SREE NARAYANA GURU COOPERATIVE THRIFT AND CREDIT SOCIETY LIMITED,DELHI V. COMMISSIONER OF INCOME TAX (APPEALS), CIVIC CENTRE

ITA 4783/DEL/2025

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The case involves Sree Narayana Guru Cooperative Thrift and Credit Society Ltd., which appealed against the decision of the CIT(A)/NFAC, Delhi, disallowing a deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961 for interest income received from fixed deposits in cooperative and nationalized banks. The Tribunal examined whether such interest income could be considered as derived from the eligible business of the cooperative society under section 80P. The Tribunal referenced several precedents, particularly focusing on the decision by the Pune Tribunal in ITO Vs. Shri Bhairavnath Multistate Cooperative Credit Society Ltd., which supported the assessee's position.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 793129 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 04-08-2025
• Other Referred Cases: Totgars Cooperative Sale Society Ltd. Vs. ITO 322 ITR 283 (SC), ITO Vs. Shri Bhairavnath Multistate Cooperative Credit Society Ltd. (2024) 164 taxmann.com 382 (Pune Tribu.), Nashik Road Nagari Sahkari Patsanstha Ltd. v. ITO [IT Appeal No. 1700 (Pune) of 2017, dated 27-12-2021], CIT v. Punjab State Cooperative Federation of Housing Building Societies Ltd. [2011] 11 taxmann.com 448 (Punjab & Haryana), State Bank of India v. CIT [2016] 72 taxmann.com 64/241 Taxman 163/389 ITR 578 (Gujarat), Mantola Cooperative Thrift & Credit Society Ltd. v. CIT [2014] 50 taxmann.com 278/229 Taxman 68 (Delhi), CIT v. Punjab State Cooperative Agricultural Development Bank Ltd. [2017] 77 taxmann.com 308/245 Taxman 125/389 ITR 68 (Bombay), CIT v. Southern Eastern Employees Cooperative Credit Society Ltd. [2016] 73 taxmann.com 123/390 ITR 524 (Calcutta), Tumkur Merchants Souharda Credit Cooperative Ltd. v. ITO (2015) 230 taxmann 309 (Kar.), Vaveru Co-operative Rural Bank Ltd. v. CIT [(2017) 396 ITR
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR
• Section: 143(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC’, NEW DELHI Before Sh. Satbeer Singh Godara, Judicial Member ITA No. 4783/Del/2025 : Asstt. Year : 2018-19 Sree Narayana Guru Cooperative Thrift and Credit Society Ltd., Sree Narayana Kendra, RB2, Pocket-3, Sector-7, D, Dwarka, Sector-6, New Delhi-110075 Vs CIT(A)/NFAC Income Tax Officer, Ward-43(6), New Delhi-110002 (APPELLANT) (RESPONDENT) PAN No. AACAS8347K Assessee by: None Revenue by : Sh. Manoj Kumar, Sr. DR Date of Hearing: 22.09.2025 Date of Pronouncement: 22.09.2025 ORDER This assessee’s appeal for Assessment Year 2018-19, arises against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2025-26/1078029340(1) dated 30.06.2025, in proceedings u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”). 2. Case called twice. None appears at the assessee’s behest. It is accordingly proceeded ex-parte. 3. It emerges at the outset during the course of hearing that the assessee’s sole substantive grievance on merits is that both the learned lower authorities have erred in law and on facts in disallowing it’s section 80P(2)(a)(i) deduction of Rs.14,73,156/-; representing it’s interest received from fixed Printed from counselvise.com ITA No. 4783/Del/2025 Sree Narayana Guru Cooperative Thrift and Credit Society Ltd. 2 deposit in cooperative society/cooperative/nationalized banks etc. 4. Mr. Kumar draws strong support from the lower appellate discussion to this effect by placing reliance on Totgars Co- operative Sale Society Ltd. Vs. ITO 322 ITR 283 (SC) that such an interest income could not be held to have been derived from the eligible business u/s 80P(2) of the Act. 5. I find no merit in the Revenue’s instant vehement arguments in light of (2024) 164 taxmann.com 382 (Pune Tribu.) ITO Vs. Shri Bhairavnath Multistate Cooperative Credit Society Ltd. rejecting the very stand 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/socieites, 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 Co-ordinate Bench of Pune Tribunal in the case of Nashik Road Nagari Sahkari Patsanstha Ltd. v. ITO [IT Appeal No. 1700 (Pune) of 2017, dated 27-12-2021], 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 Printed from counselvise.com ITA No. 4783/Del/2025 Sree Narayana Guru Cooperative Thrift and Credit Society Ltd. 3 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 v. Punjab State Cooperative Federation of Housing Building Societies Ltd. [2011] 11 taxmann.com 448 (Punjab & Haryana) , the Hon'ble Gujarat High Court in the case of State Bank of India v. CIT [2016] 72 taxmann.com 64/241 Taxman 163/389 ITR 578 (Gujarat), the Hon'ble Delhi High Court in the case of Mantola Cooperative Thrift & Credit Society Ltd. v. CIT [2014] 50 taxmann.com 278/229 Taxman 68 (Delhi), the Hon'ble Punjab & Haryana High Court in the case of CIT v. Punjab State Cooperative Agricultural Development Bank Ltd. [2017] 77 taxmann.com 308/245 Taxman 125/389 ITR 68 (Bombay) and the Hon'ble Kolkata High Court in the case of CIT v. Southern Eastern Employees Cooperative Credit Society Ltd. [2016] 73 taxmann.com 123/390 ITR 524 (Calcutta) 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. v. 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 v. ITO (ITA Nos.559/560/PUN/2018, dated 11-122018) 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 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 Nationalized banks.” Printed from counselvise.com ITA No. 4783/Del/2025 Sree Narayana Guru Cooperative Thrift and Credit Society Ltd. 4 6. I adopt the foregoing detailed discussion mutatis mutandis to accept the assessee’s instant sole substantive ground in very terms. Necessary computation shall follow as per law. 7. This assessee’s appeal is allowed in above terms. Order Pronounced in the Open Court on 22/09/2025. Sd/- (Satbeer Singh Godara) Judicial Member Dated: 22/09/2025 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR Printed from counselvise.com "