Section 56 of the Income Tax Act

Income-tax Act, 2025: s.92

Section 56 of the Income-tax Act, 1961 corresponds to section 92 (Income from other sources) of the Income-tax Act, 2025.

Read section 92 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 56 is Totgars Co-operative Sale Society Ltd. v. ITO (322 ITR 283), cited in 1,283 of the 1,790 judgments on BharatTax that turn on this section.

Leading authorities on Section 56

Totgars Co-operative Sale Society Ltd. v. ITO
322 ITR 283 · 2010 · Supreme Court
1,283
citing judgments

The interest income earned by a cooperative society from investing its surplus funds in fixed deposits with banks is not "derived from" its eligible business activities and is taxable as "income from other sources" under Section 56, thus not qualifying for deduction under Section 80P.

Pr. CIT v. Totagars
395 ITR 611 · 2017 · High Court
1,074
citing judgments

Interest income earned by a cooperative society from surplus deposits or investments held with a cooperative bank is not eligible for deduction under Section 80P(2)(d) of the Act.

Mavilayi Service Co-operative Bank Ltd. v. CIT
431 ITR 1 · 2021 · Supreme Court
999
citing judgments

Section 80P(4) serves as a proviso to Section 80P(1) and (2), excluding only cooperative banks that are cooperative societies and possess an RBI license for banking business. Its purpose is to exclude cooperative banks operating like commercial banks that lend money to the public.

Tumkur Merchants Souharda Credit Cooperative Ltd. v. ITO
230 Taxmann 309 · 2015 · High Court
527
citing judgments

A cooperative society is eligible for deduction under Section 80P(2)(a)(i) if it is engaged in cooperative activities. It also clarifies the allowability of deduction under Section 80P(2)(d) for interest income received from investments made in cooperative banks, after duly considering the Supreme Court's decision in Totgars Co-operative Sale Society Ltd.

Citizen Co-operative Society Ltd. v. ACIT
397 ITR 1 · 2017 · Supreme Court
499
citing judgments

A co-operative credit society engaged in banking business with the general public, accepting deposits from non-members and advancing loans to non-members, is treated as a co-operative bank. Such a society falls under the exclusionary clause of Section 80P(4) and is not eligible for deduction under Section 80P(2)(a)(i).

Totgar's Co-operative Sale Society Ltd. v. ITO
188 Taxmann 282 · 2010 · Supreme Court
486
citing judgments

Interest income earned by a co-operative society from investments, particularly with co-operative banks, is not eligible for deduction under Section 80P as it is not attributable to the core business activities of the society and constitutes "other income", not "profits and gains of business".

CIT v. Andhra Pradesh State
200 Taxmann 220 · 2011 · High Court
348
citing judgments

Interest earned by a Co-operative Society from investing fixed deposits in banks is entitled to a deduction under Section 80P(2)(a)(i) of the Income-tax Act.

Pr. CIT v. Totagars Co-operative Sales Society
83 Taxmann.com 140 · 2017 · High Court
306
citing judgments

Interest income earned by a co-operative society from deposits or investments made in a co-operative bank is not eligible for deduction under Section 80P(2)(d) of the Income Tax Act, 1961, in view of Section 80P(4).

Tumkur Merchants Souharda Credit Co-op. Ltd. v. ITO
55 Taxmann.com 447 · 2015 · High Court
267
citing judgments

Interest income earned by a co-operative society from temporary deposits with other banks, when such deposits are made from its business funds, qualifies as business income eligible for deduction under Section 80P(2)(a)(i) and not as income from other sources.

Bangalore Club v. CIT
350 ITR 509 · 2013 · Supreme Court
247
citing judgments

The Supreme Court affirmed the doctrine of mutuality, holding that contributions received from and returned to members for a common purpose do not constitute taxable profits. However, income from transactions with non-members or interest earned from investments in external entities (like cooperative banks) may break the mutuality chain and be taxable under Section 56, falling outside the scope of Section 80P deductions.

Judgments on Section 56

The Government Telecommunication Employees Co-Operative Society Ltd., Chennai vs. ITO, Ncw - 12 (3), Chennai

In the result, all the appeals filed by the assessee are partly allowed

ITA 559/CHNY/2020[2016-17]Status: DisposedITAT Chennai10 Feb 2022AY 2016-17

Bench: Shri V. Durga Rao & Shri Manoj Kumar Aggarwalआयकर अपील सं./I.T.A. Nos.2478/Chny/2017, 2703/Chny/18, 558 & 559/Chny/2020 िनधा"रण वष"/Assessment Years: 2014-15, 2015-16, 2011-12 & 2016-17 M/S. The Government The Income Tax Officer, Telecommunications Employees Ncw – 12(3)/Acit 12(1), Cooperative Society Ltd., New No. 112, Chennai. Old No. 37A, Sembudoss Street, Vs. Chennai 600 001. [Pan:Aabat3072B] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri M. Karunakaran, Advocate ""थ" की ओर से/Respondent By : Shri P. Sajit Kumar, Jcit सुनवाई की तारीख/ Date Of Hearing : 07.02.2022 घोषणा की तारीख /Date Of Pronouncement : 10.02.2022 आदेश /O R D E R Per V. Durga Rao: These Four Appeals Filed By The Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 13, Chennai Dated 13.07.2017, 16.08.2018, 21.01.2020 & 27.01.2020 Relevant To The Assessment Years 2014-15, 2015-16, 2011-12 & 2016-17. Since Common Grounds In Identical Facts Involved In These Appeals, Heard Together & Are Being Disposed Of By This Common Order For The Sake Of Brevity.

For Appellant: Shri M. Karunakaran, AdvocateFor Respondent: Shri P. Sajit Kumar, JCIT
Section 80P

The Government Telecommunication Employees Co-Operative Society Ltd., Chennai vs. ITO, Ncw - 12 (3), Chennai

In the result, all the appeals filed by the assessee are partly allowed

ITA 558/CHNY/2020[2011-12]Status: DisposedITAT Chennai10 Feb 2022AY 2011-12

Bench: Shri V. Durga Rao & Shri Manoj Kumar Aggarwalआयकर अपील सं./I.T.A. Nos.2478/Chny/2017, 2703/Chny/18, 558 & 559/Chny/2020 िनधा"रण वष"/Assessment Years: 2014-15, 2015-16, 2011-12 & 2016-17 M/S. The Government The Income Tax Officer, Telecommunications Employees Ncw – 12(3)/Acit 12(1), Cooperative Society Ltd., New No. 112, Chennai. Old No. 37A, Sembudoss Street, Vs. Chennai 600 001. [Pan:Aabat3072B] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri M. Karunakaran, Advocate ""थ" की ओर से/Respondent By : Shri P. Sajit Kumar, Jcit सुनवाई की तारीख/ Date Of Hearing : 07.02.2022 घोषणा की तारीख /Date Of Pronouncement : 10.02.2022 आदेश /O R D E R Per V. Durga Rao: These Four Appeals Filed By The Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 13, Chennai Dated 13.07.2017, 16.08.2018, 21.01.2020 & 27.01.2020 Relevant To The Assessment Years 2014-15, 2015-16, 2011-12 & 2016-17. Since Common Grounds In Identical Facts Involved In These Appeals, Heard Together & Are Being Disposed Of By This Common Order For The Sake Of Brevity.

For Appellant: Shri M. Karunakaran, AdvocateFor Respondent: Shri P. Sajit Kumar, JCIT
Section 80P

The Govt. Telecommunication Employees Co-Operative Society Ltd., Chennai vs. ACIT Non Corporate Circle 12(1), Chennai

In the result, all the appeals filed by the assessee are partly allowed

ITA 2703/CHNY/2018[2015-16]Status: DisposedITAT Chennai10 Feb 2022AY 2015-16

Bench: Shri V. Durga Rao & Shri Manoj Kumar Aggarwalआयकर अपील सं./I.T.A. Nos.2478/Chny/2017, 2703/Chny/18, 558 & 559/Chny/2020 िनधा"रण वष"/Assessment Years: 2014-15, 2015-16, 2011-12 & 2016-17 M/S. The Government The Income Tax Officer, Telecommunications Employees Ncw – 12(3)/Acit 12(1), Cooperative Society Ltd., New No. 112, Chennai. Old No. 37A, Sembudoss Street, Vs. Chennai 600 001. [Pan:Aabat3072B] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri M. Karunakaran, Advocate ""थ" की ओर से/Respondent By : Shri P. Sajit Kumar, Jcit सुनवाई की तारीख/ Date Of Hearing : 07.02.2022 घोषणा की तारीख /Date Of Pronouncement : 10.02.2022 आदेश /O R D E R Per V. Durga Rao: These Four Appeals Filed By The Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 13, Chennai Dated 13.07.2017, 16.08.2018, 21.01.2020 & 27.01.2020 Relevant To The Assessment Years 2014-15, 2015-16, 2011-12 & 2016-17. Since Common Grounds In Identical Facts Involved In These Appeals, Heard Together & Are Being Disposed Of By This Common Order For The Sake Of Brevity.

For Appellant: Shri M. Karunakaran, AdvocateFor Respondent: Shri P. Sajit Kumar, JCIT
Section 80P

The Government Telecommunication Employees Co-Operative Society Ltd., Chennai vs. ITO Non Corporate Ward 12(3), Chennai

In the result, all the appeals filed by the assessee are partly allowed

ITA 2478/CHNY/2017[2014-15]Status: DisposedITAT Chennai10 Feb 2022AY 2014-15

Bench: Shri V. Durga Rao & Shri Manoj Kumar Aggarwalआयकर अपील सं./I.T.A. Nos.2478/Chny/2017, 2703/Chny/18, 558 & 559/Chny/2020 िनधा"रण वष"/Assessment Years: 2014-15, 2015-16, 2011-12 & 2016-17 M/S. The Government The Income Tax Officer, Telecommunications Employees Ncw – 12(3)/Acit 12(1), Cooperative Society Ltd., New No. 112, Chennai. Old No. 37A, Sembudoss Street, Vs. Chennai 600 001. [Pan:Aabat3072B] (अपीलाथ"/Appellant) (""थ"/Respondent) अपीलाथ" की ओर से / Appellant By : Shri M. Karunakaran, Advocate ""थ" की ओर से/Respondent By : Shri P. Sajit Kumar, Jcit सुनवाई की तारीख/ Date Of Hearing : 07.02.2022 घोषणा की तारीख /Date Of Pronouncement : 10.02.2022 आदेश /O R D E R Per V. Durga Rao: These Four Appeals Filed By The Assessee Are Directed Against Different Orders Of The Ld. Commissioner Of Income Tax (Appeals) 13, Chennai Dated 13.07.2017, 16.08.2018, 21.01.2020 & 27.01.2020 Relevant To The Assessment Years 2014-15, 2015-16, 2011-12 & 2016-17. Since Common Grounds In Identical Facts Involved In These Appeals, Heard Together & Are Being Disposed Of By This Common Order For The Sake Of Brevity.

For Appellant: Shri M. Karunakaran, AdvocateFor Respondent: Shri P. Sajit Kumar, JCIT
Section 80P