THE NAGALASSERY SERVICE CO-OP BANK,PALAKKAD V. THE ITO, PALAKKAD

ITA 649/COCH/2023

AI Insights

The case involves Nagalassery Service Co-operative Bank Limited appealing against the orders of the National Faceless Appeal Centre (NFAC), which disallowed certain deductions under Section 80P of the Income-tax Act, 1961, for various assessment years. The primary issue was the eligibility of the bank to claim deductions on interest income from loans given to its staff members, who are also members of the bank. The Tribunal noted that the bank does not qualify as a 'Co-operative Bank' under Section 80P(4) as it lacks a license from the Reserve Bank of India, and thus, the deductions claimed were not permissible except for the income from loans to staff members who are also members of the bank.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 38405 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 11-09-2023
• Other Referred Cases: Mavilayi case
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V.SWARNALATHA
• 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.645/Coch/2023 : Asst.Year 2013-2014 ITA No.646/Coch/2023 : Asst.Year 2014-2015 ITA No.647/Coch/2023 : Asst.Year 2015-2016 ITA No.648/Coch/2023 : Asst.Year 2016-2017 ITA No.649/Coch/2023 : Asst.Year 2017-2018 ITA No.650/Coch/2023 : Asst.Year 2020-2021 ITA No.651/Coch/2023 : Asst.Year 2021-2022 Nagalassery Service Co-operative Bank Limited No.P-541 Koottanad, Pattambi Palakkad – 679 533. PAN : AABAT7089C. v. The Income Tax Officer Ward – 3 Palakkad. (Appellant/Applicant) (Respondent) Appellant by : --- None --- Respondent by : Smt.V.Swarnalatha, Sr.DR Date of Hearing : 14.08.2024 Date of Pronouncement : 05.11.2024 O R D E R Per Bench : These assessee’s seven appeals arise against the orders of the National Faceless Appeal Centre, Delhi [CIT(A)] in proceedings u/s.143(3) of the Income-tax Act, 1961; in short “the Act” hereinafter, assessment year-wise, respectively:- Sr. No. ITA No. AY DIN & Order No. Date 1 645/Coch/2023 2013- 2014 ITBA/NFAC/S/250/20 23-24/1054065210(1) 30.06.2023 2 646/Coch/2023 2014- 2015 ITBA/NFAC/S/250/20 23-24/1054063134(1) 30.06.2023 ITA Nos.645-651/Coch/2023 Nagalassery Service Co-op Society Ltd. 2 3 647/Coch/2023 2015- 2016 ITBA/NFAC/S/250/20 23-24/1054063388(1) 30.06.2023 4 648/Coch/2023 2016- 2017 ITBA/NFAC/S/250/20 23-24/1054063668(1) 30.06.2023 5 649/Coch/2023 2017- 2018 ITBA/NFAC/S/250/20 23-24/1054063822(1) 30.06.2023 6 650/Coch/2023 2020- 2021 ITBA/NFAC/S/250/20 23-24/1054064404(1) 30.06.2023 7 651/Coch/2023 2021- 2022 ITBA/NFAC/S/250/20 23-24/1054064771(1) 30.06.2023 Case called twice. None appears at assessee’s behest. It is accordingly proceeded ex parte. 2. It emerges at the outset that the assessee’s identical sole substantive grounds claim itself as eligible for sec.80P deduction claim qua interest income from its’ staff members, involving varying sums, assessment year-wise, respectively. We find from a perusal of the case file that the CIT(A)/NFAC has already accepted it’s impugned claim in principle vide following detailed discussion : “6.3 In view of the above, it is clear that a Co-operative Bank which is not eligible for deduction under BOP(4) must necessarily have of India. Without such a a license from the Reserve Bank license, a Co-operative Society providing credit facilities and registered under the Co- operative Societies Act cannot be held to be a Co-operative Bank within the meaning of Section 80P(4). In view of the aforesaid decision of the Honourable Apex Court, it is clear that the appellant is not a Co-operative Bank within the meaning of section 80P(4). Further, the appellant is ITA Nos.645-651/Coch/2023 Nagalassery Service Co-op Society Ltd. 3 engaged in granting credit facilities to its members. The Supreme Court in the aforesaid decision has clearly held that \"providing credit facilities to its members\" does not necessarily mean agricultural credit alone. Thus, the fact that the appellant is providing substantial percentage of non-agricultural loans does not disentitle the appellant from claiming deduction under 80P(2)(a)(i) of the IT Act. No specific instance of loan granted to a non-member has been pointed out by the Assessing Officer. Thus, the action of the AO. in disallowing deduction under 80P of Rs. 1,38,22,625/- is held to be incorrect, and the A.O. is directed to allow deduction under 80P as claimed by the appellant. The AO is directed to disallow deduction u/s.80P on income earned from loans to staff who are not members as directed by the Apex Court in the Mavilayi case. The appellant’s ground of appeal is, therefore, partly allowed.” 3. The assessee could hardly rebut the clinching fact emerging from the above extracted detailed discussion that it has already been held eligible relief only qua the staff members concerned who also happens to be it’s members. Since he has directed the Assessing Officer to verify the factual position for this limited extent, we reject the assessee’s instant sole substantive issue in very terms at this stage. Ordered accordingly. ITA Nos.645-651/Coch/2023 Nagalassery Service Co-op Society Ltd. 4 4. These assessee’s seven appeals ITA Nos.645, 646, 647, 648, 649, 650 & 651/Coch/2023 are dismissed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on this 05th day of November, 2024. Sd/- (Amarjit Singh) Sd/- (Satbeer Singh Godara) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin ; Dated : 05th 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 "