CHITTUR SERVICE CO-OPERATIVE BANK,PALAKKAD V. ITO, WARD 1 & TPS, PALAKKAD

ITA 109/COCH/2025

AI Insights

The case involves Chittur Service Co-op. Bank Ltd., a cooperative society, appealing against the orders of the National Faceless Appeal Centre, which denied them deductions under section 80P of the Income Tax Act for the assessment years 2016-17 and 2017-18. The primary contention was whether the bank, which lends money to non-members, qualifies for deductions under section 80P(2)(a)(i). The Income Tax Officer initially denied the claim based on the society's engagement in lending to non-members. However, the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. v. CIT, which overruled the earlier Full Bench decision, provided a precedent that supported the appellant's position. Consequently, the Tribunal allowed the appeal, aligning with the Supreme Court's judgment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668785 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC), Mavilayi Service Co-operative Bank Ltd. v. CIT [2019] 414 ITR 67 (Ker) (FB)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: SHREYA S. SAMUEL
• Keywords: Set aside
• 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 Nos. 109 & 110/Coch/2025 Assessment Years: 2016-17 & 2017-18 Chittur Service Co-op. Bank Ltd. .......... Appellant Chittur, Palakkad 678101 [PAN: AACAC2895G] vs. The Income Tax Officer-1 & TPS, Palakkad .......... Respondent Appellant by: Ms. Shreya S. Samuel, CA Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 29.05.2025 Date of Pronouncement: 23.06.2025 O R D E R Per: Inturi Rama Rao, AM These appeals filed by the assessee are directed against different orders of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 04.12.2024 for Assessment Years (AY) 2016-17 & 2017-18. 2. Since identical issues and facts are involved in these appeals, they are heard together and disposed of by this common order. 3. For the sake of convenience and clarity the facts relevant to the appeal bearing ITA No. 109/Coch/2023 for AY 2016-17 are stated herein. 2 ITA Nos. 109 & 110/Coch/2025 Chittur Service Co-op. Bank Ltd. 4. The appellant is a co-operative society registered under the Kerala State Co-operative Societies Act, 1969. The return of income for AY 2016-17 was filed on 24.03.2018 declaring Nil income 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-1, Palakkad (hereinafter called \"the AO\") denying the claim by holding that the appellant is not a co-operative society. 5. Being aggrieved, an appeal was filed before the CIT(A), who placing reliance on the decision of the Hon'ble Jurisdictional High Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC) held that the appellant is not entitled for deduction us 80P of the Act. 6. On further appeal before this Tribunal, vide order dated 09.07.2020 in ITA No. 96/Coch/20230 the Tribunal set aside the matter to the file of AO with a direction to examine the nature of each loan disbursement for which it was disbursed, whether it is agricultural or not. However, pursuant to the order of the Tribunal the AO passed assessment order u/s. 143(3) r.w.s. 254 & 144B of the Income Tax Act, 1961 (the Act) at a total income of Rs. 2,24,84,244/- by disallowing by disallowing the claim u/s. 80P of the Act. 7. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO for the 3 ITA Nos. 109 & 110/Coch/2025 Chittur Service Co-op. Bank Ltd. failure of the appellant to substantiate the claim for deduction u/s. 80P of the Act. 8. Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal. 9. We have heard the rival contentions and perused the material available on record. The issue that arises for our consideration is whether the appellant co-operative society is entitled for deduction u/s. 80P(2)(a)(i) of the Act or not. Admittedly, the appellant is a co- operative society registered under the Kerala State Co-operative Societies Act, 1969. It is formed with the object of accepting deposits from members and lending money to its members. In the original round of assessment proceedings, the claim for deduction u/s. 80P(2)(a)(i) was disallowed solely on the ground that the appellant is engaged in lending money to non-members also, placing reliance on the Full Bench decision of the Hon'ble Jurisdictional High Court in the case Mavilayi Service Co-operative Bank Ltd. v. CIT [2019] 414 ITR 67 (Ker) (FB). On appeal before this Tribunal the matter was remanded back to the file of the AO with a direction to examine whether the loans were provided for non-agricultural purposes or not. We find that the Full Bench judgement of the Hon'ble High Court in the case Mavilayi Service Co-operative Bank Ltd. v. CIT [2019] 414 ITR 67 (Ker) (FB) was overruled by the Hon'ble Supreme Court in the case of 431 ITR 1 (SC). Therefore, in the light of the judgement of the Hon'ble Supreme Court the 4 ITA Nos. 109 & 110/Coch/2025 Chittur Service Co-op. Bank Ltd. appellant society is entitled for deduction u/s. 80P(2)(i)(a) of the Act. Accordingly, the appeal filed by the assessee co-operative society stands allowed. 10. Since identical issues and facts are involved in assessee’s appeal ITA No. 110/Coch/2024, our findings in ITA No. 109/Coch/2025 shall apply mutatis mutandis to this appeal also. 11. In the result, the appeals filed by the assessee stand 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. 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 "