CHAKKITTAPARA SERVICE CO-OPERATIVE BANK LTD,CHAKKITTAPARA V. ITO, WARD-2(1), KOZHIKODE

ITA 83/COCH/2024

AI Insights

The case involves Chakkittapara Service Co-op. Bank Ltd., which appealed against the orders of the National Faceless Appeal Centre, Delhi, concerning the rejection of their Section 80P deduction claims for interest income from nominal/associate members and deposits in cooperative banks for the assessment years 2017-18, 2018-19, and 2020-21. The primary legal contention was whether such interest income qualifies for deductions under Section 80P of the Income Tax Act, 1961. The Tribunal examined precedents and the specific provisions of the Act, ultimately deciding in favor of the assessee based on interpretations of relevant case law and the cooperative society's operational framework under state law.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 38376 (ITAT-COCHIN)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Appeal Filed On: 02-02-2024
• Other Referred Cases: Citizen Co-op Society Ltd. vs. ACIT [2017] 397 ITR 1 (SC), Totgar's Co-operative Sale Society Ltd. v. ITO [2010] 322 ITR 283 (SC), Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC), Pr. CIT vs. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. PANDIAN
• Assessee Lawyers: T.P. PAUL
• Section: 80P

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Satbeer Singh Godara, Judicial Member and Shri Amarjit Singh, Judicial Member ITA Nos. 82 to 84/Coch/2024 (Assessment Years: 2017-18, 2018-19 & 2020-21) Chakkittapara Service Co-op. Bank Ltd. Chakkittapara P.O. Koyilandi, Kozhikode 673526 [PAN: AAAAC2050K] vs. The Income Tax Officer Ward - 2(1), Kozhikode (Appellant) (Respondent) Appellant by: Shri T.P. Paul, CA Respondent by: Dr. S. Pandian, CIT-DR Date of Hearing: 19.08.2024 Date of Pronouncement: 23.10.2024 O R D E R Per Bench These assessee’s three appeals ITA.Nos.82 to 84/Coch/2024, arise against orders of the National Faceless Appeal Centre , Delhi [CIT(A)] in proceedings u/s. 250 of the Income Tax Act, 1961 (the Act) as under : - Sr. No. ITA No. AY DIN & Order No. Date 1 82/Coch/2024 2017-18 ITBA/NFAC/S/250/2023- 24/10580585566(1) 20.11.2023 2 83/Coch/2024 2018-19 ITBA/NFAC/S/250/2023- 24/1058922765(1) 20.12.2023 84/Coch/2024 2020-21 ITBA/NFAC/S/250/2023- 24/1058058630(1) 20.11.2023 Heard both the parties. Case files perused. 2 ITA Nos. 82 to 84/Coch/2024 Chakkittapara Service Co-op. Bank Ltd. 2. It emerges at the outset that both the learned lower authorities have, inter alia, rejected the assessee’s section 80P claim deduction(s) pertaining to its interest income derived from nominal/associate members and deposits made in co-operative bank u/s. 80P(4) of the Act; involving varying sums by quoting case law Citizen Co- op Society Ltd., vs. ACIT [2017] 397 ITR 1 (SC); Totgar’s Co-operative Sale Society Ltd. v. ITO [2010] 322 ITR 283 (SC); respectively. 3. Learned CIT-DR’s foremost argument seeking to draw a distinction between assessee’s nominal/associate vis-à-vis regular members hardly deserves to be accepted in light of case law Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC) holding that such a stand is no more admissible in section 80P deduction claim once the interest income is derived from various categories of members recognised under the state co-operative law. We make it clear that there is no material in the case file indicating the assessee having transacted with non- members for the purpose of deriving interest income. 4. So far as the assessee’s latter category of interest income derived from deposits made in co-operative banks is concerned, we find that the hon'ble jurisdictional high court has settled the issue against the department in the case of Pr. CIT vs. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker) as under : - “12.2 Section 80P deals with Co-operative Societies' computation of income. As already noted, it has four sections and several sub-sections and clauses. The Parliament has considered the various situations in which the exigible income and the deductable income of the assessee is considered while computing the income of the assessee. For getting deduction, in our considered view, the assessee must also establish that the interest income earned by the assessee is from a Co-operative Society. As a matter of fact, in the case on hand, there is no dispute that it is not from a Co-operative Society registered under Kerala Co-operative Societies Act. The interest income earned from District Co-operative Bank/State Co-operative Bank, in the facts and circumstances of the case, do come within Section 80P(2)(d). Therefore, the income constitutes income from other sources and the only eligible deduction is covered by Section 80P(2)(d) viz. Interest or dividend derived by the assessee from its investments with any other Co-operative Society. The source of interest 3 ITA Nos. 82 to 84/Coch/2024 Chakkittapara Service Co-op. Bank Ltd. income is from Bank and Treasury, interest income received from Treasury be included in the computation of total income of the assessee. In other words, interest earned from Treasury is inadmissible for deduction and interest income from Co-operative Societies registered under the Kerala Co-operative Societies Act are eligible for deduction. The contra consideration of Commissioner of Income Tax (Appeals) and the Tribunal is incorrect and liable to be modified as stated above. Hence, it is held that the interest income earned by the assessee does not come within the ambit of Section 80P(2)(a)(i) and permissible deduction of interest income is limited to Co-operative Societies/Banks registered under Kerala Co-operative Societies Act under clause (d) of the Act and effect order on the above lines is made by the Assessing Officer. The questions are accordingly answered.” 5. We adopt the above detailed discussion mutatis mutandis to accept assessee’s latter argument regarding interest income derived from co-operative bank is allowable u/s. 80P of the Act. Ordered accordingly. 6. Delay of 14 days in filing these appeals is condoned in light of assessee’s condonation averments and as per Collector Land Acquisition vs. Mst. Katiji & Ors (1987) 167 ITR 471 (SC) settling the issue long back that that all such technical aspects must make way for the cause of substantial justice. 7. These assessee’s three appeals ITA.Nos.82 to 84/Coch/2024 are allowed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 23rd October, 2024. Sd/- Sd/ (Amarjit Singh) Accountant Member (Satbeer Singh Godara) Judicial Member Cochin, Dated: 23rd October, 2024 n.p. 4 ITA Nos. 82 to 84/Coch/2024 Chakkittapara Service Co-op. Bank Ltd. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order Assistant Registrar ITAT, Cochin "