THE VELLIAMATTOM SERVICE CO OPERATIVE BANK LTD,PANNIMATTOM, THODUPUZHA V. THE INCOME TAX OFFICER, THODUPUZHA

ITA 596/COCH/2024

AI Insights

The case involves the Velliamattom Service Co-op. Bank Ltd., which appealed against the decision of the Commissioner of Income Tax (Appeals)-5, Kolkata, confirming the Assessing Officer's classification of the bank as a service co-operative bank, thereby denying them the exemption under Section 80P(2)(a)(i) of the Income Tax Act, 1961. The Tribunal examined whether the assessee qualified as a primary agricultural co-operative society entitled to deductions under the said section. The Tribunal referenced the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. v. CIT, which emphasized the need for a factual determination of the activities of the society rather than its nomenclature.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474686 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 24-06-2024
• 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: MATHEW JOSEPH
• Keywords: Business income
• Section: 133(6); 80P

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Inturi Rama Rao, Accountant Member ITA No. 596/Coch/2024 (Assessment Year: 2017-18) Velliamattom Service Co-op. Bank Ltd. Pannimattom, Thodupuzha Idukki 686588 [PAN: AAAAT3271D] vs. The Income Tax Officer-2 Mahima Towers Temple Road Thodupuzha 685584 (Appellant) (Respondent) Appellant by: Shri Mathew Joseph, CA Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 30.10.2024 Date of Pronouncement: 18.11.2024 O R D E R This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-5, Kolkata [CIT(A)] dated 31.05.2024 for Assessment Year (AY) 2017-18. 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 2017-18 was filed on 18.01.2018. Against the said return of income assessment was completed by the Assessing Officer (AO) vide order dated 19.12.2019 passed u/s. 143(3) of the Income Tax Act, 1961 (the Act) at a total income of Rs. 23,21,729/- denying exemption u/s. 80P(2)(a)(i) of the Act by holding that the assessee is not a primary agricultural co-operative society, but a service co-operative bank. 2 ITA No. 596/Coch/2024 Velliamattom Service Co-op. Bank Ltd. 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. 5. I have heard the rival contentions of both the parties, also perused the material available on record. 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.” 6. 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 exemption. Further the addition, if any, made to the returned income also qualifies as 3 ITA No. 596/Coch/2024 Velliamattom Service Co-op. Bank Ltd. business income eligible for deduction u/s. 80P of the Act. Therefore, the AO is directed to allow the deduction u/s. 80P(2)(i)(a) of the Act. 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 18th November, 2024 Sd/- (Inturi Rama Rao) Accountant Member Cochin, Dated: 18th November, 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 Assistant Registrar ITAT, Cochin "