INCOME TAX OFFICER, WARD -20(3)(1), MUMBAI V. VISHAL JUNNAR SAHAKARI PATPEDHI LTD, MUMBAI

ITA 4872/MUM/2025

AI Insights

The case involves three appeals by the Revenue against Vishal Junnar Sahakari Patpedhi Ltd. concerning the eligibility for deduction under Section 80P(2)(a)(i) of the Income-tax Act, 1961 for the assessment years 2017-18, 2018-19, and 2020-21. The primary legal issue was whether the assessee, a co-operative credit society, qualifies as a 'co-operative bank' under the Banking Regulation Act, 1949, and thus falls under the exclusion of Section 80P(4) which denies certain deductions to co-operative banks. The Tribunal examined the nature of the assessee's operations, its compliance with the Banking Regulation Act, and previous judicial decisions, ultimately deciding in favor of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773487 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2020-2021
• Appeal Filed On: 01-08-2025
• Other Referred Cases: Quepem Urban Co-operative Credit Society Ltd.
• Laws Referred To: Income-tax Act, 1961, Banking Regulation Act, 1949
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAVITHA KAUSHIK
• Assessee Lawyers: SIDDHESH WARHADI
• Keywords: Co-operative Credit Society
• Section: 56

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAJ KUMAR CHAUHAN (JUDICIAL MEMBER) ITA No. 4880, 4859 & 4872/MUM/2025 Assessment Year: 2017-18, 2018-19 & 2020-21 Income-tax Officer, Ward 20(3)(1), 306, 3rd Floor, Piramal Chamber, Parel, Mumbai-400012. Vs. Vishal Junnar Sahakari Patpedhi Ltd., B/3, Sussex Industrial Estate, Dadiji Konddev Cross Lane, Byculla (E), Mumbai-400027. PAN NO. AAAAV 0104 H Appellant Respondent Assessee by : Mr. Siddhesh Warhadi/ Mr. Rajendra Karekar Revenue by : Ms. Kavitha Kaushik, Sr. DR Date of Hearing : 15/09/2025 Date of pronouncement : 22/09/2025 ORDER PER BENCH These three appeals by the Revenue are directed against three separate orders, all dated 30.06.2025, passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017- 18, 2018-19 and 2020-21 respectively. As common issue in dispute is involved in all three appeals, therefore, same were heard together Printed from counselvise.com and disposed off by way of this consolidated order for the sake of convenience. 2. As identical grounds have been raised in all the appeal the quantum of deduction in raised in the assessment year 2017 1. On facts and in law, the Ld. CIT(A) erred in allowing the assessee's claim for deduction under Section 80P(2)(a)(i) of the Income provided under Section 80P(4) applicable to co banks. 2. The Ld. CIT(A) failed to appreciate that the assessee fulfils all the conditions laid down under Section 5(ccv) of the Banking Regulation Act, 1949, thereby qualifying as a \"primary co- deduction under Section 80P(2)(a)(i). 3. The Ld. CIT(A) erred in relying on the decisions of the Hon'ble ITAT in the assessee's own cases for earlier years and in the case of Quepem Urban Co Credit Society Ltd., without independently evaluating the applicability of Section 80P4 based on the facts of the relevant assessment year. 4. The Ld. CIT(A) failed to consider that each assessment year is independent and that reliance on earlier orders is not binding where the statutory provisions and underlying facts have been properly applied and examined afresh during the currem Assessment 5. The order of the Ld. CIT(A) is contrary to the legislative intent behind Section SOP) and the factual findings recorded by the Assessing Officer based on the activities and 3. Briefly stated, facts of the case are that registered Co-operative Credit Society, incorporated in the year 1979 under the Maharashtra State Co Vishal Junnar Sahakari Patpedhi Ltd and disposed off by way of this consolidated order for the sake of As identical grounds have been raised in all the appeal quantum of deduction involved, for sake of brevity, the grounds raised in the assessment year 2017-18 are reproduced as under: 1. On facts and in law, the Ld. CIT(A) erred in allowing the assessee's claim for deduction under Section 80P(2)(a)(i) of the Income-tax Act, 1961, despite the bar provided under Section 80P(4) applicable to co-operative 2. The Ld. CIT(A) failed to appreciate that the assessee fulfils all the conditions laid down under Section 5(ccv) of the Banking Regulation Act, 1949, thereby qualifying as mary co-operative bank\" and making it ineligible for deduction under Section 80P(2)(a)(i). 3. The Ld. CIT(A) erred in relying on the decisions of the Hon'ble ITAT in the assessee's own cases for earlier years and in the case of Quepem Urban Co-operative Credit Society Ltd., without independently evaluating the applicability of Section 80P4 based on the facts of the relevant assessment year. 4. The Ld. CIT(A) failed to consider that each assessment year is independent and that reliance on earlier orders is not binding where the statutory provisions and underlying facts have been properly applied and examined afresh during the currem Assessment 5. The order of the Ld. CIT(A) is contrary to the legislative intent behind Section SOP) and the factual findings ecorded by the Assessing Officer based on the and bye-laws. Briefly stated, facts of the case are that the assessee is a operative Credit Society, incorporated in the year 1979 under the Maharashtra State Co-operative Societies Act, ITA No. 4880, 4859 & 4872/MUM/2025 2 Vishal Junnar Sahakari Patpedhi Ltd and disposed off by way of this consolidated order for the sake of As identical grounds have been raised in all the appeals except or sake of brevity, the grounds 18 are reproduced as under: 1. On facts and in law, the Ld. CIT(A) erred in allowing the assessee's claim for deduction under Section ite the bar operative 2. The Ld. CIT(A) failed to appreciate that the assessee fulfils all the conditions laid down under Section 5(ccv) of the Banking Regulation Act, 1949, thereby qualifying as operative bank\" and making it ineligible for 3. The Ld. CIT(A) erred in relying on the decisions of the Hon'ble ITAT in the assessee's own cases for earlier operative Credit Society Ltd., without independently evaluating the applicability of Section 80P4 based on the facts of the 4. The Ld. CIT(A) failed to consider that each assessment year is independent and that reliance on earlier orders is not binding where the statutory provisions and underlying facts have been properly applied and 5. The order of the Ld. CIT(A) is contrary to the legislative intent behind Section SOP) and the factual findings ecorded by the Assessing Officer based on the the assessee is a operative Credit Society, incorporated in the year operative Societies Act, Printed from counselvise.com 1960. It was established with the avowed object of providing credit facilities exclusively to its members in acc principles of co-operation, mutual aid, and self governed and regulated by the Commissioner & Registrar of Co operative Societies, Maharashtra State. 3.1 The assessee filed its returns of income for the Assessment Years (AYs) 2017–18, 2018 26.09.2018 and 13.11.2020, declaring incomes of Nil and Nil respectively. The returns were duly processed under section 143(1) of the Income were thereafter selected for scrutiny and statutory notices were issued and complied with. respective years, the Assessing Officer disallowed the assessee’s claim of deduction under section 80P(2)(a)(i) of the Act on the reasoning that the assessee was in substance functioning as a co operative bank and, in view of section 80P(4), was not entitled to deduction. 3.2 On appeal, the learned Commissioner of Income Tax (Appeals) [CIT(A)] allowed the deduction by placing reliance on the bi decisions of the Tribunal in assessee’s own cases for AYs 2013 and 2014–15 (ITA Nos. 7752/Mum/2019, 7753/Mum/2019 and 1288/Mum/2021), wherein the assessee was held not to fall within the mischief of section 80P(4). Vishal Junnar Sahakari Patpedhi Ltd 1960. It was established with the avowed object of providing credit facilities exclusively to its members in accordance with the operation, mutual aid, and self-help. The Society is governed and regulated by the Commissioner & Registrar of Co operative Societies, Maharashtra State. The assessee filed its returns of income for the Assessment 18, 2018–19 and 2020–21 on 23.10.2017, 26.09.2018 and 13.11.2020, declaring incomes of Nil and Nil respectively. The returns were duly processed under section 143(1) of the Income-tax Act, 1961 (“the Act”). The cases after selected for scrutiny and statutory notices were issued and complied with. In the assessments framed for the respective years, the Assessing Officer disallowed the assessee’s claim of deduction under section 80P(2)(a)(i) of the Act on the hat the assessee was in substance functioning as a co operative bank and, in view of section 80P(4), was not entitled to On appeal, the learned Commissioner of Income Tax (Appeals) [CIT(A)] allowed the deduction by placing reliance on the bi decisions of the Tribunal in assessee’s own cases for AYs 2013 15 (ITA Nos. 7752/Mum/2019, 7753/Mum/2019 and 1288/Mum/2021), wherein the assessee was held not to fall within the mischief of section 80P(4). ITA No. 4880, 4859 & 4872/MUM/2025 3 Vishal Junnar Sahakari Patpedhi Ltd 1960. It was established with the avowed object of providing credit ordance with the help. The Society is governed and regulated by the Commissioner & Registrar of Co- The assessee filed its returns of income for the Assessment 21 on 23.10.2017, 26.09.2018 and 13.11.2020, declaring incomes of ₹6,63,32,186/-, Nil and Nil respectively. The returns were duly processed under tax Act, 1961 (“the Act”). The cases after selected for scrutiny and statutory notices were In the assessments framed for the respective years, the Assessing Officer disallowed the assessee’s claim of deduction under section 80P(2)(a)(i) of the Act on the hat the assessee was in substance functioning as a co- operative bank and, in view of section 80P(4), was not entitled to On appeal, the learned Commissioner of Income Tax (Appeals) [CIT(A)] allowed the deduction by placing reliance on the binding decisions of the Tribunal in assessee’s own cases for AYs 2013–14 15 (ITA Nos. 7752/Mum/2019, 7753/Mum/2019 and 1288/Mum/2021), wherein the assessee was held not to fall within Printed from counselvise.com 4. We have carefully considered material on record. Section 80P(2)(a)(i) entitles a co to deduction in respect of business attributable to carrying on the business of banking or providing credit facilities to its members. the activity of providing credit facility to its member and therefore, the relevant income earned , which is attributable to said activity reported under the head of “profit and gain of business” is eligi for deduction u/s 80P(2)(a)(i) of the Act. section 80P(4), the deduction u/s 80P is not available to a “co operative bank” other than a primary agricultural credit society or a primary co-operative agricultural and rural developme Explanation to section 80P(4) incorporates the definition of “co operative bank” from Part V of the Banking Regulation Act, 1949. 4.1 Since the assessee is not a or ‘primary co-operative agricult therefore, the decisive question is whether the assessee is a “co operative bank” within the meaning of section 80P(4). 4.2 Under the Explanation to section 80P(4) of the Act co bank has been defined that as the meaning under part 5 of Banking Regulation Act, 1949. Before us, the Ld. counsel for the assessee has referred to section 56 of the Banking Regulation wherein the banking is defined as accepting deposits Vishal Junnar Sahakari Patpedhi Ltd We have carefully considered the rival submissions and the material on record. Section 80P(2)(a)(i) entitles a co-operative society to deduction in respect of whole of amount of profits and gains of business attributable to carrying on the business of banking or lities to its members. The assessee is engaged in the activity of providing credit facility to its member and therefore, the relevant income earned , which is attributable to said activity reported under the head of “profit and gain of business” is eligi for deduction u/s 80P(2)(a)(i) of the Act. However, by virtue of section 80P(4), the deduction u/s 80P is not available to a “co operative bank” other than a primary agricultural credit society or a operative agricultural and rural developme Explanation to section 80P(4) incorporates the definition of “co operative bank” from Part V of the Banking Regulation Act, 1949. ince the assessee is not a ‘primary agriculture credit society operative agricultural and rural development bank he decisive question is whether the assessee is a “co operative bank” within the meaning of section 80P(4). Under the Explanation to section 80P(4) of the Act co bank has been defined that as the meaning assigning to them part 5 of Banking Regulation Act, 1949. Before us, the Ld. counsel for the assessee has referred to section 56 of the Banking Regulation wherein the banking is defined as accepting deposits ITA No. 4880, 4859 & 4872/MUM/2025 4 Vishal Junnar Sahakari Patpedhi Ltd the rival submissions and the operative society profits and gains of business attributable to carrying on the business of banking or The assessee is engaged in the activity of providing credit facility to its member and therefore, the relevant income earned , which is attributable to said activity reported under the head of “profit and gain of business” is eligible However, by virtue of section 80P(4), the deduction u/s 80P is not available to a “co- operative bank” other than a primary agricultural credit society or a operative agricultural and rural development bank. The Explanation to section 80P(4) incorporates the definition of “co- operative bank” from Part V of the Banking Regulation Act, 1949. primary agriculture credit society’ rural development bank’, he decisive question is whether the assessee is a “co- operative bank” within the meaning of section 80P(4). Under the Explanation to section 80P(4) of the Act co-operative assigning to them part 5 of Banking Regulation Act, 1949. Before us, the Ld. counsel for the assessee has referred to section 56 of the Banking Regulation wherein the banking is defined as accepting deposits Printed from counselvise.com from the public, withdrawal facilities thr The Ld. counsel submitted that the respondent society meet this criteria as it deals exclusively with its members and not the public and cannot provide withdrawal facility through banking instruments. This fact has not been controv Departmental Representative (DR). assessee does not accept deposits from, nor extend facilities to, the general public. Its activities are confined exclusively to its members, and it does not provide withdra or other banking instruments. Thus, the essential attributes of “banking” under section 56 of the Banking Regulation Act, 1949 are not satisfied. Hence, t Co-operative Bank provided under the Explanation to section 80P(4) of the Act and thus assessee is eligible for deduction u/s 80P(2)(a)(i) of the Act. 4.3 The Supreme Court in v. CIT [(2021) 431 ITR 1 (SC)] has categorically held a co-operative society is engaged in providing credit facilities to its members, the income so earned is deductible under section 80P(2)(a)(i). The Court clarified that section 80P(4) carves out an exception only in respect of co the Banking Regulation Act, and does not affect societies confining their activities to members. Vishal Junnar Sahakari Patpedhi Ltd withdrawal facilities through cheques and drafts. The Ld. counsel submitted that the respondent society meet this criteria as it deals exclusively with its members and not the public and cannot provide withdrawal facility through banking instruments. This fact has not been controverted by the Ld. Departmental Representative (DR). Thus, it is undisputed that the assessee does not accept deposits from, nor extend facilities to, the general public. Its activities are confined exclusively to its members, and it does not provide withdrawal facilities through cheques, drafts or other banking instruments. Thus, the essential attributes of “banking” under section 56 of the Banking Regulation Act, 1949 are Hence, the assessee does not fulfil the definition of nk provided under the Explanation to section 80P(4) of the Act and thus assessee is eligible for deduction u/s 80P(2)(a)(i) The Supreme Court in Mavilayi Service Co-operative Bank Ltd. [(2021) 431 ITR 1 (SC)] has categorically held operative society is engaged in providing credit facilities to its members, the income so earned is deductible under section 80P(2)(a)(i). The Court clarified that section 80P(4) carves out an exception only in respect of co-operative banks, as defined under the Banking Regulation Act, and does not affect societies confining their activities to members. ITA No. 4880, 4859 & 4872/MUM/2025 5 Vishal Junnar Sahakari Patpedhi Ltd ough cheques and drafts. The Ld. counsel submitted that the respondent society meet this criteria as it deals exclusively with its members and not the public and cannot provide withdrawal facility through banking erted by the Ld. t is undisputed that the assessee does not accept deposits from, nor extend facilities to, the general public. Its activities are confined exclusively to its members, wal facilities through cheques, drafts or other banking instruments. Thus, the essential attributes of “banking” under section 56 of the Banking Regulation Act, 1949 are he assessee does not fulfil the definition of a nk provided under the Explanation to section 80P(4) of the Act and thus assessee is eligible for deduction u/s 80P(2)(a)(i) operative Bank Ltd. [(2021) 431 ITR 1 (SC)] has categorically held that so long as operative society is engaged in providing credit facilities to its members, the income so earned is deductible under section 80P(2)(a)(i). The Court clarified that section 80P(4) carves out an banks, as defined under the Banking Regulation Act, and does not affect societies confining Printed from counselvise.com 4.4 On the other hand, the ruling in Ltd. v. ACIT [(2017) 397 ITR 1 (SC)] demonstrates the converse position, where a society, though registered as a co society, was in fact engaged in accepting deposits from the public and advancing loans to non fledged co-operative bank. It was held therein that such a society would fall within the exclusionary clause of section 80P(4). 4.5 Tested against these authoritative pronouncements, the assessee’s case is squarely governed by the ratio of and stands on a completely different footing from operative Society (supra). The assessee operates solely within the co-operative fold of its members and does not satisfy the statutory test of being a “co-operative bank”. 4.6 In view of the above legal position and following the consistent orders of the Tribunal in assessee’s own cases for earlier years, we uphold the order of the learned CIT(A) granting deduction under section 80P(2)(a)(i). No infirmity has been pointed out warranting interference. 4.7 The grounds raised by the Revenue in all the three appeal dismissed. Vishal Junnar Sahakari Patpedhi Ltd On the other hand, the ruling in Citizen Co-operative Society [(2017) 397 ITR 1 (SC)] demonstrates the converse on, where a society, though registered as a co society, was in fact engaged in accepting deposits from the public and advancing loans to non-members, thereby functioning as a full operative bank. It was held therein that such a society would fall within the exclusionary clause of section 80P(4). Tested against these authoritative pronouncements, the assessee’s case is squarely governed by the ratio of Mavilayi and stands on a completely different footing from (supra). The assessee operates solely within the operative fold of its members and does not satisfy the statutory operative bank”. In view of the above legal position and following the consistent nal in assessee’s own cases for earlier years, we uphold the order of the learned CIT(A) granting deduction under section 80P(2)(a)(i). No infirmity has been pointed out warranting he grounds raised by the Revenue in all the three appeal ITA No. 4880, 4859 & 4872/MUM/2025 6 Vishal Junnar Sahakari Patpedhi Ltd operative Society [(2017) 397 ITR 1 (SC)] demonstrates the converse on, where a society, though registered as a co-operative society, was in fact engaged in accepting deposits from the public members, thereby functioning as a full- operative bank. It was held therein that such a society would fall within the exclusionary clause of section 80P(4). Tested against these authoritative pronouncements, the Mavilayi (supra) and stands on a completely different footing from Citizen Co- (supra). The assessee operates solely within the operative fold of its members and does not satisfy the statutory In view of the above legal position and following the consistent nal in assessee’s own cases for earlier years, we uphold the order of the learned CIT(A) granting deduction under section 80P(2)(a)(i). No infirmity has been pointed out warranting he grounds raised by the Revenue in all the three appeal are Printed from counselvise.com 5. In the result, all the three appeals of the Revenue are dismissed. Order pronounced in the open Court on Sd/ (RAJ KUMAR CHAUHAN JUDICIAL MEMBER Mumbai; Dated: 22/09/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Vishal Junnar Sahakari Patpedhi Ltd In the result, all the three appeals of the Revenue are ounced in the open Court on 22/09/2025. Sd/- (RAJ KUMAR CHAUHAN) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai ITA No. 4880, 4859 & 4872/MUM/2025 7 Vishal Junnar Sahakari Patpedhi Ltd In the result, all the three appeals of the Revenue are /09/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai Printed from counselvise.com "