Section 80P(2)(d) Deduction on Interest Earned from Co-operative Banks Allowed to Co-operative Housing Society: Mumbai ITAT
Case Overview
Case Name: Mayoor Co-Operative Housing Society Limited Vs Jurisdictional AO (ITAT Mumbai)
Appeal Number: ITA 3860/MUM/2026
Date of Order: 21/08/2026
Assessment Year: 2020-21
Forum: Income Tax Appellate Tribunal, Mumbai
Background of the Dispute
A co-operative housing society — the assessee in this matter — had earned interest income on deposits held with co-operative banks and duly claimed a deduction in respect of the same under Section 80P(2)(d) of the Income Tax Act, 1961. Both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)-NFAC, Delhi] rejected this claim by their respective orders, prompting the assessee to approach the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT).
The singular question before the Tribunal was whether the interest income received by a co-operative housing society from deposits maintained with co-operative banks qualifies for deduction under Section 80P(2)(d) of the Income Tax Act, 1961.
Legal Framework: Section 80P(2)(d)
Section 80P(2)(d) of the Income Tax Act, 1961 provides that a co-operative society is entitled to a deduction in respect of income derived from interest or dividends from its investments with any other co-operative society. The central interpretive question that has arisen repeatedly before various tribunals and High Courts is whether a co-operative bank qualifies as a "co-operative society" for the purposes of this provision.
Key Question: Does a co-operative bank retain its character as a "co-operative society" under
Section 80P(2)(d), thereby making interest earned from it eligible for deduction in the hands of another co-operative society?
Assessee's Arguments Before the Tribunal
The Authorised Representative (AR) of the assessee drew the Tribunal's attention to two prior decisions directly in the assessee's favour:
ITA No. 263/Mum/2018 dated 09.03.2018 – The coordinate bench of the ITAT had, for Assessment Year 2013-14, directed the AO to allow deduction on interest earned from co-operative banks under
Section 80P(2)(d).ITA No. 5416/Mum/2024 dated 24.02.2025 – For Assessment Year 2021-22, the Tribunal once again decided the issue in the assessee's favour, placing reliance on the Hon'ble Supreme Court's ruling in Mavilayi Service Co-operative Bank Ltd. (431 ITR 1 (SC)) as well as several coordinate bench decisions.
The AR contended that the facts and legal position in AY 2020-21 were no different from those in prior years, and that consistent judicial precedent warranted the same outcome.
Revenue's Stand
The Departmental Representative (DR) placed reliance on the orders passed by the lower authorities — the AO and the CIT(A) — and did not bring any fresh or distinguishing facts on record to differentiate the present year's case from those already decided by the Tribunal in the assessee's own case.