EVERARD TOWERS COOPERATIVE HOUSING SOCIETY LIMITED,EVERARD TOWER CHS LTD V. WARD 41(1)(2), MUMBAI, KAUTILYA BHAVAN

ITA 7341/MUM/2025

AI Insights

The case involves The Everard Tower Co-operative Housing Society Limited, which appealed against the assessment order confirming the disallowance of deduction on interest income earned from fixed deposits and savings bank deposits with various cooperative banks. The primary legal issue was whether the cooperative banks should be considered as cooperative societies for the purpose of deduction under section 80P(2)(d) of the Income Tax Act. The Tribunal examined precedents and interpretations of section 80P(2)(d), distinguishing it from section 80P(2)(a), which was the focus of earlier Supreme Court decisions.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 831388 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: misc
• Appeal Filed On: 13-11-2025
• Other Referred Cases: PCIT vs Totgars Co-op Society, State Bank of India vs CIT, CIT vs Punjab State Co-op Agricultural Development Bank Ltd., Totgars Co-op Sale Society Ltd. vs ITO, Royal Industrial Estate Cooperative Limited Vs DCIT, Rustomjee Aspiree Premises Coop. Society Limited Vs ITO, Murude Sahakari Patsanstha Maryadit Vs ITO, Surat Vankar Shahkari Sangh Vs ACIT, UP Co-operative Sugar Factory, Haryana Co-operatives Sugar Mill Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADESH RAI; VIRTUALLY
• Assessee Lawyers: VINITA NARA

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 7341/MUM/2025 (AY : 2020-21) (Physical hearing) The Everard Tower Co-operative Housing Society Limited B-1007, Everard Tower CHS Ltd. Eastern Express Highway, Sion (East), Mumbai – 400022. [PAN No. AAAAE2800M] Vs ITO,Ward-41(1)(2), Mumbai KautilyaBhavan, BandraKurla Complex, Bandra (East), Mumbai – 400051. Appellant / Assessee Respondent / Revenue Assessee by Ms. Vinita Nara, Advocate Revenue by Shri Adesh Rai, Sr. DR (virtually) Date of institution of appeal 13.11.2025 Date of hearing 21.01.2026 Date of pronouncement 21.01.2026 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the assessment order of ld. CIT(A)/NFAC dated 20.08.2025for A.Y. 2016-17.The assessee has raised the following grounds of appeal: “1. Ld. CIT(A) / (NFAC) erred in confirming the action of Ld. AO of disallowing the deduction though same was allowed on identical facts or AY 2017-18 vide order us. 143(3). 2. Ld. CIT(A) / (NFAC) erred in confirming the action of Ld. AO of disallowing deduction u/s 80P(2)(d) of Rs. 35,71,053.” 2. Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that a very short dispute is involved in the present appeal. The assessee is a co- operative society. The assessee earned interest on fixed deposit and on other deposits with co-operative banks namely Shamrao Vithal co-op Bank, Printed from counselvise.com ITA No. 7341/Mum/2025 The Everard Tower Co-operative Housing Society Limited 2 Saraswat Co-op Bank, Citizens Credit Co-op Bank, Mumbai District Central Co- op Bank, and Maharashtra State Co-op Bank Limited aggregating of Rs. 35,70,053. The figure of interest income is not in dispute. The assessing officer disallowed such interest income on the basis of decision of Karnataka High Court in PCIT vs Totgars Co-op Society in ITA No. 100064 to 100068 of 2016 dated 16.08.2017 and the decision of State Bank of India vs CIT (2016) 389 ITR 578 (Guj), CIT vs Punjab State Co-op Agricultural Development Bank Ltd. (2016) 389 ITR 607 (P&H) and the decision of Hon’ble Apex Court in Totgars Co-op Sale Society Ltd. vs ITO (2010) 322 ITR 283 (SC). The ld CIT(A) confirmed action of assessing officer. The ratio of such decision is not applicable on the facts of the present case. The said decision is basically on deduction section 80P(2)(a). However, the assessee claimed deduction clause under (d) of sub-section (2) of section 80P. There are series of decision wherein it has been consistently held that co-operative banks are primary co- operative society and the assessee is eligible for deduction of interest earned on fixed deposit with savings bank deposit with such co-operative bank. To support her submissions, she relied on the following case laws;  Royal Industrial Estate Cooperative Limited Vs DCIT in ITA No. 3792/Mum/2023 dated 29/02/024,  Rustomjee Aspiree Premises Coop. Society Limited Vs ITO in ITA No. 1195/Mum/2023 dated 10.07.2023,  Murude Sahakari Patsanstha Maryadit Vs ITO in ITA No. 1058/Mum/2017 dated 21.07.2017. 3. On the other hand, the ld. Sr. DR for the Revenue supported the order of ld. CIT(A). The ld. Sr. DR for the Revenue submits that Hon’ble Supreme Court in Totgars Co-operative Sale Society vs ITO 322 ITR 283 (SC) held that assessee Printed from counselvise.com ITA No. 7341/Mum/2025 The Everard Tower Co-operative Housing Society Limited 3 is not eligible for deduction of interest income earned from fixed deposit or surplus parked with bank is not eligible for deduction under section 80P(2)(d). The cooperative bank cannot be treated as cooperative society. 4. In short rejoinder submission, the ld. AR of the assessee submits that Karnataka High Court in its subsequent decision distinguished the ratio of decision of Totgars Co-op Sale Society Ltd. vs ITO (322 ITR 283) in subsequent decision 392 ITR 74 (Karnataka) wherein it was held that for the purpose of section 80P(2)(d), a co-operative bank should be considered as co-operative society. The decision relied by lower authorities is basically relates to deduction under section 80P(2)(a). 5. I have considered the submission of both the parties and gone through the orders of lower authorities. I find that there is no dispute about the quantum of interest earned from FD and Savings Bank with various co-operative Banks. Short dispute is as to whether the co-operative bank should be considered a so-operative society or not. I find that Hon’ble Karnataka High Court in its subsequent decision in PCIT vs Totgars Co-op Sale Society Ltd. 392 ITR 74 held that for the purpose of section 80P(2)(d), co-operative bank should be considered as a co-operative society. The decision in Totgars Co-op Sale Society Ltd. vs ITO 322 ITR 283 dealt with interpretation and the deduction which is applicable under section 80P(2)(a). I further find the similar view was taken by Gujarat High Court in Surat Vankar Shahkari Sangh Vs ACIT (2016) 72 taxmann.com 169 (Gujarat), Allahabad High Court in case of UP Co-operative Sugar Factory (2013) 17 taxmann.com 58 (Allahabad) and Punjab & Haryana High Court in Haryana Co-operatives Sugar Mill Ltd. (1989) Printed from counselvise.com ITA No. 7341/Mum/2025 The Everard Tower Co-operative Housing Society Limited 4 46 Taxman 28. Thus, in view of the aforesaid legal discussion wherein it has been consistently held that for the purpose of deduction under section 80P(2)(d), the co-operative bank is to be treated as primary co-operative society, therefore, the assessee is eligible for deduction of interest income earned form such cooperative banks. The ration of decision relied by the lower authorities in case of Co-op Sale Society Ltd. vs ITO (322 ITR 283) is not applicable on the facts of the present case, as the dispute in the said case relates to deduction under section 80P(2)(a) of the Act. Said sub-clause deals with the income earned by Cooperative society on its activities. In the result, the grounds of appeal raised by assessee are allowed. 6. In the result, the appeal of assesseeis allowed. Order pronounced in the open Court on 21/01/2026. -S Sd/- PAWAN SINGH JUDICIAL MEMBER MUMBAI, Dated: 21/01/2026 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai Printed from counselvise.com "