THE KERALA HIGH COURT EMPLOYEES CREDIT CO-OPERATIVE SOCIETY LIMITED E830,ERNAKULAM V. ITO, CORPORATE WARD 2(1), KOCHI

ITA 1049/COCH/2024

AI Insights

The case involves the Kerala High Court Employees Credit Co-operative Society Limited, which appealed against the orders of the National Faceless Assessment Centre / Commissioner of Income-tax (Appeals) that denied them deductions under section 80P of the Income-tax Act, 1961 for the assessment years 2017-2018, 2018-2019, and 2020-2021. The primary issue was whether the interest income received by the society from a co-operative bank qualifies for deduction under section 80P(2)(d) of the Act. The Tribunal, referencing a Supreme Court judgment and a jurisdictional High Court decision, concluded that the society was not a co-operative bank and thus entitled to the deductions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 47010 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr. (2021) 431 ITR 1 (SC), PCIT v. Peroorkada Service Co-operative Bank Ltd. and Vilappil 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
• Assessee Lawyers: M.R.SASI

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.1049/Coch/2024 :Asst.Year 2017-2018 ITA No.1050/Coch/2024 :Asst.Year 2018-2019 ITA No.1051/Coch/2024 :Asst.Year 2020-2021 The Kerala High Court Employees Credit Co-operative Society Limited No.E-830 Ernakulam – 682 031. PAN : AAEAT6869P. v. The Income Tax Officer Ward 2(1) Kochi. (Appellant) (Respondent) Appellant by : Sri.M.R.Sasi, Advocate 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 : These appeals filed by the assessee are directed against different orders of the National Faceless Assessment Centre / Commissioner of Income-tax (Appeals), [“CIT(A)”] passed u/s.250 of the Income-tax Act, 1961 [“the Act”] for the assessment years 2017-2018, 2018-2019 and 2020-2021. 2. Since common issues are involved in these appeals, they were heard together and are being disposed of by this consolidated order for the sake of convenience. We take the appeal bearing ITA No.1049/Coch/2024 for assessment year 2017-2018 as the lead appeal ITA Nos.1049-1051/Coch/2024. The Kerala High Court Employees Cr.Co-op.So.Ltd. 2 for adjudication, and the decision that would arrive at therein would be applicable to the other appeals as well. 3. 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 2017- 2018 was filed on 07.10.2017 disclosing 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 Assessing Officer (“the AO”) vide order dated 29.12.2019 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. 4. 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.1,15,42,832 by holding that the appellant is a co-operative bank. 5. Being aggrieved by the order confirming the action of the AO, the appellant is in appeal before the Tribunal. 6. The issue in the present appeal is as to whether the interest income received by the co-operative society from a co-operative bank 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 ground that the appellant is a co-operative ITA Nos.1049-1051/Coch/2024. The Kerala High Court Employees Cr.Co-op.So.Ltd. 3 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). 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. and Vilappil 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 appeals filed by the assessee are 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 Nos.1049-1051/Coch/2024. The Kerala High Court Employees Cr.Co-op.So.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 "