THE KATTAPPANA SERVICE CO-OPERATIVE BANK LTD. ,IDUKKI V. THE INCOME TAX OFFICER, THODUPUZHA

SA 159/COCH/2023

AI Insights

The case involves The Kattappana Service Co-operative Bank Limited appealing against the decision of the Commissioner of Income-tax (Appeals) which disallowed the deduction of interest income from deposits made in co-operative banks under Section 80P of the Income-tax Act, 1961. The Tribunal examined the applicability of Section 80P(2)(d) in light of precedents that support the deduction of interest income from investments with co-operative societies. The Tribunal found that the interest income in question was indeed eligible for deduction under the specified section, aligning with the jurisdictional High Court's interpretation in similar cases.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 38404 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 29 day(s)
• Appeal Type: Others
• Pronouncement Date: 07-11-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 09-10-2023
• Other Referred Cases: Collector, Land Acquisition vs. MST Katiji [1987] 167 ITR 471 (SC), Totagar's Co-operative Sale Society Ltd. v. ITO (2010) 322 ITR 283 (SC), Pr.CIT & Anr. v. Totagars Co-operative Sale Society (2017) 395 ITR 611 (Kar.), Pr.CIT v. Peroorkada SCB Ltd. [2022] 442 ITR 141 (Ker)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V.SWARNALATHA
• Keywords: Application of stay
• Section: 80P

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Satbeer Singh Godara, Judicial Member & Shri Amarjit Singh, Accountant Member ITA No.705/Coch/2023 : Asst.Year 2017-2018 SA No.159/Coch/2023 The Kattappana Service Co- operative Bank Limited No.3738 Kattappana Idukki- 685 508. PAN : AAAAT7092A. v. The Income Tax Officer Ward – 1 Thodupuzha. (Appellant/Applicant) (Respondent) Appellant/Applicant by : Sri.Anil D.Nair, Advocate Respondent by : Smt.V.Swarnalatha, Sr.DR Date of Hearing : 16.08.2024 Date of Pronouncement : 07.11.2024 O R D E R Per Bench : This assessee’s appeal in ITA No.705/Coch/2023 (alongwith its stay application SA No.159/Coch/2023 therein) for assessment year 2017-2018 arises out of the order of the Commissioner of Income-tax (Appeals) / NFAC vide DIN & Order No.ITBA/NFAC/S/250/2023-24/1056351832(1) dated 21.09.2023 in proceedings u/s.143(3) of the Income-tax Act, 1961; in short “the Act” hereinafter. Heard both the parties. Case files perused. 2. Coming to the assessee’s main appeal ITA No.705/Coch/2023, both the parties pointed out at the outset that the CIT(A)/NFAC has refused to condone 35 days delay in ITA No.705/Coch/2023 & SA No.159/Coch/2023. The Kattappana SCB Ltd. 2 filing of the appeal before the lower appellate proceedings on 18.12.2020 against the assessment herein dated 15.12.2019. Learned counsel submits that the assessee had explained all the relevant circumstances beyond its control that is various communication gaps as well as management approval. Faced with this situation, we condone the impugned delay of 35 days in the instant appeal as per assessee’s solemn averments in light of Collector, Land Acquisition vs., MST Katiji [1987] 167 ITR 471 (SC) having settled the law long back that all such technical aspects must make a way for the cause of substantial justice. 3. Next substantive ground in respect of sec.80P disallowance, we notice that the able assistance coming from learned Revenue side that the assessee’s substantive grievance canvassed in the instant appeal seeks to reverse both lower authorities action disallowing its interest income derived from deposit made in co-operative banks as not eligible for 80P deduction in light of Totagar’s Co-operative Sale Society Ltd. v. ITO reported in (2010) 322 ITR 283 (SC) and Pr.CIT & Anr. v. Totagars Co-operative Sale Society reported in (2017) 395 ITR 611 (Kar.), wherein the lower authorities held that such an interest income has to be treated as income from other sources only when assessee’s profits derived in regular course extending credit facilities to the banks. That being the case, we find in this factual background that the instant issue is no more res integra in light of the hon’ble jurisdictional high court’s recent judgment ITA No.705/Coch/2023 & SA No.159/Coch/2023. The Kattappana SCB Ltd. 3 in Pr.CIT v. Peroorkada SCB Ltd. [2022] 442 ITR 141 (Ker) having accepted the issue in assessee’s favour, as under:- “12.2 Section 80P deals with co-operative societies' computation of income. As already noted, it has four sub- sections and several clauses and sub-clauses. Parliament has considered the various situations in which the exigible income and the deductible 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 the assessee. In other words, interest earned from treasury is registered under the Kerala inadmissible for deduction and interest income from co-operative societies Co-operative Societies Act are eligible for deduction. The contra consideration of the 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. We adopt the foregoing detailed discussion mutatis mutandis to accept the assessee’s instant substantive grievance. Ordered accordingly. 5. The stay application No.159/Coch/2023 is dismissed as rendered infructuous. ITA No.705/Coch/2023 & SA No.159/Coch/2023. The Kattappana SCB Ltd. 4 6. To sum up, assessee’s appeal ITA No.705/Coch/2023 is allowed and the SA No.159/Coch/2023 is dismissed as rendered infructuous. A copy of the common order be placed in the case files. Order pronounced in the open court on this 07th day of November, 2024. Sd/- (Amarjit Singh) Sd/- (Satbeer Singh Godara) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin ; Dated : 07th November, 2024 Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT Concerned. 4. The DR, ITAT, Cochin. 5. Guard File. Asst.Registrar/ITAT, Cochin "