ITO, SATARA V. UTKARSHA NAGARI SAHKARI PATSANSTHA MARYA WAI, WAI

ITA 2443/PUN/2025

AI Insights

The case involves appeals by the Income Tax Officer, Satara against Utkarsha Nagari Sahakari Patsanstha Marya Wai, a Cooperative Credit Society, concerning the eligibility of deductions under sections 80P(2)(a)(i) and 80P(2)(d) of the Income Tax Act, 1961 for the assessment years 2018-19 and 2022-23. The primary issue was whether the interest income earned by the assessee from investments in Cooperative Banks qualifies for deductions under the specified sections. The Tribunal considered various judicial precedents and the arguments presented by both parties before concluding that the deductions were applicable.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839662 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2026
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Appeal Filed On: 21-10-2025
• Other Referred Cases: PCIT Vs. Totagars Co-operative Sale Society, Citizen Co-operative Society Ltd. Vs. ACIT, Bangalore Club Vs. CIT, Mavilayi Service Cooperative Bank Ltd. Vs. CIT, Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO, Deeplaxmi Nagari Sahakari Patsanstha Maryadit Vs. ITO, Nashik Road Nagari Sahkari Patsanstha Limited Vs. ITO, Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd. Vs. ITO, The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHILPA N C
• Assessee Lawyers: PRAMOD S SHINGTE; . DECISION; CATENA OF DECISIONS OF VARIOUS; VARIOUS DECISIONS
• Keywords: Set aside; Business income; Additional evidence; Co-operative Credit Society
• Section: 143(3); 142(1); 263; 56

Judgement Text

" आयकर अपीलीय अधिकरण “बी” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, PUNE BEFORE SHRI R.K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.2443 & 3121/PUN/2025 धििाारण वर्ा / Assessment Years : 2018-19 & 2022-23 Income Tax Officer, Satara Vs. Utkarsha Nagari Sahakari Patsanstha Marya Wai, Head Office 442, Ganpati Ali Wai, Tal.-Wai, Satara-412803 PAN : AAAAU0544L अपीलार्थी / Appellant प्रत्यर्थी / Respondent CO No.16/PUN/2026 धििाारण वर्ा / Assessment Year : 2022-23 Utkarsha Nagari Sahakari Patsanstha Marya Wai, Head Office 442, Ganpati Ali Wai, Tal.-Wai, Satara-412803 PAN : AAAAU0544L Vs. Income Tax Officer, Satara अपीलार्थी / Appellant प्रत्यर्थी / Respondent Assessee by : Shri Pramod S Shingte Department by : Smt. Shilpa NC Date of hearing : 17-02-2026 Date of Pronouncement : 24-02-2026 आदेश / ORDER PER ASTHA CHANDRA, JM : These two appeals by the Revenue and the Cross Objection by the assessee are directed against the order dated 08.08.2025 and 24.10.2025 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)/NFAC”] pertaining to Assessment Years (“AYs”) 2018-19 and 2022-23. For the sake of convenience, both the appeals filed by the Printed from counselvise.com 2 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 Revenue and the Cross Objection filed by the assessee were heard together and are being disposed off by this common order. ITA No. 2443/PUN/2025, AY 2018-19 by the Revenue. 2. Briefly stated, the facts of the case are that the assessee is a Co- operative Credit society registered under the Maharashtra Co-operative Society Act, 1960. It is engaged in the activities of providing credit facilities to its members and accepting deposits from its members. For AY 2018-19, the assessee filed its return of income on 08.10.2018 declaring total income at Rs.Nil after claiming deduction of Rs.2,58,31,735/- u/s 80P of the Income Tax Act, 1961 (the “Act”) which was accepted by the Ld. Assessing Officer (“AO”) in the scrutiny assessment vide assessment order passed u/s 143(3) on 24.03.2021. Thereafter, the Ld. PCIT invoked the provisions of section 263 of the Act and directed the Ld. AO to reassess the income of the assessee with respect to the claim of the assessee u/s 80P(2)(a)(i)/80P(2)(d) of the Act. Consequent thereto, the Ld. AO issued notice u/s 142(1) of the Act to the assessee calling for various details on deduction claimed under Chapter VI-A including therein details of interest and dividend received from the various Co-operative Societies and Co- operative Banks for the year under consideration. In response thereto, the assessee failed to comply and hence, another notice was issued which also remained un-complied. Thereafter, on issue of third notice, the assessee submitted its reply which is incorporated in para 8 and 9 of the impugned assessment order by the Ld. AO. However, the submissions of the assessee were not found to be acceptable by the Ld. AO and relying on the decision of the Hon’ble Karnataka High Court in the case of PCIT Vs. Totagars Co-operative Sale Society (2017) 83 taxmann.com 140 (Kar.) and the Hon’ble Supreme Court in the case of Citizen Co-operative Society Ltd. Vs. ACIT (2017) 84 taxmann.com 114 (SC) and Bangalore Club Vs. CIT 29 Taxmann.com 29 (SC), the Ld. AO concluded that the interest income earned by the Co-operative Society from Co-operative/Commercial Banks during the relevant AY under consideration are to be treated as income from other sources taxable u/s 56 of the Act. He, therefore, proceeded to complete the assessment u/s 143(3) r.w.s. 263 of the Act vide his order dated 26.03.2024 disallowing the assessee’s claim of deduction u/s 80P(2) of the Act amounting to Rs.2,58,31,735/-. Printed from counselvise.com 3 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 3. Aggrieved, the assessee carried the matter before the Ld. CIT(A)/NFAC. During the appellate proceedings, placing reliance on the various judicial precedents covering the impugned issue in favour of the assessee, it was contended that the interest income earned by the assessee during the relevant AY from investments with the Co-operative Banks is eligible for deduction u/s 80P of the Act. The Ld. CIT(A)/NFAC after considering the submissions of the assessee which is reproduced in para 5 of the impugned appellate order allowed the appeal of the assessee by observing as under : “6. Decision I have gone through the facts of the case. The main grievance of the appellant is regarding disallowance of claim for deduction u/s 80P(2)(a)(i) on account of interest received from co-operative banks, MSEB bill commission and dividend income. The appellant has made an alternative claim u/s 80P(2)(d) in respect of interest and divided from co-operative banks. It is necessary understand the observation of different courts in the same set of facts in the following cases. A.The decision of Hon‟ble Kerala High Court in The Principal Commissioner of Income Tax vs M/s Peroorkada Service Co- operative Bank Ltd. 134 taxmann.com 380 (Kerala) is also of prime importance. The following portion of the order is relevant to the facts of the case: “8.3 Further, clause (d) deals with interest in respect of any income by way of interest or dividends derived by the Co-operative Societies from its investments with any other Cooperative Society, the whole of such interest income is eligible for deduction. It is upon plain construction inferable that clauses (d) deals with income derived by a Co-operative Society, other than the income covered by clauses (a) to (c) of Section 80P(2). Clause (d) deals with yet another type of income earned by the Co-operative Society which is deducted while computing the total income of the assessee. However, to merit acceptance of deduction under clause (d) of Section 80P(2) of the Act, the clause referring to interest or dividend derived from investments with any other Co-operative Society is satisfied. In the case on hand, the argument of assessee is that the interest earned by the assessee is from Cooperative Banks/Treasury. The Co-operative Banks are registered under the Kerala Cooperative Societies Act. Therefore, the interest earned could be treated as meriting consideration under clause (d) of Section 80P(2) of the Act. It is not in dispute that the District/State Cooperative Banks have licence from the Reserve Bank of India under the Banking Regulation Act and are registered Cooperative Societies under the Act. Suffice to observe that by being a Society doing banking business such society will stand on par with a Cooperative Society registered under the Kerala Cooperative Societies Act would come within the purview of clause (d) of Section 80P(2). ..... 12.2 Section 80P deals with Cooperative Societies‟ computation of income. As already noted, it has four sections and several sub-sections and clauses. The Parliament has considered the various situations in which the exigible income and the deductible income of the assessee is considered while computing the income of the assessee. For getting deduction, in our considered view, the assessee must also establish that the interest income earned by the assessee is from a Co-operative Society. As a matter of fact, in the case on hand, there is no dispute that it is not from a Co-operative Printed from counselvise.com 4 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 Society registered under Kerala Cooperative Societies Act. The interest income earned from District Cooperative Bank State Cooperative Bank, in the facts and circumstances of the case, do come within Section 80P(2)(d). Therefore, the income constitutes income from other sources and the only eligible deduction is covered by Section 80P(2)(d) viz. Interest or dividend derived by the assessee from its investments with any other Co-operative Society. The source of interest income is from Bank and Treasury, interest income received from Treasury be included in the computation of total income of the assessee. In other words, interest earned from Treasury is inadmissible for deduction and interest income from Co-operative Societies registered under the Kerala Co-operative Societies Act are eligible for deduction. The contra consideration of Commissioner of Income Tax (Appeals) and the Tribunal is incorrect and liable to be modified as stated above. Hence, it is held that the interest income earned by the assessee does not come within the ambit of Section 80P(2)(a)(i) and permissible deduction of interest income is limited to Cooperative Societies/Banks registered under Kerala Co-operative Societies Act under clause (d) of the Act and effect order on the above lines is made by the Assessing Officer.” B.Reference may be drawn to the decision of Hon‟ble Kerala High Court in The Principal Commissioner of Income Tax vs M/s Sahyadri Co-operative Credit Society Ltd. 166 taxmann.com 445 (Kerala). The following portion of the order is relevant to the facts of the case:” 4. Dissatisfied, the Revenue is in appeal before the Tribunal raising the following grounds of appeal : “1. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in deleting the disallowance made by the Assessing Officer of the deduction of Rs. 2,58,31,730/- claimed under section 80P of the Income-tax Act, 1961 being interest earned from the investments with co-operative banks, ignoring the decision of the Hon'ble Supreme Court in the case of Totgars Co-operative Sales Society Ltd. Vs. ITO, (SC) (322 ITR 283) (2010) wherein the Hon'ble Court clearly held that the interest income which has been earned by a co-operative society by investing surplus funds would come in the category of 'Income from other sources' taxable u/s 56 of the Act and would not qualify for deduction as business income u/s 80P(2)(a) (i) of the Act. 2. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on merits that interest earned from Co-operative banks is eligible for deduction under section 80P(2)(d) without appreciating the rationale propounded by the Hon'ble Karnataka High Court in the case of PCIT vs. Totagars Co-operative Sale Society 392 ITR 74 (Karnataka) whereby it has been held that the use of the word 'in relation to' in amending sub-section 80P(4) would preclude any income earned from Co-operative Banks to qualify the deductions available under section 80P. 3. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on merits that interest earned from Co-operative banks is eligible for deduction under section 80P(2)(d) without appreciating the fact that Income Tax Act being a taxing statute deserved to be interpreted in strict terms in cases of exclusionary provisions as propounded by Hon'ble Apex Court in the case of Printed from counselvise.com 5 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 Commissioner of Customs (Imports), Mumbai v. Dilip Kumar & Company & Ors. in Civil Appeal No. 3327 of 2007 & Krishi Upaj Mandi Samiti New Mandi Yard vs Commissioner Of Central Excise in CIVIL APPEAL NO. 1482 OF 2018. 4. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on merits that interest earned from Co-operative banks is eligible for deduction under section 80P(2)(d) without appreciating the fact that Income Tax Act is not a Welfare Act in itself and that even in welfare statutes the exclusion provisions are strictly construed and therefore, the exclusion provisions of section 80P(4) precluding income earned in relation to a Co-operative bank is not deductible under section 80Р. 5. On the facts and in the circumstances of the case the Ld. CIT(A) has erred in law and on merits that interest earned from Co-operative banks is eligible for deduction under section 80P(2))P( without appreciating the fact that Income Tax Act and so also the State Co- operative Act does not differentiate Co-operative banks and Nationalized banks as far as earning of interest is concerned and it has been a continued legislative endeavour to exclude the Co- operative Banks from the benefits available to other Co-operative societies inter alia vide amendment nmade in section 194A(3)(v) which is indicative of the fact that the Income Tax Act seeks to treat Cоoperative Banks and Nationalized banks on similar footings for Income Tax purposes and therefore, interest earned from both types of banks would not qualify deductions under section 80P. 8. 6. On the facts and circumstances of the case and in law, the learned CIT(A) erred in granting relief to does the assessee Co-operative society without appreciating the fact that the above interest income not satisfy the ingredients of mutuality having been earned by commercial activities carried out by the assessee with the non- member Co-operative banks and hence, such interest income needs to be charged as income from other sources under section 56 of the Income Tax Act, 1961. 7. On the facts and circumstances of the case and in law, the learned CIT(A) erred in holding that interest earned by the assessee on its surplus investments with co- operative banks is eligible for deduction u/s. 80P(2) (d) of the Income Tax Act, 1961 despite the fact that the provisions of Sec.80P(4) of the Act specifically provides that the provisions of Sec.80P shall not apply in relation to a cooperative bank and therefore, the benefit of deduction under the said provisions could not have been extended to interest received on deposits kept such cooperative banks. 8. On the facts and circumstances of the case and in law, the learned CIT(A) erred in not giving due consideration to the decision of the Hon'ble Karnataka High Court in the case of Pr. Commissioner of Income Tax vs. Totagars Cooperative Sale Society (2017). (395 ITR 611 Kar 2017), wherein, based on the decision of the Hon'ble Apex Court in the case of Totgars Co- operative Sales Society Ltd. Vs. ITO, (SC) (322 ITR 283) (2010), it was held that a co-operative society would not be eligible for deduction u/s 80P(2)(d) on the interest income earned by it on account of deposit of its surplus funds in a co- operative bank. 9. The appellant craves leave to add to, amend, alter any ofthe above grounds of appeal.” Printed from counselvise.com 6 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 5. At the outset, the Ld. AR submitted that the impugned issue is squarely covered in favour of the assessee by catena of decisions of various judicial forums including the decision(s) of the Pune Bench of the Tribunal. Placing reliance on the various decisions pronounced in favour of the assessee relating to the impugned issue, he further submitted that the assessee is duly eligible for its claim of deduction u/s 80P(2)(a)(i) of the Act. He also raised an alternate contention that the interest income earned from Co-operative Banks by the assessee during the relevant AY is eligible income for claim of deduction u/s 80P(2)(d) of the Act. In support thereof, the Ld. AR relied on the decision of the Co-ordinate Bench of the Pune Tribunal in the case of Deeplaxmi Nagari Sahakari Patsanstha Maryadit Vs. ITO in ITA Nos. 2322 & 2323/PUN/2024 for AYs 2018-19 and 2020- 21, order dated 19.12.2025. 6. The Ld. DR, on the other hand, relied on the order of Ld. AO, however, he could not brought on record any contrary decision to rebut the above submissions of the Ld. AR. 7. We have heard the Ld. Representatives of the parties and perused the material on record. We have also considered the various judicial decisions cited before us. The facts of the case are not disputed. We find that the Ld. AO has disallowed the assessee’s claim of deduction u/s 80P(2)(a)(i)/80P(2)(d) of the Act holding that the interest income earned by the assessee from its investments made in Co-operative Banks amounting to Rs.2,58,31,730/- the details of which are provided in para 8 of the assessment order is not eligible for claim of deduction u/s 80P(2) of the Act. After considering the detailed submissions along with various judicial precedents relied upon by the assessee which decisions are also cited and relied upon by the Ld. AR before us, the Ld. CIT(A)/NFAC allowed the appeal of the assessee for the reasons reproduced in the preceding paragraphs. We observe that the impugned issue is no more res integra and is covered in favour of the assessee by various judicial precedents on the subject. There are several decisions pronounced by the various Benches of the Tribunal including the Pune Bench and the Hon’ble High Courts wherein the claim of deduction u/s 80(2)(a)(i)/80P(2)(d) of the Act Printed from counselvise.com 7 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 under the similar set of facts as that of the present assessee, has been allowed. 8. The Ld. AR has placed reliance on the decision of the Pune Bench of the Tribunal in the case of Deeplaxmi Nagari Sahakari Patsanstha Maryadit (supra) in support of its claim. We have perused the order of the Tribunal in the said case and find that the Tribunal under similar set of facts has allowed the appeal of the assessee holding that the assessee is entitled to claim deduction u/s 80P(2)(a)(i) of the Act in respect of interest income from the deposits held with the Co-operative Banks. The relevant observations and findings of the Tribunal re reproduced below : “10. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Assessing Officer in the instant case, relying on the decision of Hon‟ble Supreme Court in the case of Totgars Cooperative Sale Society Ltd. Vs. ITO and various other decisions, rejected the claim of deduction u/s 80P(2)(a)(i) of the Act in respect of interest income of Rs.61,83,470/- received by the assessee from various cooperative banks. We find the Ld. CIT(A) / NFAC sustained the disallowance made by the Assessing Officer. It is the submission of the Ld. Counsel for the assessee that in view of various decisions filed in the paper book, the interest income received by the assessee from various cooperative banks is allowable as deduction u/s 80P(2)(a)(i) of the Act. 11. We find some force in the above arguments of the Ld. Counsel for the assessee. We find the issue of allowability of deduction u/s 80P(2)(a)(i) in respect of income from cooperative banks and cooperative societies stands decided in favour of the assessee by various decisions. 12. We find the Hon‟ble Supreme Court in the case of Mavilayi Service Cooperative Bank Ltd. Vs. CIT reported in (2021) 431 ITR 1 (SC) has held that where the assessee was registered as primary agricultural credit society, it was entitled to benefit of deduction under section 80P(2)(a)(i) notwithstanding that it was also giving loans to its members which were not related to agriculture. The relevant observations of Hon‟ble Supreme Court read as under: “45. To sum up, therefore, the ratio decidendi of Citizen Cooperative Society Ltd. (supra), must be given effect to. Section 80P of the IT Act, being a benevolent provision enacted by Parliament to encourage and promote the credit of the cooperative sector in general must be read liberally and reasonably, and if there is ambiguity, in favour of the assessee. A deduction that is given without any reference to any restriction or limitation cannot be restricted or limited by implication, as is sought to be done by the Revenue in the present case by adding the word “agriculture” into Section 80P(2)(a)(i) when it is not there. Further, section 80P(4) is to be read as a proviso, which proviso now specifically excludes co-operative banks which are co-operative societies engaged in banking business i.e. engaged in lending money to members of the public, which have a licence in this behalf from the Printed from counselvise.com 8 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 RBI. Judged by this touchstone, it is clear that the impugned Full Bench judgment is wholly incorrect in its reading of Citizen Cooperative Society Ltd. (supra). Clearly, therefore, once section 80P(4) is out of harm‟s way, all the assessees in the present case are entitled to the benefit of the deduction contained in section 80P(2)(a)(i), notwithstanding that they may also be giving loans to their members which are not related to agriculture. Also, in case it is found that there are instances of loans being given to non-members, profits attributable to such loans obviously cannot be deducted. 46. It must also be mentioned here that unlike the Andhra Act that Citizen Cooperative Society Ltd. (supra) considered, „nominal members‟ are „members‟ as defined under the Kerala Act. This Court in U.P. Cooperative Cane Unions‟ Federation Ltd., Lucknow v. Commissioner of Income Tax, Lucknow-I (1997) 11 SCC 287 referred to section 80P of the IT Act and then held: “8. The expression “members” is not defined in the Act. Since a cooperative society has to be established under the provisions of the law made by the State Legislature in that regard, the expression “members” in Section 80-P(2)(a)(i) must, therefore, be construed in the context of the provisions of the law enacted by the State Legislature under which the cooperative society claiming exemption has been formed. It is, therefore, necessary to construe the expression “members” in Section 80-P(2)(a)(i) of the Act in the light of the definition of that expression as contained in Section 2(n) of the Cooperative Societies Act. The said provision reads as under: “2. (n) „Member‟ means a person who joined in the application for registration of a society or a person admitted to membership after such registration in accordance with the provisions of this Act, the rules and the bye-laws for the time being in force but a reference to „members‟ anywhere in this Act in connection with the possession or exercise of any right or power or the existence or discharge of any liability or duty shall not include reference to any class of members who by reason of the provisions of this Act do not possess such right or power or have no such liability or duty;”” Considering the definition of „member‟ under the Kerala Act, loans given to such nominal members would qualify for the purpose of deduction under section 80P(2)(a)(i). 47. Further, unlike the facts in Citizen Cooperative Society Ltd. (supra), the Kerala Act expressly permits loans to non-members under section 59(2) and (3), which reads as follows: “59. Restrictions on loans.- (1) A society shall not make a loan to any person or a society other than a member: Provided that the above restriction shall not be applicable to the Kerala State Co-operative Bank. Provided further that, with the general or special sanction of the Registrar, a society may make loans to another society. (2) Notwithstanding anything contained in sub-section (1), a society may make a loan to a depositor on the security of his deposit. Printed from counselvise.com 9 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 (3) Granting of loans to members or to non-members under sub- section (2) and recovery thereof shall be in the manner as may be specified by the Registrar.” Thus, the giving of loans by a primary agricultural credit society to non-members is not illegal, unlike the facts in Citizen Cooperative Society Ltd. (supra). 48. Resultantly, the impugned Full Bench judgment is set aside. The appeals and all pending applications are disposed of accordingly.” 13. We find the Hon‟ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. reported in (2015) 230 Taxman 309 (Karnataka) has held that where co-operative society was engaged in business of providing credit facilities to its members, deposited excess amount for short term in bank, interest earned was entitled to be deducted under section 80P. The relevant observations of Hon‟ble High Court read as under: 14. We find an identical issue had come up before the Co-ordinate Bench of the Tribunal in the case of ITO vs. M/s. Shri Bhairavnath Multistate Cooperative Credit Society Ltd. vide ITA No.2484/PUN/2017 order dated 27.06.2024 for assessment year 2014-15. The Tribunal has allowed the claim of exemption u/s 80P(2)(a)(i) of the Act on the interest earned on investments made out of surplus funds with the cooperative banks, Printed from counselvise.com 10 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 cooperative banks and nationalized banks. The relevant observations of the Tribunal from para 5 onwards read as under: “5. We heard the rival submissions and perused the material on record. We find this issue is no more res integra by virtue of catena of decisions passed by the Coordinate Benches of this Tribunal. In the present case, we find that admittedly the interest income was earned from the investments out of surplus funds made with cooperative banks/societies, the cooperative bank is also a specie of cooperative society, therefore, the interest income earned by the cooperative society from the cooperative banks qualifies for deduction u/s.80(P)(2)(d) of the Act. Such interest also qualifies for exemption u/s.80P(2)(a)(i) as held by the Coordinate Bench of Pune Tribunal in the case of Nashik Road Nagari Sahkari Patsanstha Limited Vs. ITO in ITA No.1700/PUN/2017 wherein the Tribunal held as under :- “9. We heard the rival submissions and perused the material on record. Admittedly, the appellant is a Cooperative society formed under the provisions of Maharashtra Cooperative Societies Act,1960 with the objective of accepting deposits and lending money to its members. The money which is not immediately required for the purpose of lending to the members is deposited with Bank of Baroda in the form of Fixed Deposit. The question is whether the interest so earned qualifies for exemption u/s. 80P(2)(a)(i) of the Act. The AO as well as the CIT(A) were of the opinion that the interest earned from third parties or nonmembers does not quality for exemption u/s.80P. It is an admitted position that the interest so earned should be taxed as „income from other sources‟ There is a cleavage of judicial opinion among several High Courts on the issue of eligibility of this kind of income for exemption u/s. 80P(2)(a)(i) of the Act. The Hon‟ble Punjab & Haryana High Court in the case of CIT vs. Punjab State Cooperative Federation of Housing Building Societies Ltd. 11 taxmann.com 448, the Hon‟ble Gujarat High Court in the case of State Bank of India Vs. CIT 389 ITR 578 (Guj.), the Hon‟ble Delhi High Court in the case of Mantola Cooperative Thrift & Credit Society Ltd. Vs. CIT 50 taxmann.com 278, the Hon‟ble Punjab & Haryana High Court in the case of CIT Vs. Punjab State Cooperative Agricultural Development Bank Ltd. 389 ITR 68 and the Hon‟ble Kolkata High Court in the case of CIT Vs. Southern Eastern Employees Cooperative Credit Society Ltd. 390 ITR 524 took a view that the income arising on the surplus invested in short term deposits and securities cannot be attributed to the activities of the society and, therefore, not eligible for exemption u/s.80P(2)(a)(i) of the Act. However, the Hon‟ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. Vs. ITO (2015) 230 taxmann 309 (Kar.) and the Hon‟ble Telangana and Hon‟ble Andhra Pradesh High Court in the case of Vaveru Co-operative Rural Bank Ltd. v CIT [(2017) 396 ITR took a view that such interest income is attributable to the activities of the society and, therefore, eligible for exemption u/s.80P(2)(a)(i) of the Act. The Coordinate Bench of Pune Benches in the case of M/s. Ratnatray Gramin Bigar Sheti Sah. Pat Sanstha Maryadit Vs. ITO (ITA Nos.559/560/PUN/2018, dated 11-12- 2018) has taken view in favour of the assessee following the judgment of Hon‟ble Karnataka High Court in the case of Tumkur Merchants Souharda Credit Cooperative Ltd. (supra). Respectfully Printed from counselvise.com 11 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 following the decision of the Coordinate Bench, we hold that the interest income earned on the investment of surplus money with banks is also eligible for exemption u/s.80P(2)(a)(i) of the Act. Thus, the grounds of appeal No. 1 & 2 stands allowed.” 6. Thus, the order passed by the ld.CIT(A) is in conformity with the settled position of law by virtue of the above discussion. Therefore, we affirm the impugned order directing the Assessing Officer to allow the claim of exemption u/s.80P(2)(a)(i)/80P(2)(d) on the interest income earned on investments made out of surplus funds made with Cooperative banks, Cooperative Societies and Nationalised banks. 7. In the result, the appeal filed by the Revenue is dismissed.” 15. We find the various other decisions relied on by the Ld. Counsel for the assessee also supports his case to the proposition that the assessee is entitled to claim deduction u/s 80P(2)(a)(i) of the Act in respect of interest income from deposits held with the cooperative banks. Therefore, in the light of the above decisions, we set aide the order of the Ld. CIT(A) / NFAC and direct the Assessing Officer to allow the claim of deduction u/s 80P(2)(a)(i) of the Act of an amount of Rs.61,83,470/- received by the assessee being interest earned on deposits with the cooperative banks. The grounds raised by the assessee are accordingly allowed.” 9. The Ld. AR has also raised an alternate contention that the assessee is also entitled to claim deduction u/s 80P(2)(d) of the Act. We find that the Co-ordinate Bench of the Pune Tribunal in the case of The Karad Urban Sevak Sahakari Patsanstha Maryadit Karad Vs. ITO in ITA No. 2985/PUN/2025 for AY 2020-21, order dated 03.02.2026 has held that the assessee is eligible for deduction u/s 80P(2)(d) of the Act for the interest income earned from the investments held with Co-operative Banks. The relevant observations and findings of the Tribunal is reproduced below : “4. I have heard the rival contentions and perused the records placed before me. I observe that the assessee is a Cooperative society and Nil income declared in the return of income for A.Y. 2020-21 furnished on 23.12.2020. After the case being selected for Complete Scrutiny valid statutory notices were served upon the assessee. During the source of assessment proceedings, ld. Assessing Officer has observed that assessee has earned interest income of ₹39,69,439 from the investments held with Cooperative Banks namely The Satara District Central Cooperative Bank Ltd. And The Karad Urban Cooperative Bank Ltd. Ld. Assessing Officer concluded the proceedings making addition of ₹39,69,439 and assessed the income at ₹39,69,439. Thereafter, assessee preferred appeal before ld.CIT(A) but failed to succeed. 5. Before me, ld. Counsel for the assessee has demonstrated that sum of ₹39,69,439 has been earned from deposits held with Cooperative Banks and that this interest income is eligible for deduction u/s.80P(2)(d) of the Act. 6. The issue under consideration is no longer res integra by virtue of catena of decisions taking consistent view that interest income earned from deposits Printed from counselvise.com 12 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 with Cooperative Banks is eligible for deduction u/s.80P(2)(d) of the Act. Recently, this Bench in the case of Annapurna Nagari Sahkari Pathsanstha Maryadit Yawal Vs. ITO in ITA No.313/PUN/2025, order dated 07.05.2025 has allowed the deduction claimed by the appellant u/s.80P(2)(d) of the Act observing as under : “5. We have heard the rival submissions and perused the record placed before us. There is no dispute to the fact that appellant has earned interest income of Rs.1,02,95,103/- from deposits/investments with Cooperative Banks. This fact has been accepted by the Assessing Officer in the assessment order also. Admittedly, appellant has not filed the requisite details before ld.CIT(A). We however considering the fact that the issue regarding allowability of deduction u/s.80P(2)(d) of the Act for the interest earned from Cooperative Banks is no longer res integra as the very same issue has been decided by this Tribunal in catena of decisions and in assesse‟s own case for A.Y. 2020-21 holding that the appellant is eligible for deduction u/s.80P(2)(d) of the Act as the Cooperative Banks are basically Cooperative Societies. For the sake of brevity, the finding given in ITA No.2471/PUN/2024 is reproduced below: “7. We have heard both the sides and perused the record placed before us. In the instant case, the Assessing Officer disallowed the interest income of Rs.1,63,98,998/- earned out of the Fixed deposits/Investments made with Cooperative Banks treating the same as Income from Other Source. Ld.CIT(A) dismissed the appeal in limine without discussing anything on merits of the issues and on the ground that the appellant has not provided plausible explanation for admission of additional evidences. 8. Section 80P(2)(d) of the Act provides that the sum received in respect of any income by way of interest or dividend derived by Cooperative Society from its investment with any other Cooperative Society, the whole of such income is eligible for deduction u/s.80P of the Act. we find that this issue is no more res integra as the Coordinate Benches of this Tribunal has been consistently holding that the interest income earned out of the FDs/Investments kept with Cooperative Banks is allowable u/s.80P(2)(d) of the Act. We find that this Tribunal in case of Kolhapur District Central Co-op. Bank Kanista Sevakanchi Sahakar Pat Sanstha Ltd., Vs. ITO in ITA No.1365/PUN/2023, dated 01.01.2024 dealing with similar issue after placing reliance on another decision of this Tribunal in the case of The Ugar Sugar Works Kamgar & Dr. Shirgaokar Shaikshanik Trust Nokar Co-op Credit Society vs. ITO in ITA No.84/PAN/2018, dated 27.05.2022 has held that the interest earned from deposits with Cooperative Banks are also eligible for deduction u/s.80P(2)(d) of the Act as Cooperative Banks are basically Cooperative Societies only but have turned into Bank on getting necessary banking license. 9. Respectfully following the above referred decisions taking consistent view along with considering the facts of the case, where the appellant made investment with the Cooperative Banks we hold that the appellant is eligible for deduction u/s.80P(2)(d) of the Act for the interest income earned from Cooperative Banks at Rs.1,63,98,998/-. Findings of the ld. CIT(A) is set-aside and the Assessing Officer is directed to Printed from counselvise.com 13 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 allow the claim made by the appellant. Effective grounds of appeal raised by the appellant are allowed.” 6. Respectfully following the same, we hold that deduction of Rs.1,02,95,103/- u/s.80P(2)(d) of the Act claimed by the appellant on the interest earned from deposits/Investments with Cooperative Banks deserves to be allowed. Relevant finding of ld.CIT(A) on merits is set aside and grounds of appeal No.5 to 8 raised by the appellant are allowed.” 7. In light of the above decision and other judicial precedents consistently followed by this Tribunal, I hold that the assessee is eligible for deduction u/s.80P(2)(d) of the Act for the interest income of ₹39,69,439 earned from the investments held with Cooperative Banks. Ground No.2 raised by the assessee s allowed.” 10. The Revenue is also aggrieved by the order of the Ld. CIT(A)/NFAC raising one of the grounds that the Ld. CIT(A)/NFAC has allowed the claim of the assessee u/s 80P(2)(d) of the Act in respect of interest income earned from the Co-operative Banks during the relevant AY due consideration to the decision of the Hon'ble Karnataka High Court in the case of Pr. Commissioner of Income Tax vs. Totagars Cooperative Sale Society (2017). (395 ITR 611 Kar 2017), wherein, based on the decision of the Hon'ble Apex Court in the case of Totgars Co- operative Sales Society Ltd. Vs. ITO, (SC) (322 ITR 283) (2010), it was held that a co-operative society would not be eligible for deduction u/s 80P(2)(d) on the interest income earned by it on account of deposit of its surplus funds in a co-operative bank. In our considered view, the case of Totagars Co-operative Sale Society Ltd. (supra) is distinguishable on facts and therefore not be applied in the instant case of the assessee. In that case the society was also marketing the agricultural produce of its members and hence was engaged in carrying on the business of marketing agricultural produce of the members of the assessee. However, in the present case, the interest income earned by the assessee from deposits made with the Co-operative Banks form an integral part of its business. 11. Based on the above discussion and respectfully following the decisions (supra) of the Co-ordinate Bench of the Pune Tribunal, we do not find any infirmity in the order of the Ld. CIT(A)/NFAC which is hereby upheld. The grounds raised by the Revenue are accordingly dismissed. Printed from counselvise.com 14 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 ITA No. 3121/PUN/2025, AY 2022-23 by the Revenue 12. Both the sides are unanimous in stating that the facts and the grounds of appeal in ITA No. 3121/PUN/2025 for AY 2022-23 are identical to the facts and grounds raised in ITA No. 2443/PUN/2025 for AY 2018-19 except the variance in amounts. Thus, in view of the fact that the issue(s) raised in both the appeals are identical and are arising from same set of facts, the finding given by us while adjudicating the appeal in ITA No. 2443/PUN/2025 would mutatis mutandis apply to the appeal in ITA No. 3121/PUN/2025 as well. Accordingly, the grounds of appeal raised by the Revenue in ITA No. 3121/PUN/2025 are dismissed in the same terms as above. CO No. 16/PUN/2026, AY 2022-23 by the assessee 13. There is a delay of 85 days in filing of the Cross Objection filed before the Tribunal for which the assessee has filed condonation petition stating therein the reasons for the said delay. After hearing both the sides, we are of the view that the delay is attributable to the sufficient cause. We, therefore, in light of the decisions of the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) and in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 Live Law (SC) 339, condone the said delay and proceed to decide the Cross Objection. 14. The assessee has raised the following solitary ground of Cross Objection : “1. On the facts and in the circumstances of the case and in law, Ld. AO erred in not giving the deduction u/s 80P(2)(d) for interest on investments made by a co-operative society with a scheduled bank without realising the fact that some of the scheduled banks are co- operative banks and appellant is entitled for deduction u/s 80P(2)(d) for such interest income as well. Your appellant prays for allowing such deduction.” 15. Since, vide our above order, we have dismissed the appeal of the Revenue in ITA Nos. 2443 & 3121/PUN/2025 holding that the assessee is entitled to claim deduction u/s 80P(2)(a)(i)/80P(2)(d) of the Act, the ground raised by the assessee in the present Cross Objection becomes infructuous and as such dismissed. Printed from counselvise.com 15 ITA No.2443 & 3121/PUN/2025 and CO No. 16/PUN/2026, AYs 2018-19, 2022-23 & 2022-23 16. To sum up, both the appeals filed by the Revenue and the Cross Objection filed by the assessee are dismissed. Order pronounced in the open court on 24th February, 2026. Sd/- Sd/- (R.K. Panda) (Astha Chandra) VICE PRESIDENT JUDICIAL MEMBER पुणे / Pune; दिन ांक / Dated : 24th February, 2026. रदि आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : 1. अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT concerned. 4. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “बी” बेंच, पुणे / DR, ITAT, “B” Bench, Pune. 5. ग र्ड फ़ इल / Guard File. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER, सहायक पंजीकार/ Assistant Registrar आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune Printed from counselvise.com "