POOTHAKULAM SERVICE CO OPEARATIVE BANK LTD NO 2944,KOLLAM V. ITO WARD - 2, KOLLAM

ITA 325/COCH/2024

AI Insights

The case involves Poothakulam Service Co-op. Bank Ltd., which appealed against the order of the National Faceless Appeal Centre, Delhi, confirming the assessment made by the Income Tax Officer, Ward-2, Kollam. The assessment included an addition of Rs. 3,69,27,761 as income from other sources under section 56 of the Income Tax Act, 1961, specifically from interest earned from banks. The Tribunal's decision was influenced by the High Court's ruling in a similar case, which distinguished the eligibility of interest income deductions based on the source of the income, specifically highlighting the limitations of section 80P(2)(a)(i) and the specific applicability of section 80P(2)(d) for interest from Co-operative Societies and Banks registered under the Kerala Co-operative Societies Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474731 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2020-2021
• Other Referred Cases: 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: SANJIT KUMAR DAS
• Assessee Lawyers: RAJAGOPAL
• Section: 143(3); 80P

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI PRAKASH CHAND YADAV, JM ITA No. 325/Coch/2024 Assessment Year: 2020-21 Poothakulam Service Co-op. Bank Ltd. .......... Appellant Poothakulam P.O., Kollam 691302 [PAN: AADAP3252H] Vs. The Income Tax Officer, Ward-2 .......... Respondent Aayakar Bhavan, Karbala Junction Kollam 691302 Appellant by: Shri Rajagopal, CA Respondent by: Shri Sanjit Kumar Das, CIT-DR Date of Hearing: 19.12.2024 Date of Pronouncement: 21.01.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 29.12.2023 for Assessment Year (AY) 2020-21. 2. Brief facts of the case are that the appellant is a co-operative society engaged in providing credit facilities to its members and also carrying banking business to its members. The appellant filed the return of income for AY 2020-21 on 04.02.2021 declaring Nil 2 ITA No. 325/Coch/2024 Poothakulam Service Co-op. Bank Ltd. income. Against the said return of income, the assessment was completed by the by the Income Tax Officer, Ward -2, Kollam (hereafter “the AO”) vide order dated 19.09.2022 passed u/s. 143(3) r.w.s. 144B of the Income Tax Act, 1961 (the Act) at a total income of Rs. 3,69,27,761/- by making an addition of Rs. 3,69,27,761/- u/s. 56 of the Act on account of interest earned from banks as “income from other sources”. 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. We have heard the rival contentions of both the parties and perused the material available on record. We notice that the issue related to interest income received from banks stands adjudicated by Hon'ble Jurisdictional High Court’s decision 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 3 ITA No. 325/Coch/2024 Poothakulam Service Co-op. Bank Ltd. 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.” 6. Respectfully following the above decision of the Hon'ble Jurisdictional High Court, we hold that the assessee is entitled for deduction under section 80P(2)(d) of the Act on account of interest received from District Co-operative Bank and Treasury. Order pronounced in the open court on 21st January, 2025. Sd/- Sd/- (PRAKASH CHAND YADAV) JUDICIAL MEMBER (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 21st January, 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 Assistant Registrar ITAT, Cochin "