LOKMANGAL KARMACHARYANCHI SAHAKARI PATSANSTHA MARYADIT,SOLAPUR V. ITO WARD2(3), SOLAPUR

ITA 1083/PUN/2025

AI Insights

The case involves Lokmangal Karmacharyanchi Sahakari Patsanstha Maryadit, which appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the assessment year 2018-19. The primary issue was the denial of deduction under section 80P(2)(d) of the Income-tax Act for interest income of Rs.11,68,749 earned from investments with Lokmangal Cooperative Bank. The Assessing Officer had treated this income as 'income from other sources' and denied the deduction, arguing that Lokmangal Cooperative Bank is not a Cooperative Society. The Tribunal, referencing a series of precedents, concluded that the interest income from Cooperative Banks is eligible for deduction under section 80P(2)(d), as these banks are essentially Cooperative Societies that have obtained banking licenses.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652685 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Other Referred Cases: Annapurna Nagari Sahkari Pathsanstha Maryadit Yawal 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: S. SADANANDA SINGH
• Assessee Lawyers: PRAMOD S. SHINGTE
• Keywords: Set aside; Additional evidence; Principle of natural justice

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “SMC”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.1083/PUN/2025 Assessment Year : 2018-19 Lokmangal Karmacharyanchi Sahakari Patsanstha Maryadit, Lokmangal House, 8536A/11, Murarji Peth, Old Pune Naka, Solapur 413001 Maharashtra PAN : AAAAL4388B Vs. Income Tax Officer, Ward-2(3), Solapur Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : This appeal filed by the assessee pertaining to the assessment year 2018-19 is directed against the order dated 29.03.2025 of National Faceless Appeal Centre, Delhi passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of the Assessment Order dated 27.03.2021 passed u/s.143(3) r.w.s.143(3A) & 143(3B) of the Act. 2. In the instant appeal, assessee has raised following grounds of appeal : “1. On the facts and in the circumstances of the case and in law the learned Assessing Officer erred in rejecting deduction under section 80P(2)(a)(i) for a sum of Rs.11,68,749 being part of book profit of appellant society without appreciating the fact that earning of interest is an integral part of society's business and appellant prays for allowing such deduction. Assessee by : Shri Pramod S. Shingte Revenue by : Shri S. Sadananda Singh Date of hearing : 16.06.2025 Date of pronouncement : 17.06.2025 ITA No.1083/PUN/2025 Lokmangal Karmacharyanchi Sahakari Patsanstha Maryadit 2 2. On the facts and in the circumstances of the case and in law the learned Assessing Officer erred in treating the interest received from investment with co-operative bank a sum of Rs.11,68,749/- as income from other sources by rejecting appellant's contention that said interest income is integral part of business activity and your appellant prays for cancellation of Assessing officers action 3. Without prejudice to above ground on the facts and circumstances of the case and in the law Learned Assessing Officer erred in not allowing the deduction under section 80P(2)(d) on interest income received from other co-operative bank a sum of Rs.11,68,749. Your appellants pray for allowing of the same. 4. Without prejudice to above ground, On the facts and circumstances of the case and in the law Learned Assessing Officer erred in treating entire interest income as interest income received from other co-operative society or bank without allowing deduction on account of interest expenses. Your appellant prays for such deduction. Your appellant prays for deletion of entire addition. Your appellant craves for to add, alter amend, modify, delete any or all grounds of appeal before or during the course of hearing in the interest of natural justice. 3. From the above grounds, sole grievance of the assessee is that ld.CIT(A) erred in not granting the assessee the benefit of deduction u/s.80P(2)(d) of the Act for the interest income earned from investments with Cooperative Banks at Rs.11,68,749/-. 4. At the outset, Ld. Counsel for the assessee submitted that this Hon’ble Tribunal is consistently holding that Cooperative Banks are basically Cooperative Societies and therefore the interest income earned from investments with Cooperative Banks is also eligible for deduction u/s.80P(2)(d) of the Act. Ld. Departmental Representative did not controvert this contention by placing any binding precedent in favour of the Revenue. 5. I have heard the rival contentions and perused the record placed before me. It is an admitted fact that impugned addition ITA No.1083/PUN/2025 Lokmangal Karmacharyanchi Sahakari Patsanstha Maryadit 3 is regarding denial of deduction u/s.80P(2)(d) of the Act for the interest income earned from Cooperative Bank namely Lokmangal Cooperative Bank at Rs.11,68,749/-. Lower authorities have denied the deduction as Lokmangal Cooperative Bank is not a Cooperative Society. 6. This issue is no longer res integra by virtue of catena of decisions taking consistent view that interest income earned from deposits 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 assessee 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 assessee 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, assessee 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 assessee 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 assessee has not provided plausible explanation for admission of additional evidences. ITA No.1083/PUN/2025 Lokmangal Karmacharyanchi Sahakari Patsanstha Maryadit 4 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 assessee made investment with the Cooperative Banks we hold that the assessee 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 allow the claim made by the assessee. Effective grounds of appeal raised by the assessee 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 assessee 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 assessee are allowed.” 7. Respectfully following the same, I hold that deduction claimed by the assessee on the interest income earned from deposits/Investments with Lokmangal Cooperative Bank u/s.80P(2)(d) of the Act at Rs.17,51,124/- deserves to be allowed. Impugned finding of ld.CIT(A) is set aside and effective Grounds of appeal raised by the assessee are allowed. ITA No.1083/PUN/2025 Lokmangal Karmacharyanchi Sahakari Patsanstha Maryadit 5 8. In the result, appeal of the assessee is allowed. Order pronounced on this 17th day of June, 2025. Sd/- (MANISH BORAD) ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 17th June, 2025. Satish आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “SMC” ब\u0014च, पुणे / DR, ITAT, “SMC” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune "