ITAT Mumbai Upholds Deduction Under Section 80P(2)(d) on Interest Earned from Co-operative Bank

Case Overview

Case Name: Matruchhaya Commercial Premises Co-OP Society Ltd. Vs ITO (ITAT Mumbai)

Assessment Years: 2020-21 and 2021-22

Forum: Income Tax Appellate Tribunal, Mumbai

Date of Order: 13th March 2026

Background of the Dispute

The assessee in this matter is a co-operative society duly registered under the Maharashtra Cooperative Societies Act, primarily engaged in the management and maintenance of commercial premises. For the relevant assessment years, the assessee had placed deposits with a Co-operative Bank and earned interest income amounting to Rs. 1,41,392/-. A deduction in respect of this interest income was claimed under Section 80P(2)(d) of the Income Tax Act, 1961.

When the return was processed by the Centralised Processing Centre (CPC), Bengaluru under Section 143(1) of the Act, the claim for deduction was rejected outright. The assessee thereafter filed a rectification petition before the CPC under Section 154 of the Act, which too was dismissed. Aggrieved by both rejections, the assessee carried the matter before the Commissioner of Income Tax (Appeals) [CIT(A)], ADDL/JCIT(A), Kochi. However, the Ld. CIT(A) also upheld the disallowance vide order dated 31.10.2025 passed under Section 250 of the Income Tax Act, 1961. This led to the filing of two appeals before the ITAT Mumbai.

Proceedings Before ITAT Mumbai

Both appeals — ITA No. 9178/Mum/2025 and ITA No. 9179/Mum/2025 — arose from the same assessee, related to the same factual background, and raised identical legal issues across assessment years 2020-21 and 2021-22. The Tribunal decided to hear them together and dispose of them through a consolidated order, with ITA No. 9179/Mum/2025 treated as the lead case. The decision in the lead case was held to apply mutatis mutandis to the companion appeal.

It is noteworthy that none appeared on behalf of the assessee during the hearing, nor was any request for adjournment submitted. Given the nature of the legal question involved and the material available on record, the Tribunal proceeded to decide the matter ex parte qua the assessee, after hearing the Learned Departmental Representative (DR).

The central issue before the Tribunal was straightforward:

Whether interest income earned by a co-operative society from deposits placed with a Co-operative Bank qualifies for deduction under Section 80P(2)(d) of the Income Tax Act, 1961?