KUTHANUR SERVICE CO_OPERATIVE BANK LIMITED,KUTHANUR V. INCOME TAX OFFICER, WARD 1, PALAKKAD

ITA 1128/COCH/2024

AI Insights

The case involves Kuthanur Service Co-op. Bank Ltd., the appellant, contesting an income tax assessment for the year 2017-18. The Income Tax Officer, Ward-1, Palakkad, had disallowed a deduction under section 80P(2)(d) concerning interest income from co-operative banks, leading to an assessed income of Rs. 36,20,690. The appellant's appeal to the CIT(A) was unsuccessful, prompting the appeal to the Income Tax Appellate Tribunal. The Tribunal, referencing a decision by the Hon'ble Jurisdictional High Court, overturned the CIT(A)'s decision, allowing the deduction and thus favoring the appellant.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474713 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Other Referred Cases: PCIT v. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker)
• Laws Referred To: Income Tax Act, 1961, Kerala State Co-operative Societies Act, 1969
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: DHANYA G.
• Section: 80P

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM ITA No. 1128/Coch/2024 Assessment Year: 2017-18 Kuthanur Service Co-op. Bank Ltd. .......... Appellant Kuthanur, Palakkad 678621 [PAN: AAAAIK151G] vs. The Income Tax Officer .......... Respondent Ward - 1, Palakkad Appellant by: Ms. Dhanya G., CA Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 05.02.2025 Date of Pronouncement: 19.02.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 28.10.2024 for Assessment Year (AY) 2017-18. 2. Brief facts of the case are that appellant is a co-operative society registered under the Kerala State Co-operative Societies Act, 1969. The return of income for AY 2017-18 was filed on 04.01.2019 declaring nil income after claiming 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-1, Palakkad (hereinafter called \"the AO\") vide order dated 18.12.2019 at a total income of Rs. 2 ITA No. 1128/Coch/2024 Kuthanur Service Co-op. Bank Ltd. 36,20,690/-. While doing so, the AO disallowed deduction u/s. 80P(2)(d) in respect of interest income received 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 appellant 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. It is notice that the issue related to interest income received from Co-operative banks stands settled by the decision 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: - “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 3 ITA No. 1128/Coch/2024 Kuthanur Service Co-op. Bank Ltd. 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. Respectfully following the above decision of the Hon'ble Jurisdictional High Court, I hold that the assessee is entitled for deduction under section 80P(2)(d) of the Act on account of interest received from Co-operative Banks. 7. In the result, the appeal filed by the assessee stands allowed. 8. Order pronounced in the open court on 19th February, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 19th February, 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 "