KADIRUR SERVICE CO-OPERATIVE BANK LTD,KADIRUR V. ITO, WARD-2, KANNUR

ITA 872/COCH/2023

AI Insights

The case involves Kadirur Service Co-op. Bank Ltd., which appealed against the order of the National Faceless Appeal Centre, Delhi, for the Assessment Year 2018-19. The primary issue in the appeal was the disallowance of an income tax refund of Rs. 44,40,300 by the AO, which was confirmed by the CIT(A). The CIT(A) had allowed other claims such as the deduction under section 80P of the Income Tax Act, following the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. v. CIT. However, the addition regarding the income tax refund was contested by the appellant, arguing that it had not been taxed in earlier years. The Tribunal, after hearing both parties, decided to set aside this specific issue to the AO for a fresh examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23388 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: ARUN RAJ
• Keywords: Set aside; Opportunity of being heard; Bad and doubtful debts
• Section: 143(3); 80P

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI PRAKASH CHAND YADAV, JM ITA No. 872/Coch/2023 Assessment Year: 2018-19 Kadirur Service Co-op. Bank Ltd. .......... Appellant Kadirur, Thalassery, Kannur 670642 [PAN: AACAK6088R] vs. The Income Tax Officer .......... Respondent Ward - 2, Kannur Appellant by: Shri Arun Raj, Advocate Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 23.01.2025 Date of Pronouncement: 04.02.2025 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 11.08.2023 for Assessment Year (AY) 2018-19. 2. Brief facts of the case are that the appellant is a primary agricultural credit society founded with the objective of providing credit facilities to the members for carrying out agricultural and allied activities. The return of income for AY 2018-19 was filed on 28.09.2018 declaring total income at Rs. 2,18,720/- after claiming 2 ITA No. 872/Coch/2023 Kadirur Service Co-op. Bank Ltd. deduction u/s. 80P of the Income Tax Act, 1961 (the Act). Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-2, Kannur (hereinafter called \"the AO\") vide order dated 09.02.2021 passed u/s. 143(3) r.w.s. 143(3A) & 143(3B) of the Act at a total income of Rs. 1,19,04,650/- denying deduction u/s. 80P and after making the following additions: - i) Disallowance of income tax refund ii) Disallowance of provision for bad and doubtful debts iii) Disallowance of ‘reserve of overdue interest’ 3. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order while allowing the claim for deduction u/s. 80P of the Act following the judgement of the Hon'ble Supreme Court in the case Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC) deleted the additions on account of provision for overdue interest and provision for bad and doubtful debts, have confirmed the addition on account of income tax refund of Rs. 44,40,300/-. 4. Being aggrieved, the assessee in appeal before the Tribunal in the present appeal. 5. The learned A.R. submitted that he CIT(A) ought not have confirmed the addition of the income tax refund as the same was not allowed in the earlier years. 3 ITA No. 872/Coch/2023 Kadirur Service Co-op. Bank Ltd. 6. On the other hand, the learned Sr. DR opposed the above contention. 7. We have heard the rival contentions of both the parties and perused the material available on record. From a perusal of the assessment order it is evident that the AO chose to disallow income tax refund of Rs. 44,40,300/- claimed as deduction for the failure of the assessee to demonstrate that the said income tax refund was credited to the Profit & Loss A/c., which is a condition necessary to allow the claim made by the assessee. Even during the proceedings before the CIT(A), it appears that the appellant had made no efforts in this direction except harping on that income tax refund cannot be taxed. In the circumstance, in order to meet the ends of justice the matter is set aside to the file of the AO for de novo adjudication in accordance with law after affording opportunity of being heard to the appellant. 8. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 4th February, 2025. Sd/- Sd/- (PRAKASH CHAND YADAV) JUDICIAL MEMBER (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 4th February, 2025 n.p. 4 ITA No. 872/Coch/2023 Kadirur 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 "