M/S. LOKAMALESWARAM SERVICE CO-OPERATIVE BANK LTD NO.249,THRISSUR V. ITO,WARD 2(2), THRISSUR

ITA 105/COCH/2025

AI Insights

The case involves M/s. Lokamaleswaram Service Co-operative Bank Limited, which appealed against the order of the National Faceless Assessment Centre / Commissioner of Income-tax (Appeals) that denied them a deduction under section 80P of the Income-tax Act, 1961 for the assessment year 2010-2011. The primary contention was whether the assessee, a co-operative society, was eligible for deductions under section 80P(2)(a)(i) despite the lower authorities' view that it was a co-operative bank, which is not eligible for such deductions as per section 80P(2)(4). The tribunal, referencing a Supreme Court decision, clarified that the assessee was indeed a co-operative society and not a bank, thus entitled to the deduction.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470741 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Other Referred Cases: Collector Land Acquisition v. Mst.Katiji & Ors. (1987) 167 ITR 471 (SC), Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr. (2021) 431 ITR 1 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL; SENIOR
• Assessee Lawyers: O.D.SIVADAS
• Section: 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, COCHIN Before Shri Inturi Rama Rao, Accountant Member ITA No.105/Coch/2025 : Asst.Year 2010-2011 M/s.Lokamleswaram Service Co- operative Bank Limited No.249 Kodungallur Thrissur – 680 664. PAN : AAAAL8848G. v. The Income Tax Officer Ward – 2(5) Thrissur.. (Appellant) (Respondent) Appellant by : Sri.O.D.Sivadas, Advocate Respondent by : Smt.Leena Lal, Senior AR Date of Hearing : 10.02.2025 Date of Pronouncement : 13.02.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Assessment Centre / Commissioner of Income- tax (Appeals) [“CIT(A)” for short] dated 11.11.2024 having DIN & Order No.ITBA/APL/S/250/2024-25/1070245605(1) for the assessment year 2010-2011. 2. There is a delay of 20 days in filing the present appeal before the Tribunal. The assessee filed a condonation petition along with an affidavit of the Secretary of the assessee-society. On perusal of the averments made in condonation petition, I find that there is reasonable cause in filing the appeal belatedly and no latches can be attributed to the assessee. Therefore, the delay is condoned by going by the decision ITA No.105/Coch/2025. M/s.Lokamaleswaram SC.B Limited 2 of the Hon’ble Supreme Court in the case of Collector Land Acquisition v. Mst.Katiji & Ors. (1987) 167 ITR 471 (SC), and the appeal is admitted for adjudication. 3. Briefly, the assessee is a co-operative society registered under the Kerala Co-operative Societies Act. It is engaged in the business of providing credit facilities to the members of the assessee-society only. The assessee not filed any regular return of income for the assessment year 2010-2011. The Assessing Officer (“the AO” hereinafter) formed an opinion that the income had escaped to tax as the assessee’s business income is not eligible for deduction u/s.80P by virtue of the provisions of sub-section (4) of section 80P(2) of the Income-tax Act, 1961 (“the Act” hereinafter) and also in view of the judgment of the Hon’ble jurisdictional High Court in the case of 363 ITR 268. Accordingly, notice u/s.148 of the Act was issued to the assessee on 29th March, 2017. In response to the said notice, the assessee filed the return of income on 5th May, 2017 declaring `Nil’ income after claiming deduction u/s.80P of the Act amounting to Rs.2,76,720. Against the said return, the AO completed the assessment vide order dated 18.12.2017 passed u/s.143(3) r..s. 147 of the Act at a total income of Rs.2,76,720, denying the deduction claimed u/s.80P of the Act on the ground that the assessee-society is a co-operative bank. Being aggrieved, the appeal was filed an appeal before the CIT(A), who upheld the action of the AO placing reliance on the provisions of section 80P2(4) of the Act. ITA No.105/Coch/2025. M/s.Lokamaleswaram SC.B Limited 3 4. Being aggrieved, the assessee is in appeal before me and submitted that in view of the decision of the Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr. Reported in (2021) 431 ITR 1 (SC), which has overruled the reasoning of the AO. 5. I have heard the rival submissions and perused the material available on record. On a careful perusal of the orders of the AO as well as the CIT(A), it would be evident that the lower authorities have denied the deduction u/s.80P holding that the assessee is a co-operative bank. Undisputedly, the assessee-society does not enjoy banking licenses, therefore, cannot be classified as a co-operative bank in view of the judgment of the Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. (supra). The decision relied upon by the AO had been overruled by the Hon’ble SC in the case of Mavilayi Service Co-operative Bank Ltd. (supra). Therefore, I am of the considered opinion that the assessee-society is entitled for deduction u/s.80P of the Act and accordingly direct the AO to allow the deduction u/s.80P(2)(a)(i) of the Act. 6. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 13th day of February, 2025. Sd/- (Inturi Rama Rao) ACCOUNTANT MEMBER Cochin; Dated :13th February, 2025. Devadas G* ITA No.105/Coch/2025. M/s.Lokamaleswaram SC.B Limited 4 Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT, Cochin. 4. The DR, ITAT, Cochin. 5. Guard File. Asst.Registrar/ITAT, Cochin "