CHEEKKILODE SERVICE CO-OP BANK LTD,KOZHIKODE V. ITO, WARD-2(3), KOZHIKODE

ITA 353/COCH/2025

AI Insights

The case involves the Cheekkilode Service Co-op. Bank Ltd., a cooperative society engaged in accepting deposits and providing credit facilities, which appealed against the order of the Commissioner of Income Tax (Appeals), Faridabad. The primary issue was the eligibility of interest income received from the District Co-operative Bank for exemption under section 80P(2)(i)(a) of the Income Tax Act. The Income Tax Officer had assessed the income, including this interest, as taxable, which was upheld by the CIT(A). The Tribunal's decision, influenced by a prior High Court ruling, reversed this position, allowing the deduction for the interest income.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668803 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Other Referred Cases: PCIT v. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI PRAKASH CHAND YADAV, JM ITA No. 353/Coch/2025 Assessment Year: 2014-15 Cheekkilode Service Co-op. Bank Ltd. .......... Appellant Cheekkilode, Atholi, Kozhikode 673315 [PAN: AAAAC8251E] vs. The Income Tax Officer, Ward-2(3), Kozhikode .......... Respondent Appellant by: ------- None ------- Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 26.05.2025 Date of Pronouncement: 23.06.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), Faridabad [CIT(A)] dated 30.11.2023 for Assessment Year (AY) 2014-15. 2. Brief facts of the case are that the appellant is a co-operative society registered under the Kerala State Co-operative Societies Act, 1969. It is classified as primary agricultural credit co-operative society. It is engaged in the business of accepting deposits from members and providing credit facilities to its members. The return 2 ITA No. 353/Coch/2025 Cheekkilode Service Co-op. Bank Ltd. of income for AY 2014-15 was filed on 10.10.2015 after claiming deduction u/s. 80P of the Act. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-2(3), Kozhikode (hereinafter called \"the AO\") passed u/s. 143(3) of the Act at a total income of Rs. 16,28,714/-. While doing so, the AO brought to tax the interest income earned by the appellant from co- operative banks by treating it as a co-operative bank. 3. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO. 4. Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal. 5. When the appeal was called on nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceeded to dispose of the appeal after hearing the learned Sr. DR. 6. We notice that the issue relates to eligibility of interest income received from the District Co-operative bank for exemption u/s. 80P(2)(i)(a) of the Act, the issue stands adjudicated by Hon'ble Jurisdictional High Court’s decision in the case of PCIT v. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker) wherein their Lordships have rejected the Revenue’s identical stand 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 3 ITA No. 353/Coch/2025 Cheekkilode Service Co-op. Bank Ltd. 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 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.” 7. Respectfully following the above decision of the Hon'ble Jurisdictional High Court, we hold that the assessee is entitled for deduction under section 80P(2)(d) of the Act on account of interest received from District Co-operative Bank and Treasury. 8. In the result, the appeal filed by the assessee stands allowed. Order pronounced in the open court on 23rd June, 2025. Sd/- Sd/- (PRAKASH CHAND YADAV) JUDICIAL MEMBER (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 23rd June, 2025 n.p. 4 ITA No. 353/Coch/2025 Cheekkilode 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 "