THE VELINALLOOR SERVICE CO OPERATIVE BANK LTD NO 2873,KOLLAM V. ASSESSING OFFICER, WARD 2, KOLLAM

ITA 630/COCH/2024

AI Insights

The case involves Velinalloor Service Co-op. Bank Ltd., a primary agricultural credit cooperative society, which appealed against the order of the National Faceless Appeal Centre, Delhi, for the Assessment Year 2020-21. The primary contention was the denial of exemption under Section 80P(2)(a)(i) of the Income Tax Act by the Assessing Officer, who classified the assessee as a cooperative bank rather than a cooperative society. The Tribunal referenced the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. v. CIT, which emphasized that the Assessing Officer should not disregard the registration certificate and must conduct a fact-finding inquiry to determine the nature of the society's operations.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23488 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2020-2021
• Appeal Filed On: 10-07-2024
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC), Udaipur Sahkari Upbhokta Thok Bhandar Ltd. v. CIT MANU/SC/1209/2009
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: SABU
• Keywords: Business income
• Section: 143(3); 133(6); 80P

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Inturi Rama Rao, Accountant Member ITA No. 630/Coch/2024 (Assessment Year: 2020-21) Velinalloor Service Co-op. Bank Ltd. 1, Karigannoor P.O. Kollam 691516 [PAN: AAAAT1142R] vs. The Income Tax Officer- 2 2nd Floor, Aayakar Bhavan Near Karbala junction Kollam 691516 (Appellant) (Respondent) Appellant by: Shri Sabu, CA Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 28.10.2024 Date of Pronouncement: 30.10.2024 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 30.05.2024 for Assessment Year (AY) 2020-21. 2. The assessee is a primary agricultural credit co-operative society registered under the Kerala Co-operative Societies Act. The return of income for AY 2020-21 was filed on 15.01.2021 disclosing total income at Nil. Against the said return of income assessment was completed by the Assessing Officer (AO) vide order dated 22.09.2022 passed u/s. 143(3) r.w.s. 144B of the Income Tax Act, 1961 (the Act) at a total income of Rs. 5,22,389/- denying exemption u/s. 80P(2)(a)(i) of the Act by 2 ITA No. 630/Coch/2024 Velinalloor Service Co-op. Bank Ltd. holding that the assessee is not a primary agricultural co-operative society, but a 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 by the order of the CIT(A), the assessee is in appeal before he Tribunal. The assessee is a primary agricultural society formed with the object of providing credit facilities to its members. The assessee claimed deduction of income us 80P(2)(a)(i) of the Act. The AO classified the assessee as a co-operative bank and therefore denied the deduction. The AO under the provisions of the Income Tax Act cannot go behind any registration certificate granted by the Registrar of Cooperative Societies, engages in a fact-finding enquiry as to whether it is a primary agricultural co-operative society as held by the Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC) wherein it was held as under: - “32. Fifthly, as has been held in Udaipur Sahkari Upbhokta Thok Bhandar Ltd. v. CIT MANU/SC/1209/2009: (2009) 8 SCC 393 at paragraph 23, the burden is on the Assessee to show, by adducing facts, that it is entitled to claim the deduction Under Section 80P. Therefore, the assessing officer under the IT Act cannot be said to be going behind any registration certificate when he engages in a fact-finding enquiry as to whether the co-operative society concerned is in fact providing credit facilities to its members. Such fact finding enquiry (see Section 133(6) of the IT Act) would entail examining all relevant facts of the co-operative society in question to find out whether it is, as a matter of fact, providing credit facilities to its members, whatever be its nomenclature. Once this task is fulfilled by the Assessee, by placing reliance on such facts as would show that it is engaged in providing credit facilities to its members, the assessing officer must then scrutinize the same, and arrive at a conclusion as to whether this is, in fact, so.” 5. Therefore in the absence of any banking licence granted to the assessee society, AO cannot consider the assessee as co-operative bank and deny the 3 ITA No. 630/Coch/2024 Velinalloor Service Co-op. Bank Ltd. exemption. Further the addition, if any, made to the returned income also qualifies as business income eligible for deduction u/s. 80P of the Act. Therefore, the AO is directed to allow the deduction u/s. 80P of the Act. 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 30th October, 2024. Sd/- (Inturi Rama Rao) Accountant Member Cochin, Dated: 30th October, 2024 n.p. 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 "