AI Drafter 
TaxTMI 
TaxTMI 
2026 (4) TMI 1782
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....ssioner of Income Tax (Appeals), NFAC [CIT(A)] dated 21-11- 2024 in the matter of an assessment framed by Ld. AO u/s 143(3) on 12-03-2021. The sole issue that arises in the appeal is assessee's claim of deduction u/s 80P(2)(d). Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. 2. The assessee is a co-operative credit society registered under Punjab Co-operative Societies Act, 1960. The main object of the assessee is to provide finance and credit facilities to its members. The assessee earned interest income of Rs. 1,04,49,849/- from Ludhiana Central Co-operative Bank for which it initially claimed deduction u/s 80(P)(2)(a)(i) but later on during assessment proceedings, this deduction wa....
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....r recent decision of Hon'ble High Court of Sikkim in the case of Sikkim State Cooperative Supply and Marketing Federation Ltd. (181 Taxmann.com 494; dated 10-12-2025) wherein the decision as referred to by lower authorities have duly been considered. The relevant findings of Hon'ble Court were as under: - 4. When we took up the matter on 12th November, 2025, the following substantial questions of law were framed: "1. Whether the learned Tribunal misinterpreted section 80P(4), which only bars cooperative banks from claiming deductions on their own income and wrongly applied it to deny section 80P(2)(d) deductions to the Appellant, being a non-bank cooperative society, in respect of interest received from cooperative banks? ....
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.... statutory reserves of the federation as required under the relevant provision of the Sikkim Co-operative Societies Act, 1978, which mandates prudent management and investment of funds only in approved securities or co-operative banks approved by the Registrar. 7. SIMFED claimed deduction under section 80P(2)(d) of the Income Tax Act, 1961, on the interest income earned from such investments. The Assessing Officer disallowed the deduction on interest earned from deposits made with co-operative banks. 8. SIMFED, thereafter, preferred an appeal before the Commissioner of Income Tax (Appeal) who allowed the deduction upon finding that the interest income qualified for exemption as it was derived from the investment made in co....
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.... (a) "co-operative bank" and "primary agricultural credit society" shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949); (b) "primary co-operative agricultural and rural development bank" means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities.]" 11. A plain reading of the above quoted provision of law reveals that the statute makes a clear distinction between a co-operative bank (other than a primary agricultural credit society or a primary co-operative agricultural or rural development bank) and any other co-operative entity registere....
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.... under the relevant provisions of Sikkim Cooperative Societies Act, 1978, more specifically, sections 57 to 66, under Chapter V of the Sikkim Co-operative Societies Act, 1978, which mandates prudent management and investment of funds only in approved securities of co-operative banks approved by the Registrar. 15. In our view, a plain reading of the provisions of law quoted above, clearly reveals that the learned Tribunal misinterpreted the provision of section 80P(4) of the Income Tax Act, 1961, which specifically excludes cooperative banks (other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank) and erroneously applied it in respect of SIMFED, thereby disentitling it from....
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.... Co-operative Sale Society Ltd. (supra) and the Totagars Co-operative Sale Society (supra), we have already held earlier that the judgment of the Hon'ble Supreme Court's judgment in Totgars' Cooperative Sale Society Ltd (supra) is not applicable in the facts of our case. So far as judgment of the Karnataka High Court is concerned - which was relied upon by the learned Income Tax Appellate Tribunal, while rendering its impugned judgment and order dated 18th June, 2025 - the Gujarat High Court in Ashwin Kumar Urban Co-operative Society Ltd. (supra) has considered the said Karnataka High Court judgment and has clearly held the same to be distinguishable and not applicable in a similar fact situation as our present case. 18....