Section 80P(2) of the Income Tax Act
Income-tax Act, 2025: s.149
Section 80P(2) falls under section 80P of the Income-tax Act, 1961, which corresponds to section 149 (Deduction in respect of income of co-operative societies) of the Income-tax Act, 2025.
Read section 149 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 80P(2) is Mantola Co-operative Thrift & Credit Society Ltd. v. CIT (50 Taxmann.com 278), cited in 242 of the 332 judgments on BharatTax that turn on this section.
Leading authorities on Section 80P(2)
A cooperative society is not entitled to deduction under Section 80P(2)(a)(i) for interest income earned from investments and deposits which are not attributable to its primary business. An assessment order erroneously allowing such a deduction is revisable under Section 263 as being erroneous and prejudicial to the revenue, or subject to reassessment under Section 147.
Income earned by a cooperative society from investing its surplus funds in short-term deposits and securities is not attributable to its core activities and therefore not eligible for deduction under Section 80P(2)(a)(i) of the Income-tax Act.
Income from surplus funds invested in short-term deposits and securities by a cooperative credit society is not attributable to its activities and is therefore not eligible for exemption under section 80P(2)(a)(i) of the Income-tax Act.
Interest earned by a Cooperative credit Society from deposits with a Cooperative bank is eligible for deduction under Section 80P(2) of the Income-tax Act. Revisional orders under Section 263 disallowing such deduction are invalid if the original allowance was correct.
When the High Court admits a substantial question of law concerning an assessee's claim or alleged default, it indicates the assessee's bona fides, thereby preventing the imposition of penalties under sections 271(1)(c) or 271C. The mere disallowance of a claim or an addition by revenue authorities does not automatically lead to a penalty if the issue is debatable and pending appeal.
The revisional powers of the Principal Commissioner under Section 263 extend to matters not considered and decided in an appeal, even if these matters were part of the original assessment.
The genuineness of a transaction does not constitute a reasonable cause for the non-levy of penalty under Section 271D of the Income Tax Act, 1961.
Interest income earned by a cooperative society from investments of its surplus funds in cooperative banks is eligible for deduction under Section 80P(2)(d) of the Income Tax Act.
Interest and other income are not considered to be 'derived from' the business and are therefore not eligible for deduction under Section 80IA. Separate additions cannot be made for investments in movable property if the source of such investment has already been subjected to tax.
