MYLAPRA SERVICE CO OPERATIVE BANK LTD,PATHANAMTHITTA V. INCOME TAX OFFICER, WARD 5, THIRUVALLA, THIRUVALLA

ITA 1021/COCH/2024

AI Insights

The case involves the Mylapra Service Co-operative Bank Limited, which appealed against the order of the Commissioner of Income-tax (Appeals) that denied them a deduction under section 80P(2)(d) of the Income-tax Act, 1961 for the interest income received from a district Co-operative bank. The primary contention was whether the appellant, classified as a co-operative bank by the lower authorities, could be denied the deduction. The Tribunal referenced several precedents, including a Supreme Court judgment, to conclude that the appellant was not a co-operative bank and thus entitled to the deduction.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 47012 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr. (2021) 431 ITR 1 (SC), Pr.CIT & Anr. v. Totagars Co-operative Sale Society (2017) 395 ITR 611 (Kar.), PCIT v. Peroorkada Service Co-operative Bank Ltd. 442 ITR 141 (Ker.)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri George George K, Vice-President & Shri Inturi Rama Rao, Accountant Member ITA No.1021/Coch/2024 :Asst.Year 2016-2017 Mylapra Service Co-operative Bank Limited Mylapra Town PO Pathanamthitta – 689 678. PAN : AADAM8917E. v. The Income Tax Officer Ward 2 Thiruvalla. (Appellant) (Respondent) Appellant by : --- None --- Respondent by :Smt.Leena Lal, Sr.AR Date of Hearing :03.04.2025 Date of Pronouncement : 08.04.2025 O R D E R Per Inturi Rama Rao, AM : This is an appeal filed by the assessee directed against the order of the National Faceless Assessment Centre / Commissioner of Income- tax (Appeals), [“CIT(A)”] dated 27.09.2023 passed u/s.250 of the Income-tax Act, 1961 [“the Act”] for the assessment year 2016-2017 2. Briefly the facts of the case are that the appellant is a co-operative society registered under the Kerala Co-operative Societies Act, 1969. It is engaged in the activity of accepting deposits and lending money from its the members. The return of income for the assessment year 2016- 2017 was filed on 04.05.2017 disclosing Nil income after claiming deduction u/s.80P of the Income-tax Act, 1961 “(the Act”). Against the ITA No.1021/Coch/2024. Mylapra Service Co-op. Bank Ltd. 2 said return of income, the assessment was completed by the Assessing Officer (“the AO”) vide order dated 11.12.2018 by denying the deduction u/s.80P of the Act by holding that the appellant society is a co-operative bank and not a co-operative. 3. Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order denied the deduction u/s.80P(2)(d) of the Act in respect of interest income of Rs.1,28,00,257 by holding that the appellant is a co-operative bank. 4. Being aggrieved by the order confirming the action of the AO, the appellant is in appeal before the Tribunal. 5. In the present case, the appellant had filed a Writ Petition before the Hon’ble High Court of Kerala. The Hon’ble High Court of Kerala in WP(C) No.30221 of 2024 dated 25th November, 2024 directed the appellant to file an appeal against the order of the CIT(A) within three weeks from the date of receipt of the copy of the judgment in the said case. The WP was disposed of on 25th November, 2024, and the appellant filed the present appeal before the Tribunal on 13.12.2024. Therefore, the appeal is treated as in time. 6. The issue in the present appeal is as to whether the interest income received by the co-operative society from the district Co- operative bank amounting to Rs.1,48,41,161 qualifies for deduction u/s.80P(2)(d) of the Act or not. On a mere perusal of the orders passed by the lower authorities, it would be clear that the AO as well as the CIT(A) denied the claim for deduction u/s 80P(2)(d) of the Act on the ITA No.1021/Coch/2024. Mylapra Service Co-op. Bank Ltd. 3 ground that the appellant is a co-operative bank. The finding of the lower authorities is contrary to the law in view of the settled position of law in the absence of any licenses to carry on the banking business, the co-operative society cannot be considered as a co-operative bank. Reliance is placed on the judgment of the Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr. (2021) 431 ITR 1 (SC) and Hon’ble Karnataka High Court in the case Pr.CIT & Anr. v. Totagars Co-operative Sale Society reported in (2017) 395 ITR 611 (Kar.). 7. The issue whether the interest income earned by the co-operative society from the co-operative banks qualifies for deduction is now settled by the decision of the Hon’ble jurisdictional High Court in the case of PCIT v. Peroorkada Service Co-operative Bank Ltd. 442 ITR 141 (Ker.). In the light of this, we hold that the appellant is entitled for deduction in respect of interest income earned from co-operative banks u/s.80P(2)(d) of the Act. 8. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 08th day of April, 2025. Sd/- (George George K) Sd/- (Inturi Rama Rao) VICE-PRESIDENT ACCOUNTANT MEMBER Cochin; Dated : 08th April, 2025. Devadas G* ITA No.1021/Coch/2024. Mylapra Service Co-op. Bank Ltd. 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 "