BELVE VYAVASAYA SEVA SAHAKARI SANGHA LTD., vs. THE COMMISSIONER OF INCOME TAX (APPEALS)

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HC-KAR NC: 2026:KHC:3538-DB ITA No. 118 of 2025

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF JANUARY, 2026 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AN D THE HON'BLE MR. JUSTICE K. V. ARAVIND INCOME TAX APPEAL No. 118 OF 2025 BETWEEN:

AND:

Digitally signed by VALLI MARIMUTHU Location: HIGH COURT OF KARNATAKA

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HC-KAR NC: 2026:KHC:3538-DB ITA No. 118 of 2025

THIS ITA / INCOME TAX APPEAL FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, PRAYING TO SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA No.819/BANG/2024 DATED 07.08.2024 FOR ASSESSMENT YEAR 2016-17 AND ALLOW THIS APPEAL IN THE INTEREST OF JUSTICE.

THIS APPEAL, COMING ON FOR ORDERS THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and HON'BLE MR. JUSTICE K. V. ARAVIND

ORAL JUDGMENT

(PER: HON'BLE MR. JUSTICE K.V. ARAVIND)

Heard Sri Mahesh R. Uppin, learned counsel for the appellant-Assessee and Sri Thirumalesh, learned Senior Standing Counsel for the respondents-Revenue.

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HC-KAR NC: 2026:KHC:3538-DB ITA No. 118 of 2025

The return of income was selected for scrutiny and notice under Section 143(2) of the I.T. Act was issued. 3.1 The Assessing Officer noticed that the assessee had made deposits with the SCDCC Bank and other nationalised bank and had earned interest thereon. The said interest income was claimed as a deduction under Section 80P(2)(a)(i) of the I.T. Act. The Assessing Officer held that since the interest income was assessable under the head “Income from Other Sources”, the deduction claimed was not allowable. The Assessing Officer further held that the assessee was not entitled to deduction of such interest income under Section 80P(2)(a)(i) in view of Section 80P(2)(d) of the I.T. Act. 3.2 The Assessing Officer completed the assessment under Section 143(3) of the I.T. Act by order dated 13.12.2018. Aggrieved by the said assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [for short, “CIT(A)”]. The appeal was considered by the National Faceless Appeal Centre, Delhi (for short, “NFAC”). The CIT(A), by order dated 01.03.2024, dismissed the appeal.

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HC-KAR NC: 2026:KHC:3538-DB ITA No. 118 of 2025

3.3 The assessee, being further aggrieved, preferred an appeal before the Tribunal. The Tribunal, by the impugned order dated 07.08.2024, held that the interest income received by the assessee from investments made with the SCDCC Bank and other nationalised bank is not eligible for deduction under Section 80P(2)(a)(i) in view of Section 80P(2)(d) of the I.T. Act. 4. Considered the submissions made on either side and perused the appeal papers. 5. The assessee is a Society which claimed deduction under Section 80P(2) of the I.T. Act. The assessee had made deposits with the SCDCC Bank and nationalised bank and earned interest thereon. 6. Section 80P(1) of the I.T. Act enables a co- operative society to claim deduction of the income referred to in sub-section (2). Sub-section (2) provides for deduction in respect of the profits and gains of business attributable to the business of banking or providing credit facilities to its members. Section 80P(2)(d) provides deduction of interest income

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HC-KAR NC: 2026:KHC:3538-DB ITA No. 118 of 2025

derived by the Co-operative Societies from its investments with any other Co-operative societies. The assessee as made investments in SCDCC Bank which is a Co-operative Bank. Interest income derived from Co-operative Bank is not included as deduction under Section 80P of the I.T. Act. This Court, in M/s. Judicial Employees House Building Co-operative Society Limited v. Income Tax Officer [ITA No.93/2024, dated 16.09.2025], has held that the interest income received from co-operative banks is not eligible for deduction under Section 80P of the I.T. Act. We find that the facts and the legal position considered in the aforesaid d ecision apply to the present case in all force. 7. In light of the above judgment, no substantial question of law would arise for consideration of this Court. Accordingly, the appeal stands dismissed.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (K. V. ARAVIND) JUDGE MV/List No.: 1 Sl No.: 5