ITAT Pune Upholds Section 80P(2)(d) Deduction for Credit Cooperative Society on Interest Earned from Cooperative Banks
Case Overview
Case Name: Parshuram Nagri Vs ITO (ITAT Pune)
Relevant Assessment Years: AY 2015-16 and AY 2017-18
Forum: Income Tax Appellate Tribunal, Pune
Background and Context
The ITAT Pune, in a significant ruling pronounced on 2nd July 2026, allowed two appeals preferred by a credit cooperative society challenging the denial of deduction under Section 80P(2)(d) of the Income Tax Act, 1961. The dispute centered on whether interest income earned by a primary credit cooperative society from its deposits placed with cooperative banks qualifies for deduction under Section 80P(2)(d).
Both appeals arose out of separate orders passed by the National Faceless Appeal Centre (NFAC) / CIT(A) under Section 147 read with Section 144B and Section 250 of the Income Tax Act, respectively. Since the underlying legal issues across both appeals were substantially identical, the Tribunal treated ITA No. 1659/PUN/2026 pertaining to AY 2015-16 as the lead case and extended its reasoning to ITA No. 1660/PUN/2026 for AY 2017-18 on a mutatis mutandis basis.
Procedural Aspect: Condonation of Delay
Before entering into the merits, the Tribunal addressed a preliminary procedural issue. There was a delay of 34 days in filing the appeals before the Tribunal. The assessee submitted an affidavit explaining the reasons for such delay. Upon examining the contents of the affidavit, the Tribunal found that a reasonable cause had been adequately demonstrated. The Departmental Representative raised no specific objection to the condonation. Accordingly, the Tribunal condoned the delay and proceeded to admit both appeals.
Facts of the Case
The assessee is a primary credit cooperative society whose core activity involves extending credit facilities to its own members. For the financial year 2014-15 relevant to AY 2015-16, the Assessing Officer came across information under the Non-filing of Return Monitoring System (NMS) indicating that the society had made substantial cash deposits in several cooperative banks. Since the assessee had not filed its return of income for AY 2015-16, the Assessing Officer formed a reason to believe that income had escaped assessment.
Consequently, the Assessing Officer issued notice under Section 148A(b) followed by a notice under Section 148 of the Income Tax Act. In response, the assessee filed its return of income on 22.08.2023, disclosing a total income of Rs. 9,41,319/- after claiming deduction under Section 80P of the Act.
During the course of assessment proceedings, the Assessing Officer examined the financial statements and observed that the assessee had earned interest income from investments and deposits placed with cooperative banks. Various details and explanations were called for from the assessee. Although the assessee filed its submissions in response, the Assessing Officer remained unsatisfied and concluded that the assessee was not entitled to deduction under Section 80P(2)(d) on such interest income received from cooperative banks. The assessment was completed under Section 147 read with Section 144 of the Income Tax Act vide order dated 14.03.2024, determining total income at Rs. 2,51,427/-.