INCOME TAX OFFICER, KOWDIAR V. THE KERALA UNIVERSITY EMPLOYEES CO-OPERATIVE SOCIETY LIMITED, KERALA UNIVERSITY CAMPUS

ITA 838/COCH/2024

AI Insights

The case involves the Kerala University Employees Co-operative Society Ltd., which appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the assessment year 2020-21. The primary issue was the denial of exemption on interest income derived from various sources, which the Assessing Officer classified under section 80P of the Income Tax Act, 1961. The CIT(A) reversed this decision, allowing the deduction, which was contested by the Revenue. The Tribunal's decision favored the assessee, referencing several High Court decisions that supported the deduction claim.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 47017 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2020-2021
• Other Referred Cases: 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), CIT vs. Sahyadri Co-operative Credit Society Ltd. in ITA No. 63 of 2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: BINISHA BABY
• Keywords: Co-operative Credit Society
• Section: 143(3); 80P

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI GEORGE GEORGE K., VP AND SHRI INTURI RAMA RAO, AM ITA No. 838 /Coch/2024 Assessment Year: 2020-21 The Income Tax Officer, Ward - 2(1) .......... Appellant Aayakar Bhavan, Kowdiar Thiruvananthapuram 695003 vs. Kerala Univerity Employees Co-operative .......... Respondent Society Ltd. Keralal Univerity Campus Building Palayam, Thiruvananthapuram 695034 [PAN: AADAT4659A] Appellant by: Smt. Leena Lal, Sr. D.R. Respondent by: Ms. Binisha Baby, Advocate Date of Hearing: 07.04.2025 Date of Pronouncement: 09.04.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)], dated 26.07.2024 for Assessment Year (AY) 2020-21. 2. Brief facts of the case are that the respondent, i.e. the Kerala University Employees Co-operative Society Ltd., is a co-operative society duly registered under the Kerala Co-operative Societies Act, 2 ITA No. 838/Coch/2024 Keralal University Employees Co-operative Society Ltd. 1969. It is engaged in accepting deposits from members and providing loans to its members. The return of income for AY 2020-21 was filed on 13.02.2021 disclosing Nil income after claiming deduction of Rs. 75,03,234/- u/s. 80P of the Act. Against the said return of income assessment was completed vide order dated 21.09.2022 passed u/s. 143(3) r.w.s. 144B of the Income Tax Act, 1961 (the Act) at a total income of Rs. 2,70,80,195/-. While doing so, the AO denied exemption in respect of interest income derived from the District co-operative bank, State Bank of India (SBI) and Treasury of Rs. 2,70,80,195/- by holding that the appellant is a co-operative bank hit by provisions of section 80P of the Act. 3. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order allowed the deduction u/s. 80P(2)(a)(i) of the Act following the decision of this Tribunal in assessee’s own case for AY 2014-15 in ITA No. MA No. 137/Coch/2019 (Arising out of ITA No. 97/Coch/2019) dated 10.01.2020 by holding that the interest income earned out of the investments with sub-treasuries and District co-operative bank and co-operative society should be assessed as income from business and qualifies for deduction u/s. 80P of the Act. 4. Being aggrieved by the order of the CIT(A), Revenue is in appeal before us in the present appeal. 5. It is contended by the learned Sr. DR that the CIT(A) grossly erred in not following the decision of the Hon'ble Jurisdictional High 3 ITA No. 838/Coch/2024 Keralal University Employees Co-operative Society Ltd. Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC) . Further it is submitted that interest income earned on investments with sub-treasuries and co-operative bank does not qualify for deduction u/s. 80P(2)(a)(i) of the Act. 6. On the other hand, the learned counsel for the assessee submitted that interest income earned from co-operative society qualifies for deduction in view of the decision of the Hon'ble Jurisdictional High Court in the case Pr. CIT vs. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker) and interest income earned on investments made with treasury and SBI qualifies for deduction in view of the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Sahyadri Co-operative Credit Society Ltd. in ITA No. 63 of 2019. 7. We have heard the rival contentions and perused the material available on record. The issue in the appeal relates to the eligibility of interest income earned on investments made with the co-operative banks, sub-treasury and SBI. The issue is no longer res integra as it stands settled by the decision of the Hon'ble Jurisdictional High Court in favour of the assessee. With regard to the interest income earned on deposits made out of surplus funds of the appellant society with other co-operative societies qualifies for deduction u/s. 80P(2)(d) of the Act as held by the Hon'ble Jurisdictional High Court in the case of Pr. CIT vs. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker). As regards the interest income earned by the appellant co-operative society on fixed deposits made with the SBI and treasury also qualifies for deduction u/s. 80P(2)(a)(i) of the Act as the investments made out of surplus funds. The 4 ITA No. 838/Coch/2024 Keralal University Employees Co-operative Society Ltd. interest income on such investments also qualifies for deduction u/s. 80P(2)(a)(i) of the Act in view of the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Sahyadri Co-operative Credit Society Ltd. in ITA No. 63 of 2019. 8. In view of the above legal position, we find that the decision of the CIT(A) is in consonance with the above legal position. Therefore, we find no merit in the appeal filed by the Revenue. 9. In the result, The appeal filed by Revenue stands dismissed. Order pronounced in the open court on 9th April, 2025. Sd/- Sd/- GEORGE GEORGE K. VICE PRESIDENT (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 9th April, 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 Assistant Registrar ITAT, Cochin "