Co-op Society wins ₹10.14L Tax Relief: ITAT rules FDR Interest Eligible for 80P Deduction [Read Order]
After hearing both sides, the Tribunal held that the assessee had earned interest from FDRs maintained with cooperative banks, which are registered cooperative societies, and hence, the interest qualifies for deduction under Section 80P(2)(d).
![Co-op Society wins ₹10.14L Tax Relief: ITAT rules FDR Interest Eligible for 80P Deduction [Read Order]](https://images.taxscan.in/h-upload/2025/06/26/2054663-cooperative-society-taxscan.webp "Co-op Society wins ₹10.14L Tax Relief: ITAT rules FDR Interest Eligible for 80P Deduction [Read Order]")
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has granted substantial tax relief to a cooperative credit society, holding that interest earned on fixed deposits (FDRs) with cooperative banks qualifies for deduction under Section 80P(2)(d) of the Income Tax Act. The appeal was filed by Aditya Urban Co-operative Credit Society Limited against the disallowance of...
The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has granted substantial tax relief to a cooperative credit society, holding that interest earned on fixed deposits (FDRs) with cooperative banks qualifies for deduction under Section 80P(2)(d) of the Income Tax Act.
The appeal was filed by Aditya Urban Co-operative Credit Society Limited against the disallowance of deduction claimed under Section 80P amounting to ₹10,14,038 for Assessment Year 2018–19. The Assessing Officer had denied the claim on the ground that the interest earned on fixed deposits placed with cooperative banks was not income “from” cooperative societies, thereby not eligible under Section 80P(2)(d).
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Before the Tribunal, the society contended that it had deposited surplus funds with cooperative banks to earn interest income, and such receipts squarely fell within the ambit of Section 80P(2)(d), which allows deduction on income by way of interest or dividends derived by a cooperative society from investments with other cooperative societies, including banks.
The Revenue, on the other hand, argued that such interest income was not from operational activity and was liable to be treated as income from other sources under Section 56, thereby disqualifying it from deduction.
After hearing both sides, the Tribunal held that the assessee had earned interest from FDRs maintained with cooperative banks, which are registered cooperative societies, and hence, the interest qualifies for deduction under Section 80P(2)(d). The Tribunal observed that the authorities below had erred in disallowing the claim merely based on the source of the income without examining the nature of the investment.
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The Bench further noted that the society had declared income solely from interest and no other business activities were in dispute. Since the source of interest was cooperative banks and not commercial banks, the Tribunal found no legal basis for denying the deduction.
The order was pronounced by Judicial Member R.S. Syal and Accountant Member S.S. Viswanethra Ravi.
Accordingly, the Tribunal allowed the appeal filed by the society and directed the Assessing Officer to grant the deduction of ₹10,14,038 under Section 80P(2)(d) as claimed by the assessee.
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