KOODALI PUBLIC SERVANTS CO-OP SOCIETY LIMITED NO C 924,MATTANUR V. ITO ,WARD 3, KANNUR

ITA 289/COCH/2024

AI Insights

The case involves the Koodali Public Servant Co-op. Society Ltd., which appealed against the orders of the National Faceless Appeal Centre, Delhi, for the Assessment Years 2018-19 and 2020-21. The society, engaged in banking, had filed returns declaring nil income and a profit of Rs. 7,24,640 respectively for the mentioned years. The Income Tax Officer, Kannur, had assessed the society's income significantly higher, disallowing deductions claimed under section 80P of the Income Tax Act concerning interest income from co-operative banks. The tribunal's decision reversed the CIT(A)'s confirmation of the AO's orders, aligning with the High Court's judgment that interest income from co-operative banks is deductible under section 80P(2)(d).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471699 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Other Referred Cases: PCIT & Anr. v. Totagars Co-operative Sales Society, PCIT v. Peroorkada Service Co-op. Bank Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: GEORGE THOMAS
• Section: 80P

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM ITA Nos. 289 & 290/Coch/2024 Assessment Years: 2018-19 & 2020-21 Koodali Publc Servant Co-op. Society Ltd. .......... Appellant Matanur P.O., Kannur 670702 [PAN: AABAK8429K] vs. The Income Tax Officer .......... Respondent Ward -3, Kannur Appellant by: Shri George Thomas, CA Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 17.01.2025 Date of Pronouncement: 22.01.2025 O R D E R These appeal filed by the assessee are directed against the orders of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 15.02.2024 & 20.02.2024 for Assessment Year (AY) 2018-19 & 2020-21, respectively. 2. The assessee is a co-operative society engaged in the business of banking. The returns of income were filed declaring Nil income in AY 2018-19 and Rs. 7,24,640/- for AY 2020-21, respectively. Against the said returns of income, the assessment was completed by the Income Tax Officer, Ward-3, Kannur (hereinafter called \"the AO\") vide orders dated 13.04.2021 and 19.09.2022 passed u/s. 2 ITA Nos. 289 & 290/Coch/2024 Koodali Publc Servant Coi-op. Society Ltd. a43(3) of the Income Tax Act, 1961 (the Act) at total income of Rs. 34,23,360/- & Rs. 66,04,673/- disallowing the deduction claimed by the assessee u/s. 80P of the Act in respect of interest income earned from co-operative banks. 3. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO. 4. Being aggrieved, the assessee is in appeal before us in the present appeal. 5. I heard the rival contentions of both the parties and perused the material available on record. 6. Learned CIT- DR vehemently argued that such interest income could have hardly be held even derived from assessee’s regular credit facilities made available to the members concerned. He further quotes PCIT & Anr. v. Totagars Co-operative Sales Society reported in (2017) 395 ITR 611 (Kar.) and submitted that the impugned disallowance has been rightly made in assessee’s hand. 7. Regarding the interest income received from Treasury, Scheduled Banks, etc., this issue is no longer res integra, as it is covered by the judgement of the Hon'ble Jurisdictional High court in the case of PCIT v. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker) wherein their Lordships have rejected the Revenue’s identical stand as under: - 3 ITA Nos. 289 & 290/Coch/2024 Koodali Publc Servant Coi-op. Society Ltd. “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 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) 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.” 8. Respectfully following the above decisions of the Hon'ble Jurisdictional High Court, I hold that the assessee is entitled for deduction under sections 80P(2)(d) of the Act on account of interest received from Co-operative Banks. 9. In the result, the appeals filed by the assessee are allowed. Order pronounced in the open court on 22nd January, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 22nd January, 2025 n.p. 4 ITA Nos. 289 & 290/Coch/2024 Koodali Publc Servant Coi-op. Society 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 "