A co-operative credit society is entitled to deduction under Section 80P(2)(d) of the Income-tax Act, 1961, for interest earned from deposits with co-operative banks, as the exclusion under Section 80P(4) applies only to co-operative banks claiming the deduction, not to other societies.

ORDER

Per: SHRI JAGADISH, A.M.:

These three appeals filed by the Revenue are directed against the identical orders ,all dated 18.09.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for A.Ys. 2020-21, 2022-23 and 2023-24. Since the issues involved, grounds raised and facts are identical in all the three appeals, they were heard together and are being disposed of by this consolidated order for the sake of convenience and brevity.

The assessee is a Co-operative Credit Society engaged in providing credit facilities to its members. The assessee filed its returns of income declaring Nil income after claiming deduction under section 80P of the Income-tax Act, 1961 (“the Act”). During the course of assessment proceedings completed under section 143(3) of the Act, the Assessing Officer noticed that the assessee had earned interest income from deposits kept with various co-operative banks and claimed deduction under section 80P(2)(d) of the Act in respect of such interest income.

The Assessing Officer was of the view that interest income earned from deposits with co-operative banks is not eligible for deduction under section 80P(2)(d). According to the Assessing Officer, in view of the provisions of section 80P(4), co-operative banks stand excluded from the ambit of section 80P and, therefore, interest received from such co-operative banks cannot qualify for deduction. The Assessing Officer also placed reliance on the decision of the Hon’ble Supreme Court in Totagars Co-operative Sale Society Ltd. v. ITO (322 ITR 283) and the judgment of the Hon’ble Karnataka High Court in PCIT v. Totagars Co-operative Sale Society (392 ITR 74). Accordingly, the deduction claimed under section 80P(2)(d) was disallowed and the total income was assessed by bringing the said interest income to tax.

Aggrieved, the assessee preferred appeals before the Ld. CIT(A). The Ld. CIT(A), after considering the submissions of the assessee and the judicial precedents relied upon, deleted the disallowances in all the three years by holding that the assessee is a co-operative society and interest income received from investments made with co-operative banks, which are also co-operative societies within the meaning of section 2(19) of the Act, is eligible for deduction under section 80P(2)(d). The Ld. CIT(A) followed the decision of the co-ordinate Bench of the Tribunal in assessee’s own case for earlier assessment years wherein identical disallowances were deleted.

The Revenue is in appeal before us in all the three years. The Ld. Departmental Representative reiterated the findings of the Assessing Officer and submitted that the Ld. CIT(A) erred in allowing deduction under section 80P(2)(d) in respect of interest earned from deposits with co-operative banks. It was contended that the judgment of the Hon’ble Karnataka High Court in PCIT v. Totagars Co-operative Sale Society (392 ITR 74) supports the case of the Revenue and that the legislative intent behind insertion of section 80P(4) was to deny the benefit in relation to co-operative banks.

Per contra, the Ld. Authorised Representative submitted that the issue is squarely covered in favour of the assessee by the order of the Tribunal in assessee’s own case for earlier assessment years, wherein under identical facts the Tribunal upheld the deletion of disallowance made under section 80P(2)(d) in respect of interest received from co-operative banks. It was submitted that there is no change either in facts or in law in the years under consideration and, therefore, the principle of consistency requires that the same view be followed.

We have considered the rival submissions and perused the material available on record. The short issue that arises for our consideration in all the three appeals is whether the assessee, being a co-operative credit society, is entitled to deduction under section 80P(2)(d) of the Act in re