India's ITAT Allows Section 80P Tax Deductions for Co‑operative Societies

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) allowed the National Federation of Cooperative Sugar Factories Ltd. to claim a deduction under Section 80P(2)(d) for interest earned on fixed deposits with Delhi State Cooperative Bank Ltd. and Saraswati Cooperative Bank Ltd. The Tribunal held that interest from co‑operative banks qualifies for deduction, distinguishing the case from a Supreme Court ruling that dealt with commercial banks. The order also covered identical appeals for assessment years 2018‑19 and 2020‑21.

Separately, the ITAT Bangalore bench ruled in favor of Panchagangavali Souharda Credit Cooperative Pvt. Ltd., allowing a deduction under Section 80P(2)(a)(i) despite the society having different classes of members, including nominal and associate members. The Tribunal stated that the definition of “members” should be read in line with Karnataka’s co‑operative law and that the presence of such members does not automatically disqualify the deduction. It also permitted deduction on enhanced business income arising from previously disallowed expenditure. Both appeals for assessment years 2017‑18 and 2018‑19 were allowed.