NERE VIBHAG NAGARI SAH. PATSANSTHA MARYADIT,PUNE V. INCOME TAX OFFICER WARD 5(4), PUNE

ITA 2373/PUN/2025

AI Insights

The case involves Nere Vibhag Nagari Sah. Patsanstha Maryadit, a credit cooperative society, which appealed against the order of the CIT(A)/NFAC for the assessment year 2016-17. The primary contention was regarding the rejection of deduction under section 80P(2)(a)(i) for interest income, which the Assessing Officer had treated as income from other sources. The Tribunal referenced a previous decision in favor of the same assessee for a different assessment year, which had allowed similar deductions. The Tribunal's decision was influenced by precedents from the Hondle Sikkim and Karnataka High Courts, which supported the assessee's position that interest earned from cooperative banks is eligible for deduction under section 80P(2)(d).

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 837326 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 13-10-2025
• Other Referred Cases: Sikkim State Cooperative Supply and Marketing Federation Ltd. v. Deputy Commissioner of Income-tax, Totgars' Cooperative Sale Society Ltd. v. Income Tax Officer
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.Y. BALAWADE
• Assessee Lawyers: CHAITRAL MULE; HONBLE HIGH COURTS
• Keywords: Condonation of delay; Principle of natural justice
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.2373/PUN/2025 िनधाᭅरण वषᭅ / Assessment Year : 2016-17 Nere Vibhag Nagari Sah. Patsanstha Maryadit, 61, Mangalwar Peth, Tal.- Bhor, Pune- 412206. PAN : AACAN2385C Vs. ITO, Ward-5(4), Pune. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 31.07.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2016-17. 2. There is delay in filing of the present appeal. We are satisfied with the reasons mentioned in the application for condonation of delay duly supported by an affidavit that the applicant was prevented by sufficient cause for not filing the appeal within the prescribed time limit. After hearing Ld. DR, we condone the delay and proceed to adjudicate the appeal. Assessee by : Shri Chaitral Mule Revenue by : Shri R. Y. Balawade Date of hearing : 29.01.2026 Date of pronouncement : 19.02.2026 Printed from counselvise.com ITA No.2373/PUN/2025 2 3. The appellant has raised the following grounds of appeal :- “1. On the facts and the circumstances of the case and in law, lower authorities erred in passing ex-parte order and erred in deciding the issue only on the basis of material available with them, this action is being viotative of principal of natural justice. Your appellant prays for granting opportunity of hearing before lower authorities Without prejudice to the above grounds of appeal, following grounds are also taken on merit, 2. On the facts and in the circumstances of the case and in law learned AO erred in rejecting deduction under section 80P(2)(a)(i) for a sum of Rs. 61,56,501/- for entire 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. 3. On the facts and in the circumstances of the case and in law the learned Assessing Officer erred in treating a sum of Rs.61,56,501/- being interest received on investment with other Co-Operative Bank as ineligible amount for calming deduction under section 80P(2)(a)(i) without appreciating the fact that earning of interest is an integral part of societies business and appeal and prays for allowing such deduction. 4. 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 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 officer's action. 5. 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 society Your appellants pray for allowing of the same. 6. 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 principle of natural justice.” Printed from counselvise.com ITA No.2373/PUN/2025 3 4. Facts of the case, in brief, are that the assessee is a credit cooperative society engaged in the activity of providing credit facilities to its members and also accepting deposit from them. The return of income for the year under consideration was filed on 04.10.2016 declaring total income of Rs.Nil after claiming deduction u/s 80P(2) of the IT Act. The case was selected for scrutiny through CASS. After considering the reply of the assessee in response to statutory notices, the Assessing Officer completed the assessment u/s 143(3) of the IT Act by determining taxable income at Rs.61,56,501/- as against the income returned by the assessee at Rs.Nil. The above assessed income includes addition of Rs.61,56,501/- on account of disallowance of deduction u/s 80P(2) of the IT Act. 5. Being aggrieved with the above assessment order, the assessee preferred an appeal before Ld. CIT(A)/NFAC. Since the assessee remained absent, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee. 6. It is the above order against which the assessee is in appeal before this Tribunal. 7. We have heard Ld. Counsels from both the sides and perused the material available on record including the paper book furnished Printed from counselvise.com ITA No.2373/PUN/2025 4 by the assessee. In this regard, we find that a coordinate bench of this Tribunal in the case of assessee itself for assessment year 2017-18 in ITA No.2374/PUN/2025 order dated 29.01.2026 has decided the identical issue in favour of assessee and has allowed the deduction u/s 80P(2) of the IT Act by observing as under :- “8. The Hon’ble Sikkim High Court in the decision of [2025] 181 taxmann.com 494 (SIKKIM)Sikkim State Cooperative Supply and Marketing Federation Ltd. v. Deputy Commissioner of Income-tax vide order dated 10.12.2025 has held as under : Quote.“4.When we took up the matter on 12thNovember, 2025, the following substantial questions of law were framed:- \"1. Whether the learned Tribunal misinterpreted section 80P(4), which only bars cooperative banks from claiming deductions on their own income and wrongly applied it to deny section 80P(2)(d) deductions to the Appellant, being a non-bank cooperative society, in respect of interest received from cooperative banks? 2. Whether the learned Tribunal correctly applied the ratio in Totgars' Cooperative Sale Society Ltd. (322ITR 283 (SC)), which concerned section 80P(2)(a)(i) and retained members' funds shown as liability to deny deductions under section 80P(2)(d), when the facts and statutory provisions in the present case are materially different?\" ……………………. ……………………. 18. We are, therefore, of the view that in the facts of the instant case, the assessee is entitled to claim deduction under section 80P(2)(d) of the Income Tax Act, 1961.”Unquote. 9. Hon’ble Karnataka High Court and Hon’ble Sikkim High Court has held that interest earned by Co-operative Society from deposits kept with Co-operative Banks is eligible for deduction u/s.80P(2)(d) of the Act. 10. Thus, whether a co-operative Society is eligible for deduction u/s.80P(2)(d) of the Act, on the interest earned from Co-operative Bank has been decided in favour of assessee by Hon’ble High Courts. 11. Respectfully, following the Hon’ble High Court(supra), we direct the Assessing Officer to allow deduction u/s.80P(2)(d) of the Act, to Printed from counselvise.com ITA No.2373/PUN/2025 5 Assessee of Rs.33,18,277/-. Accordingly, Ground No.2 raised by the Assessee is allowed.” 8. Respectfully following the above decision of the Tribunal in the case of the assessee itself for assessment year 2017-18 (supra), we deem it appropriate to set-aside the order passed by Ld. CIT(A)/NFAC and direct the Assessing Officer to allow the deduction u/s 80P(2) of the IT Act as claimed by the assessee in the return of income. Accordingly, the grounds of appeal raised by the assessee are allowed. 9. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 19th day of February, 2026. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 19th February, 2026. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr.CIT concerned. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Assistant Registrar आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. Printed from counselvise.com "