My society's chartered accountant told the penalty officer it was a co-operative bank. Can the department use that admission to deny section 80P?
No. The Mumbai Bench held that no addition and no denial of a deduction can be made merely on the admission of a person, still less the assessee's authorised representative, without going into the actual charter documents, and that there is no estoppel against the statute. The society's chartered accountant had argued before the Commissioner (Appeals) in a section 271D penalty matter that it was a co-operative bank, and the penalty was deleted on that basis; he later filed an affidavit saying it had been a genuine misinterpretation. On the bye-laws and objects the society took deposits only from members and lent only to members, and it held no licence from the Reserve Bank of India, so it was a co-operative credit society and not a co-operative bank. Section 80P(4) did not shut it out and the deduction under section 80P(2)(a)(i) was allowed for each of the years in appeal.
Decided by the ITAT (Income Tax Appellate Tribunal, Mumbai - M. Balaganesh, Accountant Member and Amarjit Singh, Judicial Member) on 2020-12-03, reported as [2021] 187 ITD 201 (Mumbai - Trib.); IT Appeal Nos. 4296 and 4297 (Mum.) of 2016, 5983 (Mum.) of 2017 and 403 and 4211 (Mum.) of 2018 (assessment years 2007-08, 2010-11, 2013-14 and 2014-15). It bears on section 80P(2)(a)(i), section 80P(4), section 271D, section 269SS of the Income Tax Act 1961, in Co-operative Societies, Deductions & Disallowances, Evidence & Burden of Proof and Penalty matters.
Departments do reach for a statement made in some other proceeding, and this order says plainly what such a statement is worth. Status under section 80P is a legal characterisation that follows from the registration, the objects and the bye-laws; it is not a matter the parties can settle between themselves by concession. Two propositions carry that. The first is evidentiary - an admission cannot substitute for the charter documents, which the officer is obliged to look at. The second is the older rule that there is no estoppel against the statute, so an assessee may say that a receipt is not taxable even though it once offered it to tax. The order also sets out the substantive test that decides the co-operative bank question: a bank deals with the public at large, members and non-members alike, and needs a licence from the Reserve Bank; a society whose bye-laws forbid transactions with non-members and which holds no licence is not one.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee is a co-operative credit society registered under the Maharashtra Co-operative Societies Act, 1960, whose members are secondary school teachers. It accepts deposits only from members and lends only to members; its bye-laws do not permit transactions with non-members. It claimed the deduction under section 80P(2)(a)(i) on the profits of providing credit facilities to its members. The Revenue said section 80P(4) applied because the society was in substance a co-operative bank. Its main support for that was what had happened in a separate penalty matter for assessment year 2007-08: a penalty under section 271D for contravention of section 269SS had been deleted by the Commissioner (Appeals) after the society's chartered accountant argued that it was a co-operative bank and so outside those provisions, and the department had not appealed that order. The same chartered accountant afterwards filed an affidavit saying the characterisation had been a genuine misinterpretation of the Income-tax Act and the Banking Regulation Act, and the society moved to have the record corrected.
The appeals were partly allowed. The society was held to be a co-operative credit society and not a co-operative bank, and the deduction under section 80P(2)(a)(i) was allowed for assessment years 2007-08, 2010-11, 2013-14 and 2014-15. The appeal in the section 271D penalty matter for 2007-08 was allowed for statistical purposes and restored to the Commissioner (Appeals) for a fresh decision.
The Tribunal refused to let the status question be decided by what had been said in the penalty proceeding. An admission by a person, and in particular by the assessee's authorised representative, cannot found an addition or the denial of a deduction unless the authorities have gone into the charter documents themselves; and there is no estoppel against the statute, so an assessee is free to say before the authorities that an item is not taxable even though it offered the item in its return. Turning to the documents, the objects and bye-laws confined the society to dealings with its members. Against the definition of banking business in the Banking Regulation Act, 1949, a co-operative bank is an entity that deals with the public - members and non-members - and one that requires a licence from the Reserve Bank of India, which this society did not have and could not have obtained. It followed that section 80P(4) had no application. The Tribunal also noted the society's bona fides in realising and correcting its mistake by rectification petitions and an affidavit.
There is no estoppel against the statute and therefore, it is open to the assessee to claim before the authorities that a particular item of income is not taxable despite having offered the same in its return of income.
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Handle my notice → Ask a CA on WhatsAppNo. The Mumbai Bench held that no addition and no denial of a deduction can be made merely on the admission of a person, still less the assessee's authorised representative, without going into the actual charter documents, and that there is no estoppel against the statute. The society's chartered accountant had argued before the Commissioner (Appeals) in a section 271D penalty matter that it was a co-operative bank, and the penalty was deleted on that basis; he later filed an affidavit saying it had been a genuine misinterpretation. On the bye-laws and objects the society took deposits only from members and lent only to members, and it held no licence from the Reserve Bank of India, so it was a co-operative credit society and not a co-operative bank. Section 80P(4) did not shut it out and the deduction under section 80P(2)(a)(i) was allowed for each of the years in appeal. This was decided by the ITAT (Income Tax Appellate Tribunal, Mumbai - M. Balaganesh, Accountant Member and Amarjit Singh, Judicial Member) and bears on section 80P(2)(a)(i), section 80P(4), section 271D, section 269SS of the Income Tax Act 1961. It is reported as [2021] 187 ITD 201 (Mumbai - Trib.); IT Appeal Nos. 4296 and 4297 (Mum.) of 2016, 5983 (Mum.) of 2017 and 403 and 4211 (Mum.) of 2018 (assessment years 2007-08, 2010-11, 2013-14 and 2014-15). Departments do reach for a statement made in some other proceeding, and this order says plainly what such a statement is worth. Status under section 80P is a legal characterisation that follows from the registration, the objects and the bye-laws; it is not a matter the parties can settle between themselves by concession. Two propositions carry that. The first is evidentiary - an admission cannot substitute for the charter documents, which the officer is obliged to look at. The second is the older rule that there is no estoppel against the statute, so an assessee may say that a receipt is not taxable even though it once offered it to tax. The order also sets out the substantive test that decides the co-operative bank question: a bank deals with the public at large, members and non-members alike, and needs a licence from the Reserve Bank; a society whose bye-laws forbid transactions with non-members and which holds no licence is not one. If it applies to you, the first step is this: Put the registration certificate, the objects and the bye-laws on record and take the officer through the clause that restricts dealings to members. That is the material the Tribunal treated as decisive.
The assessee is a co-operative credit society registered under the Maharashtra Co-operative Societies Act, 1960, whose members are secondary school teachers. It accepts deposits only from members and lends only to members; its bye-laws do not permit transactions with non-members. It claimed the deduction under section 80P(2)(a)(i) on the profits of providing credit facilities to its members. The Revenue said section 80P(4) applied because the society was in substance a co-operative bank. Its main support for that was what had happened in a separate penalty matter for assessment year 2007-08: a penalty under section 271D for contravention of section 269SS had been deleted by the Commissioner (Appeals) after the society's chartered accountant argued that it was a co-operative bank and so outside those provisions, and the department had not appealed that order. The same chartered accountant afterwards filed an affidavit saying the characterisation had been a genuine misinterpretation of the Income-tax Act and the Banking Regulation Act, and the society moved to have the record corrected. The matter was decided on 2020-12-03 by the ITAT (Income Tax Appellate Tribunal, Mumbai - M. Balaganesh, Accountant Member and Amarjit Singh, Judicial Member). On those facts the ITAT held as follows. The appeals were partly allowed. The society was held to be a co-operative credit society and not a co-operative bank, and the deduction under section 80P(2)(a)(i) was allowed for assessment years 2007-08, 2010-11, 2013-14 and 2014-15. The appeal in the section 271D penalty matter for 2007-08 was allowed for statistical purposes and restored to the Commissioner (Appeals) for a fresh decision.
The Tribunal refused to let the status question be decided by what had been said in the penalty proceeding. An admission by a person, and in particular by the assessee's authorised representative, cannot found an addition or the denial of a deduction unless the authorities have gone into the charter documents themselves; and there is no estoppel against the statute, so an assessee is free to say before the authorities that an item is not taxable even though it offered the item in its return. Turning to the documents, the objects and bye-laws confined the society to dealings with its members. Against the definition of banking business in the Banking Regulation Act, 1949, a co-operative bank is an entity that deals with the public - members and non-members - and one that requires a licence from the Reserve Bank of India, which this society did not have and could not have obtained. It followed that section 80P(4) had no application. The Tribunal also noted the society's bona fides in realising and correcting its mistake by rectification petitions and an affidavit. In the words reproduced by the source cited on this page: "There is no estoppel against the statute and therefore, it is open to the assessee to claim before the authorities that a particular item of income is not taxable despite having offered the same in its return of income." The decision followed or applied Quepem Urban Co-operative Credit Society Ltd. v. Asstt. CIT [2015] 58 taxmann.com 113/232 Taxman 510/377 ITR 272 (Bom.).
It was decided by the ITAT on 2020-12-03 and is reported as [2021] 187 ITD 201 (Mumbai - Trib.); IT Appeal Nos. 4296 and 4297 (Mum.) of 2016, 5983 (Mum.) of 2017 and 403 and 4211 (Mum.) of 2018 (assessment years 2007-08, 2010-11, 2013-14 and 2014-15). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 80P(2)(a)(i), section 80P(4), section 271D, section 269SS, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The appeals were partly allowed. The society was held to be a co-operative credit society and not a co-operative bank, and the deduction under section 80P(2)(a)(i) was allowed for assessment years 2007-08, 2010-11, 2013-14 and 2014-15. The appeal in the section 271D penalty matter for 2007-08 was allowed for statistical purposes and restored to the Commissioner (Appeals) for a fresh decision. It arises in Co-operative Societies, Deductions & Disallowances, Evidence & Burden of Proof and Penalty matters, on section 80P(2)(a)(i), section 80P(4), section 271D, section 269SS of the Income Tax Act 1961, and was decided by Income Tax Appellate Tribunal, Mumbai - M. Balaganesh, Accountant Member and Amarjit Singh, Judicial Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If a representative has said something unhelpful in another proceeding, correct the record - an affidavit explaining the misapprehension was accepted here - and argue that there is no estoppel against the statute. Point to the absence of a Reserve Bank licence and to the definition of banking business in the Banking Regulation Act, 1949 when s.80P(4) is raised. Do not assume the point is closed because an earlier order in a penalty proceeding went the other way and was not appealed by the department; status still has to be decided on the charter documents.
Searched for later treatment; none was found. That is not the same as a source affirming it. The citator returns 27 documents, but they are a topic cluster on section 80P(2)(d) rather than citations of this order. Two were opened - Shriram Sahakari Patpedhi Ltd v ITO (ITAT Mumbai, 26 July 2024) and Veer Jijamata Co-op Credit Society v CIT(A) (ITAT Mumbai, 28 June 2024) - and neither mentions this order or its ITD citation. A name search shows the only later Bench to take up a 'Thane Zilla Madhyamik Shikshak' decision is ACIT v Shriniwas Engineering Auto Components (ITAT Pune, 22 December 2025), and that is the 2017 order of the same assessee (ITA Nos. 1249 & 1250/Mum/2017), relied on by the Departmental Representative on an estoppel point which the Bench then declined to apply. No appeal to the Bombay High Court was traced. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order does not set out the amounts of deduction claimed year by year or the quantum of the section 271D penalty, so no figures are recorded here. The penalty appeal was not decided on the merits - it was sent back to the Commissioner (Appeals) for a fresh decision - so this entry says nothing about the outcome on section 269SS. The appeal numbers and assessment years are as listed in the cause title; ITA No. 4211/Mum/2018 is the penalty appeal for 2007-08. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeals were partly allowed. The society was held to be a co-operative credit society and not a co-operative bank, and the deduction under section 80P(2)(a)(i) was allowed for assessment years 2007-08, 2010-11, 2013-14 and 2014-15. The appeal in the section 271D penalty matter for 2007-08 was allowed for statistical purposes and restored to the Commissioner (Appeals) for a fresh decision.
TaxSphere, “Thane Zilla Madhyamik Shikshak Sangh Sahakari Parpedhi Maryadit v ACIT”, https://taxnotice.vittsphere.com/caselaw/case/thane-zilla-shikshak-sahakari-parpedhi-v-acit-80p-admission/ (validity last checked 2026-09-01)
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