NEDUPANA PANCHAYAT RESIDENCE WELFARE CO-OP SOCIETY LTD ,KOLLAM V. THE ITO WARD 5 ( NOW WARD 2), KOLLAM

ITA 424/COCH/2023

AI Insights

The case involves the Nedupana Panchayath Residence Welfare Co-operative Society Ltd., which appealed against the order of the Commissioner of Income-tax (Appeals)/National Faceless Appellate Centre, which had disallowed an amount of Rs.6,16,900/- under section 80P(2) of the Income-tax Act, 1961. This amount represented interest income derived from deposits made in cooperative banks and similar institutions. The primary legal contention was whether such interest income should be treated as income from 'other' sources or as regular business income. The Tribunal, referencing a decision by the Kerala High Court, found that the interest income from District Co-operative Bank/State Co-operative Bank qualifies for deduction under section 80P(2)(d), and thus should not be treated as income from 'other' sources.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31271 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 30-05-2023
• Other Referred Cases: PCIT & Anr. vs. Totagars Cooperative Sales Society [2017] 395 ITR 611 (Kar.), The Totagars Cooperative Sales Society vs. ITO [2010] 322 ITR 283 (SC), PCIT v. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V.SWARNALATHA
• Section: 143(3); 80P

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.424/Coch/2023 Assessment year - 2017-2018 Nedupana Panchayath Residence Welfare Co- operative Society Ltd. Q1520, 996, Muttakkavu Nedumpana PO Kollam – 691 576 PAN : AADAN0457G. vs. The Income Tax Officer Ward 5 (now Ward 2) Kollam. (Appellant) (Respondent) Appellant by : --- None--- Respondent by : Smt.V.Swarnalatha, Sr.DR Date of Hearing : 13.08.2024 Date of Pronouncement : 05.11.2024 ORDER PER BENCH : This assessee’s appeal, ITA.No.424/Coch/2023. for assessment year 2017-2018, arises out of the order of the Commissioner of Income-tax (Appeals)/National Faceless Appellate Centre [NFAC], Delhi, Delhi’s DIN &Order No.ITBA/NFAC/S/250/2022-23/1051759155(1) dated 31.03.2023, in proceedings u/s. 143(3) of the Income-tax Act, 1961; in short “the Act” hereinafter. ITA No.424/Coch/2023. Nedupana Panchayath Residence Welfare Co-op Society Ltd. 2 Case called twice. None appears at assessee’s behest. It is accordingly proceeded ex parte against the assessee. 2. It emerges at the outset that both the learned lower authorities have inter alia invoked sec.80P(2) disallowance amounting to Rs.6,16,900/- representing interest income derived from deposits made in cooperative bank(s) and similar institutions; on the ground that such a receipt ought to be treated as income from “other” sources than regular business income. The Revenue’s vehement contention accordingly is that the issue already stand settled against the assessee in PCIT & Anr. vs. Totagars Cooperative Sales Society [2017] 395 ITR 611 (Kar.) and The Totagars Cooperative Sales Society vs. ITO [2010] 322 ITR 283 (SC) and therefore, we ought to uphold both the learned lower authorities action. 3. We note in this limited factual backdrop that hon’ble jurisdictional high court’s recent decision in PCIT v. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker) has accepted the assessee’s very stand reading as under : - ITA No.424/Coch/2023. Nedupana Panchayath Residence Welfare Co-op Society Ltd. 3 “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 ITA No.424/Coch/2023. Nedupana Panchayath Residence Welfare Co-op Society Ltd. 4 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.” 4. Faced with this situation, we accept the assessee’s instant appeal in principle and leave it open for the learned Assessing Officer to finalise his consequential computation as per law after verification of all the relevant facts. Ordered accordingly. 5. This assessee’s appeal is allowed in above terms. ITA No.424/Coch/2023. Nedupana Panchayath Residence Welfare Co-op Society Ltd. 5 Order pronounced in the open court on this 5th day of November, 2024. Sd/- (AMARJIT SINGH) Sd/- (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin ; Dated : 5th 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 "