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

ITA 426/COCH/2023

AI Insights

The case involves Karassery Service Co-operative Bank Limited appealing against the orders of the CIT(A)-NFAC, Delhi, which had partly upheld the Assessing Officer's disallowance of the bank's deduction claim under Section 80P for the assessment years 2015-2016 and 2017-2018. The primary contention was whether the interest income derived from deposits in cooperative banks qualifies for deduction under Section 80P. The Tribunal referenced several precedents, including the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. vs. CIT, which favored the assessee's position that the category of members should not affect the eligibility for deductions under Section 80P, provided the income is in accordance with the cooperative laws of the state.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 471695 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 30-05-2023
• Other Referred Cases: Citizen Co-operative Society Ltd vs. CIT, Mavilayi Service Co-operative Bank Ltd. vs. CIT, The Totagars Cooperative Sales Society vs. ITO, PCIT v. Peroorkada Service Co-op. Bank Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIT KUMAR DAS

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No.426/Coch/2023 - Asst.Year 2015-2016 ITA No.427/Coch/2023 - Asst.Year 2015-2016 Karassery Service Co-operative Bank Limited, Mukkam Kozhikode – 673 602. PAN AACAK0055A vs. The Income Tax Officer Ward 2(3) Kozhikode. (Appellant) (Respondent) Appellant by : --- None--- Respondent by : Sri.Sanjit Kumar Das, CIT-DR Date of Hearing : 13.08.2024 Date of Pronouncement : 06.11.2024 ORDER PER BENCH : These twin assessee’s appeals in ITA Nos.426/Coch/2023 and 427/Coch/2023 for assessment year 2015-2016 and 2017-2018, respectively arises out of the order of the CIT(A)-NFAC, Delhi, Delhi’s DIN & Order No.ITBA/NFAC/S/250/2023-24/1052404554(1) and 1052956029(1) dated 27.04.2023 and 18.05.2023, in proceedings ITA Nos.426 & 427/Coch/2023. Karassery SCB Limited. 2 u/s.143(3) of the Income-tax Act, 1961; in short “the Act” hereinafter, respectively. Case called twice. None appears at assessee’s behest. It is accordingly proceeded ex parte against the assessee. 2. We now advert to the assessee’s “lead” appeal ITA.No.326/Coch./2023for the former assessment year 2015-2016 wherein the learned CIT(A)-NFAC has partly upheld the Assessing Officer’s action disallowing it’s sec.80P deduction claim reading as under : ITA Nos.426 & 427/Coch/2023. Karassery SCB Limited. 3 ITA Nos.426 & 427/Coch/2023. Karassery SCB Limited. 4 ITA Nos.426 & 427/Coch/2023. Karassery SCB Limited. 5 ITA Nos.426 & 427/Coch/2023. Karassery SCB Limited. 6 ITA Nos.426 & 427/Coch/2023. Karassery SCB Limited. 7 ITA Nos.426 & 427/Coch/2023. Karassery SCB Limited. 8 3. Suffice to say, the Revenue’s first and foremost vehement contention is that the assessee has not derived it’s interest income from regular members only and therefore, the same is not allowable for the deduction herein in light of Citizen Co-operative Society Ltd vs. CIT (2017) 84 taxmann.com 114 (SC). 4. Learned DR could hardly dispute the clinching fact that their lordships’ recent landmark decision in Mavilayi Service Co-operative Bank Ltd., vs. CIT [2021] 431 ITR 1 (SC) has settled the issue in assessee’s favour and against the department that such a distinction qua the category of members is not permissible once the same ITA Nos.426 & 427/Coch/2023. Karassery SCB Limited. 9 confirms to the relevant State Government Cooperative law; norms. 5. The Revenue’s next vehement arguments in light of The Totagars Cooperative Sales Society vs. ITO [2010] 322 ITR 283 (SC) that assessee’s interest income derived from deposits in cooperative banks herein is not eligible for the impugned deduction. We notice in this factual backdrop that the hon’ble jurisdictional high court in it’s recent judgment in PCIT v. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker) has already accepted the assessee’s contentions 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 considered view, the assessee must also establish that ITA Nos.426 & 427/Coch/2023. Karassery SCB Limited. 10 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) ITA Nos.426 & 427/Coch/2023. Karassery SCB Limited. 11 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.” 6. We accordingly accept the assessee’s sole substantive grievance as well as the “lead” appeal ITA.No.426/Coch./2023 in very terms and leave it open for the learned to Assessing Officer to frame his consequential computation as per law after examining all the relevant facts. Ordered accordingly. 7. Same order to follow in assessee’s latter appeal ITA.No.427/Coch./2023 since raising identical sole substantive grounds. ITA Nos.426 & 427/Coch/2023. Karassery SCB Limited. 12 8. These assessee’s twin appeals ITA.Nos.426 and 427/Coch./2023 are allowed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on this 06th day of November, 2024. Sd/- (AMARJIT SINGH) Sd/- (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin ; Dated 06th November, 2024. VBP/- Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A), Concerned. 4. The CIT Concerned. 5. The DR, ITAT, Cochin. 6. Guard File. Asst.Registrar/ITAT, Cochin "