. :- 3 -:
80P(4) of the Act, held that the said provision operates as a proviso to section 80P(1) and (2) and excludes only such co-operative banks which, though co- operative societies, possess an RBI licence to carry on banking business. The Hon’ble Supreme Court further held that the limited object of section 80P(4) is to deny deduction only to those co-operative banks which function at par with commercial banks by lending money to the general public. In the light of the above decision, we are of the considered view that section 80P(4) becomes relevant only where the assessee itself is a co-operative bank claiming deduction under section 80P, which is admittedly not the case in the present appeal. Therefore, the embargo contained in section 80P(4) has no application to the assessee’s claim under section 80P(2)(d). In other words though, by virtue of insertion of sub-section (4) to section 80P, a co-operative bank is not eligible to claim deduction under section 80P of the Act, it nevertheless continues to be a co-operative society registered under the Co- operative Societies Act, 1912 or under the relevant State Co-operative Societies Act. What is relevant for claim of deduction under sec. 80P(2)(d) is that the interest income should have been derived from the investments made by the assessee co-operative society with any other cooperative society. Therefore in our considered view that as long as it is proved that the interest income is being derived by a co-operative society from its investments made with any other co-operative society, the claim of deduction under the aforesaid statutory provision, viz. sec. 80P(2)(d) cannot be denied. Accordingly we hold that the interest income earned by the assessee being a co-operative society from investments or deposits made with a co-operative bank would qualify for deduction under section 80P(2)(d) of the Act. The coordinate bench in several judicial proceedings has been consistently holding a similar view. Now coming to the issued deduction u/s.80P(2)(d) being The Triplicane Coop Credit Society Ltd. :- 4 -: disallowed on the ground of return not being filed on time, the ld AR during the course of hearing submitted that the assessee had filed a petition u/s.119(2)(b) for condoning the delay and the delay is condoned by the CCIT- 1, Chennai vide order dated 04.09.2021. Accordingly it was prayed that the deduction cannot be denied on the said ground. Considering the judicial precedence with respect to the deduction u/s.80P(2)(d) towards interest received from cooperative banks and the fact that the delay in filing the return of income being condoned, we are of the view that there is no reason to deny the claim of deduction u/s.80P(2)(d) to the assessee. Accordingly we direct the AO to allow the claim of the assessee for both AY 2020-21 & 2021-22 since the facts are identical.
In result the appeal of the assessee for both AY 2020-21 & 2021-22 are allowed. Order pronounced on 17th day of February, 2026 at Chennai.