Co-operative Societies: Interest on Statutory Bank Deposits as Business Income

By | March 19, 2026
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Co-operative Societies: Interest on Statutory Bank Deposits as Business Income

This ruling for AY 2020-21 and 2022-23 provides a major victory for co-operative credit societies. The ITAT (Income Tax Appellate Tribunal) clarified that interest earned from bank deposits is not “passive income” if those deposits are maintained to satisfy regulatory requirements for the society’s core credit business.

The Legal Conflict: Section 80P vs. Section 56

The Revenue’s Argument (Section 56):

The Assessing Officer (AO) relied on the restrictive interpretation that once funds are deposited in a commercial bank, the “direct nexus” with the members’ credit business is broken. Therefore, the interest should be taxed as “Income from Other Sources” under Section 56, making it ineligible for the Section 80P deduction.

The Assessee’s Argument (Section 80P):

The society argued that as a registered credit society, it is legally mandated by the Maharashtra Co-operative Societies Act to keep a portion of its deposits with banks (as liquidity/statutory reserves). Since this is a requirement of the business, the interest earned is “attributable to” the activity of providing credit facilities to members.

The Decision: Interest Retains “Business Character”

The Tribunal ruled in favour of the assessee, deleting the additions made under Section 56:

  1. Attributability Test: The Court held that the phrase “attributable to” in Section 80P(2)(a)(i) has a wider import than “derived from.” Since the deposits were a prerequisite for carrying out the credit business, the interest earned was inextricably linked to that business.

  2. Statutory Mandate: The fact that the society was required by law to maintain these bank deposits was a turning point. Income arising from compliance with regulatory norms governing the credit business cannot be treated as independent “other income.”

  3. Business Continuity: The investments were made using the circulating capital of the credit business. Therefore, the character of the income remains “Business Income,” qualifying for the 100% deduction under Section 80P.

Key Takeaways for Co-operative Societies

  • Link Deposits to Regulations: If your society earns interest from fixed deposits (FDs) or savings accounts with commercial banks, ensure your audit report mentions that these deposits are part of your statutory liquidity requirements or operational reserves.

  • Section 80P(2)(d) vs. 80P(2)(a)(i): * 80P(2)(d) provides a deduction for interest earned from other co-operative societies.

    • 80P(2)(a)(i) (as applied here) covers interest from commercial banks if it is attributable to the credit business.

  • The “Nawanshahar” Principle: This ruling follows the spirit of the Supreme Court’s decision in CIT v. Nawanshahar Central Co-operative Bank Ltd., which held that investments made as part of statutory requirements are part of the banking/credit business.

Summary of Taxability for Credit Societies

Income SourceAO’s Usual ViewTribunal’s Corrected View
Interest from MembersBusiness Income (Exempt)Business Income (Exempt)
Interest from Co-op BanksBusiness Income (Exempt)Business Income (Exempt)
Interest from Commercial BanksOther Sources (Taxable)Business Income (Exempt if required for business)
IN THE ITAT PUNE BENCH ‘B’
Income-tax Officer
v.
Shree Ravalnath Cooperative Housing Finance Society Ltd.*
Ms. Astha Chandra, Judicial Member
and DR. DIPAK P. RIPOTE, Accountant Member
IT Appeal Nos. 2715 and 2716 (Pune) of 2025
[Assessment Years 2020-21 and 2022-23]
MARCH  5, 2026
Amit Bobde, CIT(DR) for the Appellant. Mayuresh Doshi for the Respondent.
ORDER
1. These are two appeals filed by the Revenue against the separate orders of ld.Commissioner of Income Tax(Appeal)[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2022-23 & A.Y.2020-21 dated 03.09.2025 and 10.09.2025 emanating from the separate Assessment Orders passed under section 143(3) r.w.s 144B of the Income Tax Act, 1961 dated 21.03.2024 and 25.09.2022 respectively. For the sake of convenience, these two appeals were heard together and are being disposed of by this common order. We treat appeal in ITA No.2715/PUN/2025 as “Lead Appeal”. The Revenue has raised the following grounds of appeal :
“i) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made u/s 56 of the Act by the Assessing Officer on account of “other income” earned from deposits/investments held in the banks of Rs. 8,98,87,796/- without appreciating the fact that the deduction u/s 80P(2)(a) is available to only the ‘operational income from business, but not to the other income’ which accrues to the assessee-society.
(ii) Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) is justified in not appreciating the fact that the assessee earned interest and dividend income on surplus funds invested in co-operative banks and similar other institutions which cannot be said to be attributable to the activity mentioned in Section 80P(2)(a)(i) of the Act and therefore, the interest and dividend income are not eligible for deduction u/s 80P(2)(a)(i) of the Act?”
(iii) Whether on the facts and in the circumstances of the case and in law, the Ld. CTT(A) is justified in granting relief to the assessee Cooperative society without appreciating the facts that the above interest income does not satisfy the ingredients of mutuality having been earned by commercial activities carried out by the assessee with the nonmember Co-operative banks and hence, such interest income needs to be charged as income from other sources under section 56 of the Income Tax Act, 1961?
(iv) The appellant craves to add, amend, alter or delete the above grounds of appeal during the course of appellate proceedings before the Hon ‘ble Tribunal. “
Submission of Id.DR :
2. Ld.Departmental Representative(ld.DR) for the Revenue raised the grounds of appeal. Ld.DR for the Revenue submitted that Assessee is a Co-operative Society duly registered under Maharashtra Co-operative Societies Act, 1960 on 18.03.2015. Assessee is engaged in the business of providing credit facilities to its members. Assessee accepts deposits from its members and gives advances to its members.
3. Ld.DR for the Revenue submitted that during the year, Assessee had earned interest income from investments other than interest income from its members. Ld.DR further submitted that hence Assessee is not eligible for deduction u/s.80P(2)(a)(i) of the Act, on the interest income earned from investments. Ld.DR read out the relevant paragraphs of Assessment Order, wherein, Assessing Officer has relied on the decision of Hon’ble Karnataka High Court in the case of Pr. CIT v. Totagars Co-operative Sale Society ITR 611 (Kar).
Submission of Id.AR :
4. Ld.Authorised Representative(ld.AR) for the Assessee submitted that Assessee had filed Return of Income u/s.139(1) of the Act and claimed deduction u/s.80P(2)(a)(i) of the Act. Assessee is Co-operative Credit Society registered under Maharashtra Cooperative Societies Act. Therefore, Assessee is eligible for deduction u/s.80P(2)(a)(i) of the Act. Ld.AR relied on the following decisions.
•Aurangabad Divison Life Insurance Employees Co-op Credit Society Ltd v. ITO [IT Appeal No. 3175 (Pune) of 2025, dated 10-2-2026].
•Sangli Shikshan Sanstah Sevkanchi Sahkari Patsanstha Maryadit Sangli v. ITO [IT Appeal Nos.679 and 680 (Pune) of 2025, dated 27-6-2025].
•Mahatma Gandhi Nagri Sahakari Pat Sanstha Mydt Udgir v. ITO [IT Appeal Nos. 670 and 671 (Pune) of 2025, dated 9-9-2025].
•ITO v. Ammunition Factory Co-op. Credit Society Ltd [IT Appeal Nos. 1099 and 1100 (Pune) of 2025, dated 12-11-2025].
4.1 Ld.AR for the Assessee supported the ld.CIT(A)’s order.
Findings & Analysis :
5. We have heard both the parties and perused the records. In this case, Assessee had filed Return of Income for A.Y.2022-23 on 13.08.2022 u/s.139(1) of the Act declaring returned income at Rs.NIL. It is specifically mentioned in the assessment order that assessee had claimed deduction u/s.80P(2)(a)(i) of the Act, in the Return of Income. Assessee’s case was selected for scrutiny, accordingly, AO issued notice u/s.143(2) of the Act, dated 01.06.2023 and notice u/s.142(1) of the Act. Assessee filed reply on various dates. During the Assessment Proceedings, Assessee submitted that Assessee provides credit facilities to its Members only. During the assessment proceedings, Assessee specifically submitted that as per Maharashtra Co-operative Societies Act, every Co-operative Society providing credit facility to its members is required to maintain atleast 25% of the amount of the total deposits collected from its members in the form of Investment in Banks to protect depositors. It was also submitted that as per RBI Guidelines also, Assessee has to maintain certain deposits in the bank. Assessee had filed relevant provisions of Maharashtra Co-operative Societies Act, 1960 during the assessment proceedings. During Assessment proceedings, Assessee relied on the decisions of ITAT Pune and Hon’ble Supreme Court decision in the case of Pr. CIT v. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd. (SC)/Civil Appeal No.8719 of 2022 dated 20.04.2023. However, Assessing Officer without rebutting the submission of the Assessee, mainly the reliance on the decision of Hon’ble Supreme Court disallowed Assessee’s deduction u/s.80P(2)(a)(i). Assessing Officer relied on the decision of Hon’ble Supreme Court in the case of Totagar’s Cooperative Sales Society Ltd (supra)Assessing Officer held that the interest income earned by assessee from investments is income from other sources. Finally, Assessing Officer disallowed assessee’s claim of deduction u/s. 80P of Rs.3,22,71,452/- assessing the total income of Rs.8,74,35,494/-.
6. Aggrieved by the assessment order, Assessee filed appeal before ld.CIT(A). Ld.CIT(A) allowed the appeal of the Assessee. The relevant paragraph 4.2.6, 4.2.7 of the ld.CIT(A)’s order are reproduced here as under :
“4.2.6 A conjoint reading of the relevant provisions of both the acts clearly establishes that the appellant cannot do business of providing credit to its members without the mandatory compliance to the above provisions and without maintaining the said reserves with the banks. The said matter has been examined by the Hon’ble Supreme Court in the case of CIT v. Nawanshahar Central Co-operative Bank Ltd [2007] 289 ITR 6 (SC) has held as given below :-
“2. This Court has consistently held that investments made by a banking concem are part of the business of banking. The income arising from such investments would, therefore, be attributable to the business of bank falling under the head “Profits and gains of business and thus deductible under section 60P(2)(a)(i) of the Income-tax Act, 1961. This has been so held in Bihar State Co-operative Bank Ltd. v. CIT [1960] 39 ITR 114(SC), CIT v. Kamataka State Co-operative Apex Bank [2001] 251 ITR 194 (SC) and CIT v. Ramanathapuram District Co operative Central Bank Ltd. [2002] 255 ITR 423 (SC).

3. The principle in these cases would also cover a situation where a Co-operative bant carrying on the business of banking is statutorily required to place a part of its funds in approved securities. The appeals are accordingly dismissed without costs.

(Emphasis Supplied)
4.2.7 The Hon’ble Supreme Court followed the judgements laid down earlier in the case of Bihar State Co-operative Bank Ltd. v. CIT [1960] 39 ITR 114(SC). Further, Hon’ble Supreme Court in the case of CIT v. Karnataka State Co-operative Apex Bank [2001] 251 ITR 194 (SC) has held :-

“The assessee-co-operative bank was required to place a part of its funds with the State Bank or the Reserve Bank of India to enable it to carry on its banking business. That being so, any income derived from funds so placed arose from the business carried on by it and the assessee had not, by reason of section 80P(2)(a)(i), to pay income-tax thereon. The placement of such funds being imperative for purpose of carrying on the banking, business, the income derived therefrom would be income from the assessee’s business. It could not be accepted that only income derived from circulating or working capital would fall within section 80P(2)(a)(i). There is nothing in the phraseology of that provision which makes it applicable only to income derived from working or circulating capital. Thus, deduction was allowable in respect of income derived from the funds placed with the State Bank or the Reserve Bank.”

7. In this case, Revenue has filed appeal wherein, Revenue claims that interest income earned from deposits kept as investments needs to taxed as interest from other sources u/s.56 of the Act and therefore, Revenue contends that Assessee is not eligible for deduction u/s.80P(2)(a)(i) of the Act on the said income.
8. In this case, ld.CIT(A) has relied on the decision of Hon’ble Supreme Court. Revenue has not brought on record any contrary decision of Hon’ble Supreme Court. Therefore, we do not find any illegality, infirmity in the order of ld.CIT(A).
9. Revenue has mainly relied on the decision in the case of Totgars, Co-operative Sale Society Ltd. (supra).
10. The facts mentioned by Hon’ble Karnataka High Court in the case of Totagars Co-operative Sale Society (supra) are as under:
“10. Admittedly and undoubtedly, the respondent assessee is a Cooperative Society engaged mainly in the activity of marketing of agricultural produces grown by its members. The assessee co-operative society also accepts deposits from its members and provides credit facility to its members, runs Kirana Stores, rice mills, live stocks, van section, medical shops, Areca-nut trading section, lodging, plying and hiring of goods carriage, etc.
11. The Assessment Years involved in the present batch of appeals are Assessment Years 2007-2008 to 2011-2012. The bone of contention is that the deduction under Section 80P(2) of the Act is now claimed by the respondent assessee under Section 80P(2)(d) of the Act and not under Section 80P(2)(a) of the Act. The reason is that now the investments and deposits after the Supreme Court’s decision against the assessee Totgar’s Co-operative Sale Society Ltd. (supra), the assessee has shifted the deposits and investments from Schedule Banks to Cooperative Bank and such Co-operative Bank is essentially a Cooperative Society also and Clause (d) allows deduction of income by way of interest or dividends derived by the assessee Co-operative Society from its investments with any other Co-operative Society.
11. In these facts which Hon’ble Karnataka High Court has mentioned in Para 10 and 11 above, Hon’ble Karnataka High Court decided the issued in para 23 as under :
“23. Thus, the aforesaid judgments supports the view taken by this Court that character of income depends upon the nature of activity for earning that income and though on the face of it, the same may appear to be falling in any of the specified Clauses of Section 80P(2) of the Act, but on a deeper analysis of the facts, it may become ineligible for deduction under Section 80P(2) of the Act. The case in Udaipur Sahakari Upbhokta Thok Bhandar Ltd. (supra) was that of Section 80P(2)(e) of the Act, whereas in the present case, itis under Section 80P(2)(d) of the Act. Hence, the income by way of interest earned by deposit or investment of idle or surplus funds does not change its character irrespective of the fact whether such income of interest is earned from a schedule bank or a co-operative bank and thus, clause (d) of Section 80P(2) of the Act would not apply in the facts and circumstances of the present case. The person or body corporate from which such interest income is received will not change its character, viz. interest income not arising from its business operations, which made it ineligible for deduction under Section 80P of the Act, as held by the Hon’ble Supreme Court. Unquote.
12. The proposition of law emanating from above decision is that Character of Income depends upon the nature of activity. The Character of Interest will not change depending on the body corporate or person from whom interest is received. In the case of Totagar’s Co-operative Sale Society in para 10, it is specifically mentioned that Totagar’s Cooperative Sale Society is engaged in the business of marketing of agricultural produce of its members, Areca-nut trading section, lodging, plying and hiring of goods carriage, etc.
13. Since in the case of Totagars Co-operative Sale Society (supra), it has been held that interest income is not arising from business of providing credit facility, which made it ineligible for deduction u/s.80P of the Act. In the case of Totgars, Co-operative Sale Society Ltd. v. ITO (SC) vide order dated 08.02.2010, Hon’ble Supreme Court noted that fact that Assessee markets the agricultural produce of its members and retains the sale proceeds for some time. This sale proceeds pertaining to sale of agricultural produce was invested for a short period in fixed deposits. The dispute was regarding the interest accrued on said fixed deposits which were pertaining to sale proceeds of agricultural produce payable to members but retained for some time by the Society. In this context, Hon’ble Supreme Court held that the Totgars, Co-operative Sale Society Ltd. (supra)., is not eligible for deduction u/s.80(2)(a)(i) of the Act.
14. In the case of the Assessee, it is an admitted fact that Assessee is a Co-operative Credit Society. Its business consists of providing credit facilities to its members. It has been submitted by Assessee before Assessing Officer and ld.CIT(A) that as per the Maharashtra Co-operative Society Act and Reserve Bank of India Guidelines, Assessee has to maintain certain fixed deposits. Therefore, in these facts and circumstances of the case, the interest earned by assessee on the fixed deposits is business income and hence, eligible for deduction u/s.80P(2)(a)(i) of the Act.
15. Hon’ble Supreme Court in the case of CIT v. Karnataka State Co-operative Apex Bank (SC) observed as under :
Quote, “The question in appeal reads : “Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the interest income arising from the investment made out of reserve fund is exempt under section 80P(2)(a)(i) of the Income-tax Act, 1961 ?”
16. While deciding the above question of Law raised by Revenue, the Hon’ble Supreme Court observed as under :
Quote, ” …………There is no doubt, and it is not disputed, that the assessee-co-operative bank is required to place a part of its funds with the State Bank or the Reserve Bank of India to enable it to carry on its banking business. This being so, any income derived from funds so placed arises from the business carried on by it and the assessee has not, by reason of section 80P(2)(a)(i), to pay income-tax thereon. The placement of such funds being imperative for the purposes of carrying on the banking business, the income derived therefrom would be income from the assessee’s business ” Unquote.
17. The Hon’ble Supreme Court in the above case answered the question in favour of Assessee and against Revenue.
17.1 Thus, the proposition of law emanating from the above decision is that Interest earned from Funds deposited with State bank of India by Co-Operative Bank is business income and eligible for deduction u/s.80P(2)(a) of the Act.
18. The Hon’ble Bombay High Court in the case of Pr. CIT v. Annasaheb Patil Mathadi Kamgar Sahakari Pathpedhi Ltd [IT Appeal No. 933 of 2017, dated 14-10-2019] dismissed the appeal of the revenue on the following questions of law raised by the revenue :
“The Revenue urges the following two questions of law for our consideration : (a) Whether on the facts and circumstances of the case and in law, the Tribunal is correct in holding that assessee is entitled to deduction u/s 80P(2)(a) and (d) of the IT Act, 1961
(b) Whether on the facts and circumstances of the case and in law, the Tribunal is right to allow the relief to the assessee by holding that the assessee being Co-operative Credit Society is not a Co-operative Bank hence entitled for deduction u/s 80P(4) of the I.T. Act despite the fact that the assessee is carrying on the banking business and has been categorized as Co-operative Bank / other Bank ?”
19. Revenue’s SLP filed in the case of Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd (supra) was dismissed by Hon’ble Supreme Court vide order dated 20.04.2023, Annasaheb Patil Mathadi Kamgar Sahakari Pathpedi Ltd (supra).
19.1 Thus, the issue is settled now that a cooperative society registered under a state cooperative society Act or Central Cooperative Society Act will not be considered as Bank unless it has received Banking License from RBI. Section 80P(4) shall not be applicable to Such Cooperative Credit Societies and such Cooperative Credit Societies will be entitled for deduction u/s 80P(2)(a) of the Act. When we read the above proposition of law laid down by Hon’ble Supreme Court along with the proposition of law laid down by Hon’ble Supreme Court in the case of Karnataka State Co-operative Apex Bank (supra) , the proposition of law emanating is that Interest earned by depositing Funds with banks by such Co-operative Credit Societies will be Business Income and will be eligible for deduction u/s 80P(2)(a) of the Act.
20. Same proposition of Law has been laid down by The Hon’ble High Court of Andhra Pradesh and Telangana in the case of Vavveru Co-operative Rural Bank Ltd. v. Chief CIT (Andhra Pradesh and Telangana).
21. The Hon’ble High Court of Andhra Pradesh and Telangana in the case of Vavveru Co-operative Rural Bank Ltd. (supra) analysed the provisions of Section 80P, succinctly distinguished the decision of Hon’ble Supreme Court in the case of Totgars, Co-operative Sale Society Ltd. (supra), and held as under :
Quote,”8. Therefore, the real controversy arising in these writ petitions is as to whether the income derived by the petitioners by way of interest on the fixed deposits made by them with the banks, is to be treated as profits and gains of business attributable to any one of the activities indicated in sub-clauses (i) to (vii) of clause (a) of sub-section (2) of section 80P or not.
9. While the petitioners place strong reliance upon a decision of the Division Bench of this court in CIT v. Andhra Pradesh State Cooperative Bank Ltd. the Revenue places strong reliance upon the decision of the Supreme Court in Totgar’s Co-operative Sale Society Ltd. v. ITO.
…. …… …… …..
34. The case before the Supreme Court in Totgar’s Co-operative Sale Society Ltd.’s case (supra) was in respect of a co-operative credit society, which was also marketing the agricultural produce of its members. As seen from the facts disclosed in the decision of the Karnataka High Court in Totgars, from out of which the decision of the Supreme Court arose, the assessee was carrying on the business of marketing agricultural produce of the members of the society. It is also found from paragraph-3 of the decision of the Karnataka High Court in Totgar’s Co-operative Sale Society Ltd.’s case (supra) that the business activity other than marketing of the agricultural produce actually resulted in net loss to the society. Therefore, it appears that the assessee in Totgars was carrying on some of the activities listed in clause (a) along with other activities. This is perhaps the reason that the assessee did not pay to its members the proceeds of the sale of their produce, but invested the same in banks. As a consequence, the investments were shown as liabilities, as they represented the money belonging to the members. The income derived from the investments made by retaining the monies belonging to the members cannot certainly be termed as profits and gains of business. This is why Totgar’s struck a different note.
35. But, as rightly contended by the learned senior counsel for the petitioners, the investment made by the petitioners in fixed deposits in nationalised banks, were of their own monies. If the petitioners had invested those amounts in fixed deposits in other co-operative societies or in the construction of godowns and warehouses, the respondents would have granted the benefit of deduction under clause (d) or (e), as the case may be.
36. The original source of the investments made by the petitioners in nationalised banks is admittedly the income that the petitioners derived from the activities listed in sub-clauses (i) to (vii) of clause (a). The character of such income may not be lost, especially when the statute uses the expression “attributable to” and not any one of the two expressions, namely, “derived from” or “directly attributable to”.
37. Therefore, we are of the considered view that the petitioners are entitled to succeed. Hence, the writ petitions are allowed, and the order of the Assessing Officer, in so far as it relates to treating the interest income as something not allowable as a deduction under section 80P(2)(a), is set aside.”Unquote.
21 .1 Thus, Hon’ble High Court of AP & TS held that Interest Income earned by investing Income derived from Business and Profession by a Co-Operative Society was eligible for deduction u/s.80P(2)(a) of the Act.
22. In the case of Sahyadri Co-operative Credit Society Limited, the Sahyadri Co-operative Credit Society had deposited excess funds in the Banks or Institutions permitted by the Co-operative Societies Act. In that context, the Hon’ble Kerala High Court in the case of Pr. CIT v. Sahyadri Co-operative Credit Society Ltd.(Ker) vide order dated 04.09.2024 has held as under :
Quote “7. On a consideration of the rival submissions, we are of the view that for the reasons stated hereinafter, the question of law that arises for consideration before us must be answered against the Revenue and in favour of the assessee. The permissible deduction that is envisaged under Section 80P(2) of the I.T. Act for a Co-operative Society that is assessed to tax under the head of ‘Profits and Gains of Business or Profession’ is of the whole of the amount of profits and gains of business attributable to any one or more of its activities. Thus, all amounts as can be attributable to the conduct of the specified businesses by a Co-operative Society will be eligible for the deduction envisaged under the statutory provision. The question that arises therefore is whether, merely because the assessee chooses to deposit its surplus profit in a permitted bank or financial institution, and earns interest on such deposits, such interest would cease to form part of its profits and gains attributable to its business of providing credit facilities to its members? In our view that question must be answered in the negative, since we cannot accept the contention of the Revenue that the interest earned on those deposits loses its character as profits/gains attributable to the main business of the assessee. It is not as though the assessee in the instant case had used the surplus amount [the profit earned by it] for an investment or activity that was unrelated to its main business, and earned additional income by way of interest or gain through such activity. The assessee had only deposited the profit earned by it in the manner mandated under Section 63 of the Multi-State Cooperative Societies Act, or permitted by Section 64 of the said Act. In other words, it dealt with the surplus profit in a manner envisaged under the regulatory Statute that regulated, and thereby legitimized, its business of providing credit facilities to its members. Under those circumstances, if the assessee managed to earn some additional income by way of interest on the deposits made, it could only be seen as an enhancement of the profits and gains that it made from its principal activity of providing credit facilities to its members. The nature and character of the principal income [profits earned by the assessee from its lending activity] does not change merely because the assessee acted in a prudent manner by depositing that income in a bank, instead of keeping it in hand. The provisions of the I.T. Act cannot be seen as intended to discourage prudent financial conduct on the part of an assessee.” Unquote (emphasis supplied)
23. What emerges from the above referred decisions of Hon’ble Supreme Court and Hon’ble High Courts is that Interest earned by Cooperative Credit Society registered under state cooperative society Act, which is engaged in the business of providing credit facilities to its members, from funds deposited with Cooperative Bank or Bank is eligible for deduction u/s 80P(2)(a) (i) of the Act. Similar view has been taken by ITAT Pune Bench in the case of ITO v. Dhanshri Multi State Cooperative Society Ltd [IT Appeal No. 463 (Pune) of 2024, dated 13-6-2024]. Arth Nagari SahakariPatsanstha Limited Vs. ITO Arth Nagari Sahakari Patsanstha Limited.
24. In the result, appeal of the Revenue is dismissed.
ITA No.2716/PUN/2025
25. After hearing both sides, we find the grounds raised by the Revenue in ITA No.2716/PUN/2025 are identical to the grounds raised in ITA No.2715/PUN/2026. We have already decided the issue and dismissed the grounds raised by the Revenue. Following similar reasonings, “Lead Appeal” of the Revenue shall apply mutatis-mutandis to this appeal ITA No.2716/PUN/2025 also, accordingly, grounds of appeal raised by the Revenue are dismissed.
26. In the result, appeal of the Revenue in ITA No.2716/PUN/2025 is dismissed.
27. To sum up, both appeals of the Revenue are DISMISSED.