THE CANNANORE TALUK CO OPERATIVE EMPLOYEES COOPERATIVE SOCIETY LTD,KANNUR V. ITO, WARD 1 & TPS, KANNUR

ITA 961/COCH/2024

AI Insights

The case involves the Cannanore Taluk Co-op. Employees Co-op. Society Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, which had confirmed the assessment made by the Income Tax Officer, Ward-1, Cannore. The assessment included an addition of Rs. 96,93,219/- by disallowing the society's claim for deduction under section 80P of the Income Tax Act, 1961, concerning interest received from the District Co-operative Bank. The Tribunal, referencing a decision by the Hon'ble Jurisdictional High Court, overturned the NFAC's decision, allowing the deduction claimed by the society.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 23462 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2025
• 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: LEENA LAL
• Section: 143(3); 80P

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM ITA No. 961/Coch/2024 Assessment Year: 2020-21 Cannanore Taluk Co-op. Employees .......... Appellant Co-op. Society Ltd. Caltex, Civil Station Post, Kannur 670002 [PAN: AABTT4875F] vs. The Income Tax Officer .......... Respondent Ward - 1 & TPS, Cannore Appellant by: ------- None ------- Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 04.02.2025 Date of Pronouncement: 10.02.2025 O R D E R This appeal filed by the assessee is directed against the order National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 27.09.2024 for Assessment Year (AY) 2020-21. 2. Brief facts of the case are that the appellant is a co-operative society engaged in the financial activity. The return of income for AY 202021 was filed on 08.01.2021 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, Cannore (hereinafter called \"the 2 ITA No. 961/Coch/2024 Cannore Taluk Co-op. Employees Co-op. Society Ltd. AO\") completed the assessment vide order dated 21.09.2022 vide order passed u/s. 143(3) r.w.s. 144B of the Act at total income of Rs. 39,78,619/-. While doing so, the AO made an addition of Rs. 96,93,219/- by disallowing the claim of the assessee for deduction u/s. 80P of the Act in respect of interest received from District Co- operative Bank. 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. When the appeal was called nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceeded to dispose of the appeal after hearing the learned Sr. DR. 6. We notice that the issue related to interest income received from the District Co-operative bank stands covered by the decision of 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 3 ITA No. 961/Coch/2024 Cannore Taluk Co-op. Employees Co-op. Society Ltd. 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 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.” 7. 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. 8. In the result, the appeal filed by the assessee stands allowed. 9. Order pronounced in the open court on 10th February, 2025. Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 10th February, 2025 n.p. 4 ITA No. 961/Coch/2024 Cannore Taluk Co-op. Employees Co-op. Society Ltd. 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 "