CHENTRAPPINI SERVICE CO OPERATIVE BANK LTD NO R 276,CHENTRAPPINI V. INCOME TAX OFFICER, THRISSUR

ITA 900/COCH/2024

AI Insights

The case involves M/s. Chentrappinni Service Co-op Bank Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which disallowed deductions claimed under sections 80P(2)(a)(i) and 80P(2)(d) of the Income Tax Act for the Assessment Year 2022-23. The primary contention was whether the interest income earned from deposits with Thrissur District Co-operative Bank Ltd. and Kodungallur Town Co-operative Bank Ltd., which are registered under the Kerala Co-operative Societies Act, is eligible for deduction under section 80P(2)(d). The lower authorities had treated this income as taxable under section 56, income from other sources, rather than allowing the deduction under section 80P(2)(d). The Tribunal found that the lower authorities had not correctly interpreted the relevant Supreme Court and High Court judgments and remitted the matter back to the AO for further verification.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396853 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2022-2023
• Other Referred Cases: PCIT vs. Peroorkada Service Co-operative Bank Ltd., Mavilayi Service Co-operative Bank Ltd. v. CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: OMANAKUTTAN; SNR
• Assessee Lawyers: RAMDAS
• Section: 56

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH : COCHIN BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER ITA No. 900/Coch/2024 Assessment Year : 2022-23 M/s. Chentrappinni Service Co-op Bank Ltd. No. R 276, P.O. Chentrappinni, Thrissur - 680 687. PAN: AABAC6722F Vs. The Income Tax Officer, Thrissur. APPELLANT RESPONDENT Assessee by : Shri Ramdas, CA Revenue by : Shri Omanakuttan, Snr. AR Date of Hearing : 18-03-2025 Date of Pronouncement : 27-05-2025 ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 30/09/2024 in respect of the A.Y. 2022-23 and raised the following grounds: Page 2 of 5 ITA No. 900/Coch/2024 2. The assessee is a primary agricultural credit co-operative society and filed their return of income and claimed deduction u/s. 80G, 80P(2)(a)(i) and 80P(2)(c)(ii) of the Act. The AO made the assessment by disallowing the deduction claimed u/s. 80P(2)(a)(i) of the Act on the ground that the interest income earned from the co-operative banks are not the profits and gains of the business carried on by the assessee. Page 3 of 5 ITA No. 900/Coch/2024 3. Challenging the said order, the assessee filed an appeal before the Ld.CIT(A) and contended that the interest income earned from the co- operative banks are eligible for deduction. The Ld.CIT(A) rejected the said contention and held that the interest income earned from the scheduled banks and co-operative banks are also incomes received from non-member category and therefore the same could not be considered for deduction u/s. 80P(2)(a) to 80P(2)(d) of the Act but liable to be assessed u/s. 56 of the Act. The Ld.CIT(A) had observed that the interest income earned from deposits with Scheduled Banks and Co-operative Banks are to be taxed under the head income from other sources. 4. As against the said order, the assessee is in appeal before this Tribunal. 5. At the time of hearing, the Ld.AR submitted that the interest income received from Thrissur District Co-operative Bank Ltd. and Kodungallur Town Co-operative Bank Ltd. are eligible for deduction u/s. 80P(2)(d) of the Act since the said banks are originally registered as co-operative societies under the provisions of the Kerala Co-operative Societies Act and therefore the said interest income is eligible for deduction u/s. 80P(2)(d) of the Act. The Ld.AR also relied on the order of the Hon’ble Jurisdictional High Court reported in 328 CTR 443 (Kerala) in the case of the PCIT vs. Peroorkada Service Co-operative Bank Ltd. and prayed to allow the appeal filed by the assessee. 6. The Ld.DR relied on the orders of the lower authorities and prayed to dismiss the appeal. 7. We have heard the arguments of both sides and perused the materials available on record. 8. The only dispute involved in this appeal is about the interest income earned from the deposits made with the Thrissur District Co-operative Bank Page 4 of 5 ITA No. 900/Coch/2024 Ltd. and Kodungallur Town Co-operative Bank Ltd. We have perused the order of the AO as well as the Ld.CIT(A) and we found that the authorities below had wrongly interpreted the Hon’ble Supreme Court judgment reported in 431 ITR 1 in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT. Further, the Hon’ble Jurisdictional High Court also granted the relief to the assessees that the interest income earned from the District Co- operative Banks registered as co-operative society under the Kerala Co- operative Societies Act are eligible for deduction u/s. 80P(2)(d) of the act. Both the authorities had failed to consider the decision of Hon’ble Jurisdictional High Court. Prima facie, we see that the order of the authorities below in denying the deduction u/s. 80P(2)(d) is not correct. Admittedly, the assessee had received interest income from the two co- operative banks registered under the provisions of the Kerala Co-operative Societies Act. In order to verify the said facts including the status of the two district co-operative banks, we are remitting this issue to the file of the AO to verify the status of the two district central co-operative banks and if the AO is satisfied that the said banks are registered under the provisions of the Kerala Co-operative Societies Act, grant the necessary relief u/s. 80P(2)(d) of the Act by following the judgment of the Hon’ble Jurisdictional High Court cited supra. 9. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 27th May, 2025. Sd/- Sd/- (INTURI RAMA RAO) (SOUNDARARAJAN K.) Accountant Member Judicial Member Cochin, Dated, the 27th May, 2025. /MS / Page 5 of 5 ITA No. 900/Coch/2024 Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Cochin 5. Guard file 6. CIT(A) By order Assistant Registrar, ITAT, Cochin "