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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallYes—under the Gujarat authority followed by the Ahmedabad Income Tax Appellate Tribunal (ITAT), a qualifying co-operative society can claim a section 80P(2)(d) deduction for interest earned on fixed deposits placed with a qualifying co-operative bank. The tribunal’s 15 May 2026 decision says the bank’s status as a co-operative bank does not prevent the investing society from claiming the deduction. The result depends on the recipient institution’s legal registration and the society’s own facts; it is not a blanket exemption for every fixed deposit.
What the Ahmedabad ITAT decided
In The Ahmedabad Co-operative Department Stores Ltd. v. DCIT (ITA Nos. 99 & 100/Ahd/2024, assessment years 2018-19 and 2020-21), the Ahmedabad ITAT treated the section 80P(2)(d) issue as settled by Gujarat High Court precedent. It held that interest earned from investments with co-operative banks qualifies for deduction under section 80P(2)(d), provided the bank is itself a qualifying co-operative society under the applicable registration law.
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The tribunal’s reasoning follows the Gujarat High Court’s view that a co-operative bank registered under the Gujarat State Co-operative Societies Act is a co-operative society for section 80P(2)(d). The order states that “a co-operative bank, being a co-operative society, qualifies for the purposes of section 80P(2)(d)” and therefore interest from those investments is eligible for deduction.
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Why section 80P(2)(d) is the relevant provision
Section 80P(2)(d) covers income by way of interest or dividends derived by a co-operative society from investments with another co-operative society. For a society earning interest on a fixed deposit, this is the specific investment-income route. Section 80P(2)(a)(i), by contrast, concerns profits and gains from the business activities specified there, such as providing credit facilities to members; it is not the provision the Ahmedabad ruling relied on for fixed-deposit interest.
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The legal question is therefore whether the institution holding the deposit is “another co-operative society” for this subsection. Gujarat authority answers that question affirmatively when the bank is registered as a co-operative society under the relevant state law.
Section 80P(4) does not automatically defeat the investor’s claim
Section 80P(4) restricts a co-operative bank’s own access to section 80P in the situations covered by that subsection. The Ahmedabad decision distinguishes that restriction from the separate deduction claimed by a different taxpayer—a co-operative society investing its funds in the bank.
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In practical terms, the bank’s eligibility to claim section 80P and the depositor society’s eligibility under section 80P(2)(d) are separate analyses. The bank’s restricted treatment under section 80P(4) does not, by itself, turn the bank into a non-co-operative institution or erase the investor society’s deduction. The tribunal followed Gujarat authorities including State Bank of India v. CIT and PCIT v. Ashwinkumar Arban Co-operative Society Ltd. in reaching that conclusion.
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| Where the fixed deposit is held | Section 80P(2)(d) position under the Gujarat authority | What must be checked |
|---|---|---|
| Qualifying co-operative bank | Interest is eligible for deduction, according to the Ahmedabad ITAT and Gujarat High Court line of authority. | The bank’s legal registration as a co-operative society and the society’s supporting records. |
| Nationalised bank | Not automatically eligible under section 80P(2)(d). | Section 80P(2)(d) requires an investment with another co-operative society; a nationalised bank does not satisfy that description merely because it accepts deposits. |
| Private commercial bank or other non-co-operative bank | Not automatically eligible under the same subsection. | The institution’s legal status and whether another provision, if any, applies to the particular income. |
The ruling should therefore not be read as a deduction for every fixed-deposit receipt. The identity and legal status of the deposit-taking institution are central.
The Harsiddhi fixed-deposit example
A contemporaneous report of Harsiddhi Co-op. Credit Society Ltd. v. ACIT for assessment year 2020-21 records the Ahmedabad bench allowing the entire ₹45,31,057 of fixed-deposit interest earned from three co-operative banks. Harsiddhi was registered under the Gujarat Co-operative Societies Act, 1961. The Assessing Officer had initially treated the interest as income from other sources; the appellate ruling accepted the section 80P(2)(d) position instead.
₹45,31,057 is the amount involved in that case, not a general threshold, average, or limit. It does not mean that only deposits of that size qualify, nor that every society will receive the same result.
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Practical steps for a co-operative society claiming the deduction
- Identify the exact provision. Report the fixed-deposit interest under the section 80P(2)(d) claim rather than presenting it as a section 80P(2)(a)(i) business-income deduction.
- Verify the bank’s registration. Obtain evidence showing that the deposit-taking bank is registered as a co-operative society under the applicable state co-operative law or other governing registration framework.
- Match each deposit to the evidence. Keep the fixed-deposit advice, interest certificate, bank statements, and the bank’s registration details together so the source of every interest amount is clear.
- Reconcile the return. Ensure the interest reported in the books, tax computation, and information statements agrees with the deduction claimed.
- Separate taxpayer positions. Do not assume that the bank’s own section 80P(4) treatment determines the society’s section 80P(2)(d) entitlement.
- Review non-co-operative deposits separately. Interest from nationalised, private, or other non-co-operative banks should not be included in the same deduction without a distinct legal basis.
What the decision does—and does not—settle
- It supports the deduction for interest earned by a co-operative society from a qualifying co-operative bank in Gujarat’s governing precedent.
- It confirms that the bank’s section 80P(4) restriction and the investor society’s section 80P(2)(d) claim are not the same question.
- It does not create a universal rule for deposits with every type of bank.
- It does not remove the need to establish the bank’s registration or to test the taxpayer’s facts for the relevant assessment year.
- Because the decision is an Ahmedabad ITAT ruling applying Gujarat High Court authority, societies in other jurisdictions should consider the precedent applicable in their own jurisdiction and obtain professional advice where the legal position differs.
Frequently Asked Questions
Can a co-operative society claim section 80P(2)(d) on interest from any bank?
No. The Ahmedabad ruling concerns interest from a qualifying co-operative bank treated as another co-operative society. Interest from a nationalised, private, or other non-co-operative bank does not automatically qualify under section 80P(2)(d).
Does section 80P(4) block the depositor society’s deduction?
Not automatically. Section 80P(4) addresses the co-operative bank’s own deduction. The depositor society’s separate section 80P(2)(d) claim must be analysed on its own facts.
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What amount was involved in the Harsiddhi case?
The reported case amount was ₹45,31,057 of fixed-deposit interest from three co-operative banks for assessment year 2020-21.
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