Belve Vyavasaya Seva Sahakari Sangha Ltd. V. The Commissioner of Income Tax (Appeals) National Faceless Appeal Centre, Delhi and The Income Tax Officer, Ward-2Q and TPS, Aayakar Bhavan, Malpe Road, Adi-Udupi, Udupi

ITA/118/2025

AI Insights

The case involves Belve Vyavasaya Seva Sahakari Sangha Ltd., a society registered under the KCS Act, 1959, which appealed against the order of the Income Tax Appellate Tribunal, Bengaluru. The society had claimed a deduction under Section 80P(2) of the Income Tax Act for interest income earned from deposits with SCDCC Bank and other nationalised banks. The Assessing Officer and subsequent appellate authorities denied this deduction, citing Section 80P(2)(d), which excludes interest income from cooperative banks from deductions under Section 80P(2)(a)(i). The High Court of Karnataka upheld these decisions, referencing a similar case, M/s. Judicial Employees House Building Co-operative Society Limited v. Income Tax Officer.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 832536 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 21-01-2026
• Assessment Year: misc
• Other Referred Cases: M/s. Judicial Employees House Building Co-operative Society Limited v. Income Tax Officer [ITA No.93/2024, dated 16.09.2025]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: THIRUMALESH
• Assessee Lawyers: MAHESH UPPIN
• Keywords: Co-operative Society; Deduction under section 80P; Income tax appeal; Interest income
• Section: 143(3); 143(2); 260A; 80P(2)

Judgement Text

" - 1 - HC-KAR NC: 2026:KHC:3538-DB ITA No. 118 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF JANUARY, 2026 PRESENT THE HON'BLE MR. JUSTICE S.G.PANDIT AN D THE HON'BLE MR. JUSTICE K. V. ARAVIND INCOME TAX APPEAL No. 118 OF 2025 BETWEEN: 1. BELVE VYAVASAYA SEVA SAHAKARI SANGHA LTD., (A SOCIETY REGISTERED UNDER KCS ACT, 1959) H.O. BELVE, HEBRI TALUK, UDUPI DISTRICT-576212. REP. BY ITS CEO: MR. KEERTHI KUMAR SHETTY …APPELLANT (BY SRI MAHESH R UPPIN, ADVOCATE) AND: 1. THE COMMISSIONER OF INCOME TAX (APPEALS) NATIONAL FACELESS APPEAL CENTRE, DELHI-110001. 2. THE INCOME TAX OFFICER, WARD-2Q AND TPS, AAYAKAR BHAVAN, MALPE ROAD, ADI-UDUPI, UDUPI-576 103. …RESPONDENTS (BY SRI THIRUMALESH, ADVOCATE) Printed from counselvise.com Digitally signed by VALLI MARIMUTHU Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:3538-DB ITA No. 118 of 2025 THIS ITA / INCOME TAX APPEAL FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, PRAYING TO SET ASIDE THE ORDERS PASSED BY THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU IN ITA No.819/BANG/2024 DATED 07.08.2024 FOR ASSESSMENT YEAR 2016-17 AND ALLOW THIS APPEAL IN THE INTEREST OF JUSTICE. THIS APPEAL, COMING ON FOR ORDERS THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.G.PANDIT and HON'BLE MR. JUSTICE K. V. ARAVIND ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE K.V. ARAVIND) Heard Sri Mahesh R. Uppin, learned counsel for the appellant-Assessee and Sri Thirumalesh, learned Senior Standing Counsel for the respondents-Revenue. 2. This appeal under Section 260A of the Income-tax Act, 1961 (for short, “the I.T. Act”) is filed by the assessee challenging the order dated 07.08.2024 passed by the Income Tax Appellate Tribunal, ‘C’ Bench, Bengaluru (for short, “the Tribunal”), in ITA No.819/Bang/2024, for to the Assessment Year 2016–17. 3. The assessee is a Society which filed its return of income claiming deduction under Section 80P(2) of the I.T. Act. Printed from counselvise.com - 3 - HC-KAR NC: 2026:KHC:3538-DB ITA No. 118 of 2025 The return of income was selected for scrutiny and notice under Section 143(2) of the I.T. Act was issued. 3.1 The Assessing Officer noticed that the assessee had made deposits with the SCDCC Bank and other nationalised bank and had earned interest thereon. The said interest income was claimed as a deduction under Section 80P(2)(a)(i) of the I.T. Act. The Assessing Officer held that since the interest income was assessable under the head “Income from Other Sources”, the deduction claimed was not allowable. The Assessing Officer further held that the assessee was not entitled to deduction of such interest income under Section 80P(2)(a)(i) in view of Section 80P(2)(d) of the I.T. Act. 3.2 The Assessing Officer completed the assessment under Section 143(3) of the I.T. Act by order dated 13.12.2018. Aggrieved by the said assessment order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) [for short, “CIT(A)”]. The appeal was considered by the National Faceless Appeal Centre, Delhi (for short, “NFAC”). The CIT(A), by order dated 01.03.2024, dismissed the appeal. Printed from counselvise.com - 4 - HC-KAR NC: 2026:KHC:3538-DB ITA No. 118 of 2025 3.3 The assessee, being further aggrieved, preferred an appeal before the Tribunal. The Tribunal, by the impugned order dated 07.08.2024, held that the interest income received by the assessee from investments made with the SCDCC Bank and other nationalised bank is not eligible for deduction under Section 80P(2)(a)(i) in view of Section 80P(2)(d) of the I.T. Act. 4. Considered the submissions made on either side and perused the appeal papers. 5. The assessee is a Society which claimed deduction under Section 80P(2) of the I.T. Act. The assessee had made deposits with the SCDCC Bank and nationalised bank and earned interest thereon. 6. Section 80P(1) of the I.T. Act enables a co- operative society to claim deduction of the income referred to in sub-section (2). Sub-section (2) provides for deduction in respect of the profits and gains of business attributable to the business of banking or providing credit facilities to its members. Section 80P(2)(d) provides deduction of interest income Printed from counselvise.com - 5 - HC-KAR NC: 2026:KHC:3538-DB ITA No. 118 of 2025 derived by the Co-operative Societies from its investments with any other Co-operative societies. The assessee as made investments in SCDCC Bank which is a Co-operative Bank. Interest income derived from Co-operative Bank is not included as deduction under Section 80P of the I.T. Act. This Court, in M/s. Judicial Employees House Building Co-operative Society Limited v. Income Tax Officer [ITA No.93/2024, dated 16.09.2025], has held that the interest income received from co-operative banks is not eligible for deduction under Section 80P of the I.T. Act. We find that the facts and the legal position considered in the aforesaid d ecision apply to the present case in all force. 7. In light of the above judgment, no substantial question of law would arise for consideration of this Court. Accordingly, the appeal stands dismissed. Sd/- (S.G.PANDIT) JUDGE Sd/- (K. V. ARAVIND) JUDGE MV/List No.: 1 Sl No.: 5 Printed from counselvise.com "