Section 80P(4) of the Income Tax Act

Income-tax Act, 2025: s.149

Section 80P(4) 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(4) is Totgars Co-operative Sale Society Ltd. v. ITO (322 ITR 283), cited in 1,283 of the 1,638 judgments on BharatTax that turn on this section.

Leading authorities on Section 80P(4)

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.

State Bank Of India v. CIT
389 ITR 578 · 2016 · High Court
817
citing judgments

Income arising from a cooperative society's surplus funds invested in short-term deposits and securities is not attributable to the society's core activities and, therefore, is not eligible for exemption under Section 80P(2)(a)(i) of the Income-tax Act.

Pr. Commissioner of Income Tax and Anr. v. Totagars Cooperative Sale Society
392 ITR 74 · 2017 · High Court
762
citing judgments

Interest income earned by a cooperative society from its investments or surplus deposits with a cooperative bank is eligible for deduction under Section 80P(2)(d) of the Income-tax Act, 1961.

CIT v. Ponni Sugars & Chemicals Ltd.
306 ITR 392 · 2008 · Supreme Court
577
citing judgments

The "Purpose Test" determines whether an incentive or subsidy is a capital or revenue receipt for income tax purposes. If the incentive's purpose is to enable an assessee to set up a new industry or make investments in capital assets, it is a capital receipt and not taxable.

Subramanian and Anr. v. Siemens India Ltd. and Anr.
156 ITR 11 · 1985 · High Court
541
citing judgments

When there is a conflict between the decisions of non-jurisdictional High Courts, the view that favors the assessee should be preferred.

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".

Judgments on Section 80P(4)

ACIT- 27(3), Navi Mumbai vs. The Barc Employee Co Op Credit Society Ltd, Mumbai

In the result, the appeal filed by the revenue is hereby dismissed

ITA 6476/MUM/2017[2013-14]Status: DisposedITAT Mumbai14 May 2019AY 2013-14

Bench: Hon’Ble Shri Sandeep Gosain, Jm & Hon’Ble Shri Rajesh Kumar, Am आयकर अपील सं/ I.T.A. No.6476/Mum/2017 (निर्धारण वर्ा / Assessment Years: 2013-14) In The Matter Of : Acit 27(3)(4) बिधम/ The Barc Employees Co-Op Credit Society Ltd. R-5 Vs. 4Th Floor, Tower No.6, Shed, Behind Rig, North Vashi Railway Station Gate, Trombay, Mumbai- 400085. Complex, Vashi Navi Mumbai-400703. आयकर अपील सं/ I.T.A. Nos.6466 & 6467/Mum/2017 (निर्धारण वर्ा / Assessment Years: 2012-13 & 2014-15) बिधम/ Ito 27(3)(4) The Barc Employees Co-Op Credit Society Ltd. R-5 4Th Floor, Tower No.6, Room Vs. Shed, Behind Rig, North No.427, Vashi Railway Gate, Trombay, Mumbai- Station Complex, Vashi Navi 400085. Mumbai-400703. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No. : Aaajt0003C (अपीलाथी /Appellant) (प्रत्यथी / Respondent) .. Revenue By: Shri Amit Mohan Mittal (Dr) Assessee By: Shri Bhadresh K. Doshi (Ar) सुनवाई की तारीख / Date Of Hearing: 09/05/2019 घोषणा की तारीख /Date Of Pronouncement: 14/05/2019

For Appellant: Shri Bhadresh K. Doshi (AR)For Respondent: Shri Amit Mohan Mittal (DR)
Section 80PSection 80P(4)