Deduction u/s 80P Cannot Be Denied If Investment Is with Co-operative Society: ITAT Rules

The ITAT Mumbai rules in favour of a Co-operative Society, saying deduction is allowed under section 80P(2)(d) of the Income Tax Act, if income is earned in the form of interest or dividend from an investment, provided the investment is made with any other Co-operative Society only.

Shree Laxmi Jyot Industrial Premises Co-operative Society Limited has filed the current appeal in the Income Tax Appellate Tribunal (ITAT) Mumbai, challenging an order passed by the ADDL/JCIT(A)-Mysore on August 12, 2025.

The assessee co-operative society filed its Income Tax Return (ITR) for the Assessment Year (AY) 2018-19, wherein it had claimed exemption under section 80P(2)(d) of Income Tax Act 1961, in respect of interest income amounting to Rs. 30,55,092 earned on deposits with Saraswat Co-operative Bank, Shamrao Vithal Co-operative Bank, Maharashtra Co-operative Bank. During the assessment, AO (Assessing Officer) denied the assessee’s claim.

The aggrieved assessee filed an appeal before the CIT(A). The CIT(A) endorsed the decision of the AO and dismissed the assessee’s appeal. Thereafter, the assessee filed an appeal before the ITAT Mumbai.

The tribunal heard the arguments of both sides and concluded that the income falling under sub-section (2) of section 80P is allowed for deduction for the assessee being a Co-operative Society. This section permits deduction on income sourced from interest or dividends derived by the Co-operative Society from its investments with any other Co-operative Society. Hence, stated that a Co-operative Society must fulfil two mandatory conditions to enjoy deduction under section 80P of the Act, i.e., firstly, a Co-operative Society must earn the income in the form of interest or dividend from an investment, and secondly, the investment should be made with any other Co-operative Society only.

Other than the aforesaid two conditions, there is no other condition mentioned under section 80P of the Act, and the assessee fulfils both the said conditions, hence eligible for deductions under section 80P(2)(d) of the Income Tax Act in respect of interest received on deposits placed with various co-operative banks. The tribunal held the addition of Rs. 30,55,092 made by the AO on the assessee as invalid and deleted the same. Finally, ruled in favour of the assessee by allowing the appeal.