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Section 80P Deduction Allowed for Cooperative Bank Interest
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Income Tax Appellate Tribunal, Punetax

Section 80P Deduction Allowed for Cooperative Bank Interest

October 9, 2026

ITAT Pune allowed deductions under Section 80P(2)(d) for interest income earned by a cooperative society from a cooperative bank, distinguishing it from commercial deposits.

Interest from Cooperative Bank Eligible Under Section 80P

ITAT Pune allowed deductions of ₹1.64 crore and ₹1.32 crore under Section 80P(2)(d) of the Income Tax Act for interest income earned by a cooperative society from a cooperative bank. The provision grants exemption to cooperative societies on income from certain specified sources, including interest from other cooperative institutions.

The tribunal distinguished such interest from deposits in commercial entities like MSEDCL, where ₹1.09 lakh interest was denied exemption.

“The legislative intent behind Section 80P is to encourage intra-cooperative lending”
, the ITAT observed, upholding the benefit where the payer was a cooperative bank registered under relevant statutes.

This clarifies the scope of 80P(2)(d): it protects interest within the cooperative ecosystem. Practitioners must verify the cooperative status of the payer to claim the benefit, especially for rural and urban cooperative societies.

Citations

  • Section 80P(2)(d), Income Tax Act, 1961
Practice Areas:tax

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