VALLACHIRA SERVICE CO-OP BANK LTD,THRISSUR V. THE ITO WARD 2(1), THRISSUR

SA 116/COCH/2023

AI Insights

The case involves Vallachira Service Co-op. Bank Ltd., the appellant, which is a cooperative society registered under the Kerala State Co-operative Societies Act, 1969. The appellant had not filed its return of income for the Assessment Year 2010-11, leading the Income Tax Officer to issue a notice under section 148 of the Income Tax Act, 1961. The appellant subsequently filed a return declaring nil income after claiming deductions under section 80P. The Income Tax Officer assessed the income at Rs. 2,49,740, adding Rs. 6,99,937 as interest from investments. The CIT(A) upheld this assessment, prompting the appellant to appeal to the Income Tax Appellate Tribunal. The Tribunal, referencing a decision by the Hon'ble Jurisdictional High Court, ruled in favor of the appellant, allowing the deduction claimed under section 80P(2)(d).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 38567 (ITAT-COCHIN)
• Appeal Type: Stay Application
• Pronouncement Date: 21-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Other Referred Cases: PCIT v. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL
• Assessee Lawyers: RAMDAS
• Keywords: Application of stay
• Section: 148; 143(3); 80P

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH BEFORE SHRI INTURI RAMA RAO, AM AND SHRI PRAKASH CHAND YADAV, JM ITA No. 542/Coch/2023 & SA No. 116/Coch/2023 Assessment Year: 2010-11 Vallachira Service Co-op. Bank Ltd .......... Appellant Vallachira P.O., Thrissur 680562 [PAN: AAAAV9543J] Vs. The Income Tax Officer .......... Respondent Ward - 2(1), Thrissur Appellant by: Shri Ramdas, CA Respondent by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 19.12.2024 Date of Pronouncement: 21.01.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 19.05.2023 for Assessment Year (AY) 2010-11. 2. Brief facts of the case are that appellant is a co-operative society registered under the Kerala State Co-operative Societies Act, 1969. The appellant had not filed its return of income for AY 2010- 11. Therefore, the Income Tax Officer, Ward 2(1), Thissur issued notice u/s. 148 of the Income Tax Act, 1961 (the Act) on 2 ITA No. 542/Coch/2023 & SA 116/C/23 Vallachira Service Co-op. Bank Ltd. 30.03.2017. In response the appellant filed the return of income declaring total income at Rs. Nil after claiming deduction u/s. 80P of the Act. Against the said return of income, the assessment was completed by the AO vide order dated 30.11.2017 passed u/s. 143(3) r.w.s. 147 of the Act at a total income of Rs. 2,49,740/- by making an addition of Rs. 6,99,937/- being interest from investments. 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, the assessee is in appeal before us in the present appeal 5. We have heard the rival contentions of both the parties and perused the material available on record. We notice that the issue related to interest income received from banks stands adjudicated by Hon'ble Jurisdictional High Court’s decision in the case of PCIT v. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker) wherein their Lordships have rejected the Revenue’s identical stand as under: - “12.2 Section 80P deals with Co-operative Societies' computation of income. As already noted, it has four sections and several sub-sections and clauses. The Parliament has considered the various situations in which the exigible income and the deductable 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 3 ITA No. 542/Coch/2023 & SA 116/C/23 Vallachira Service Co-op. Bank Ltd. from Treasury be included in the computation of total income of the assessee. In other words, interest earned from Treasury is inadmissible for deduction and interest income from Co-operative Societies registered under the Kerala Co-operative Societies Act are eligible for deduction. The contra consideration of 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.” 6. Respectfully following the above decision of the Hon'ble Jurisdictional High Court, we hold that the assessee is entitled for deduction under section 80P(2)(d) of the Act on account of interest received from District Co-operative Bank and Treasury. 7. Since the appeal is disposed of, the stay petition filed by the assessee becomes infructuous. 8. In the result, the appeal filed by the assessee stands allowed and the stay application stands dismissed. Order pronounced in the open court on 21st January, 2025. Sd/- Sd/- (PRAKASH CHAND YADAV) JUDICIAL MEMBER (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 21st January, 2025 n.p. 4 ITA No. 542/Coch/2023 & SA 116/C/23 Vallachira Service Co-op. Bank Ltd. 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 "