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2025 Supreme(Online)(ITAT) 7365
INCOME TAX APPELLATE TRIBUNAL (PUNE BENCH)
DIPAK P. RIPOTE, AM, SHRI VINAY BHAMORE, JM
The Sangli Salary Earners Co-operative Society Ltd. – Appellant
Versus
The Income Tax Officer, Op Society Ltd., s. Ward-3, Sangli – Respondent
Income Tax Appeal No. 2254/PUN/2025
For the Appellants/Petitioners: Shri Amit Sudhir Shintre
For the Respondents: Smt. Saumya Pandey Jain-Addl.CIT
Co-operative societies can claim tax deductions on interest income as it relates directly to their business operations, differing from the principles applicable to co-operative banks.
Headnote:(A) Income Tax Act, 1961 - Sections 80P(2)(a)(i) and 80P(2)(d) - Deduction claim - Assessee, a co-operative credit society, contested disallowance of interest income from cooperative banks by revenue authorities. Court referred to Totgars Co-operative Sale Society Ltd. v. ITO to substantiate the claim for deductions, emphasizing that interest earned from statutory deposits and banking activities directly relates to the business operations of a co-operative society, thus qualifying for deductions. The court reiterated judicial principles including consistency in legal decisions. (Paras 4 to 12)
(B) Jurisdictional Appeals - Reliance on previous rulings - The tribunal’s decision emphasized that consistent application of legal principles required previous favorable rulings to be upheld. The court held that the interest income earned is part of the profits attributable to the business and thus eligible for deductions under sections 80P of the Income Tax Act. (Paras 7 to 11)
| Table of Content |
|---|
| 1. order granting deductions based on tax filings and assessment orders. (Para 1) |
| 2. co-op credit society's challenges against income tax authorities. (Para 3) |
| 3. court’s examination of the nature of income and eligibility for deductions. (Para 4) |
| 4. final judgment allowing appeal based on precedents. (Para 12) |
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal is filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeals)[NFAC], passed under section 250 of the Income Tax Act, 1961 for A.Y.2020-21, dated 27.08.2025 emanating from Assessment Order u/s.143(3) read with section 143(3) r.w.s 144B of the dated 26.09.2022. The assessee has raised following grounds of appeal :
“1. Deduction u/s 80P(2)(a)(i) Relying on the decision of Totgars Co- operative Sale Society Ltd. v. ITO (322 ITR 283) (SC)
The Ld. AO/CIT(A) erred in treating statutory deposits, business related deposits with banks as investments of surplus/non-operational funds, whereas they are integral to the business of providing credit facilities. Reliance on Totgars Co-operative Sale Society Ltd. v. ITO (322 ITR 283) (SC) is misplaced, as the Supreme Court itself confined the ruling to facts of that case involving marketing societies, not credit societies.
Interest income therefrom is "profits and gains of business" attributable to the activity of banking/credit facilities and deductible u/s 80P(2)(a)(i). Considering the same entire addition of Interest income of Rs.3,71,88,591/- should be allowed as a deduction under section 80P(2)(a)(i) of the Act
2. Deduction u/s 80P(2)(d) and Inapplicability of Section 80P (4)
Without prejudice, on the facts and in the circumstances of the case and in law, the Ld. AO and CIT(A) erred in not granting deduction u/s 80P(2)(d) on the interest income of ₹3,70,45,086/- earned from Sangli District Co-operative Bank Ltd. and 39,158/- earned from Primary Teachers Co-operative Bank, which are themselves registered co- operative societies.
The authorities below have wrongly invoked Section 80P (4) The Appellant is not a co-operative bank within the meaning of Part V of the Banking Regulation Act, 1949, but a co-operative credit society registered under the Maharashtra Co-operative Societies Act, 1960, engaged exclusively in providing credit facilities to its members. (4) excludes only co-operative banks (engaged in lending money to the public at large under an RBI licence) from the benefit of . The Appellant, being a co-operative credit society, squarely falls outside the exclusion carved out by (4) Accordingly, the interest earned from deposits with other co-operative societies, including co-operative banks, is fully deductible under (2)(d).
3. Deduction under Section 80P (2)(c)(ii)
On the facts and in the circumstances of the case and in law, the Ld. AO and CIT(A) erred in not granting deduction of ₹50,000/- as provided under section 80P(2)(c)(ii) of the Income-tax Act, 1961.
The Appellant, being a co-operative society engaged in activities other than those specified in section 80P(2)(a) or (b), is statutorily entitled to claim deduction of ₹50,000/- from its gross total income. The authorities below failed to allow this mandatory deduction which is available irrespective of the treatment of interest income under other provisions of section 80P.
4. Jurisdictional Binding Precedents Ignored
The authorities below erred in disregarding binding decisions of the Jurisdictional ITAT Pune and Bombay High Court, contrary to judicial discipline and CBDT instructions.
5. Rule of Consistency Violated
The disallowance violates the principle of consistency upheld by the Hon'ble Supreme Court in Honda Siel Power Products Ltd. (295 ITR 466) (SC) and Maruti Suzuki India Ltd. [2019] 107 taxmann.com 375 (SC), since identical claims were allowed in earlier years in the Appellant's own case.
6. Natural Justice
The orders are non-speaking, ign oring assessee's detailed submissions and binding case law, and hence invalid and bad in
