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Facts
The assessee, a Co-operative Bank, was denied deduction under Section 80P for AY 2013-14 by the AO, citing Section 80P(4), lack of mutuality, and issues with return filing under Section 139(1) and compliance with notices. The assessee contended it was a Primary Agricultural Credit Society eligible under Section 80P(2)(a)(i). The CIT(A) dismissed the appeal on the technical ground that the return was filed in response to a Section 148 notice, without delving into the factual eligibility of the assessee.
Held
The Tribunal found that the CIT(A) erred by not adjudicating the matter on merits and solely relying on a procedural technicality. It emphasized the need for a fact-based examination of the assessee's eligibility under Section 80P(2)(a)(i) in light of the Supreme Court's decision in Mavilayi Service Co-operative Bank Ltd. The Tribunal set aside the CIT(A)'s order and remanded the case for fresh adjudication.
Key Issues
The key issues concern the assessee's eligibility for deduction under Section 80P as a Primary Agricultural Credit Society, the impact of filing a return under Section 148 instead of Section 139(1) on such eligibility, and the applicability of the mutuality principle post-Mavilayi (SC) decision.
Sections Cited
80P, 80P(2)(a)(i), 80P(4), 139(1), 142(1), 143(2), 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN
Before: HON’BLE SHRI INTURI RAMA RAO & SHRI HON’BLE MANU KUMAR GIRI
Year: 2013-14 Kadukutty Service Co-operative The Income Tax Officer, Bank Ltd. – No..628, Vs. Ward-1(1), Via Chalakkudy P.O, Thrissur. Kadukutty, Thrissur – 680 315. PAN: AABAK 0755A (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri Aji V. Dev ��यथ� क� ओर से /Respondent by : Smt. Leena Lal, Snr AR सुनवाई क� तार�ख/Date of Hearing : 04.11.2025 घोषणा क� तार�ख /Date of Pronouncement : 28.11.2025 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member):
The captioned appeal filed by the assessee is directed against order of the Ld. Commissioner of Income Tax (Appeal)/NFAC, Delhi [‘CIT(A)’ in short] dated 27.08.2025 for Assessment Year 2013-14.
Rs.1,36,55,587 u/s 80P of the Act.
Brief facts of the case are that the Assessing Officer held that the assessee, a Co-operative Bank, was not eligible for deduction u/s 80P based on section 80P(4) restricting deduction to primary agricultural credit societies & primary co-operative agricultural and rural development banks, alleged lack of mutuality, reliance on Citizen Co- operative Society Ltd. (SC) and Mundella Service Co-operative Bank (Kerala HC), allegation that return claiming deduction was not filed u/s 139(1), and alleged non-compliance with notices u/s 142(1)/143(2).
3. The AO issued notices u/s 148, 142(1) and 143(2). The assessee contended that non-compliance was not intentional, some details were not readily available, and that it is a Primary Agricultural Credit Society (PACS) under the Kerala Co-operative Societies Act, eligible for deduction u/s 80P(2)(a)(i). It relied on Mavilayi Service Co- operative Bank Ltd. (SC) and Chirakkal Service Co-operative Bank (Kerala HC). The AO held that the assessee had not proved eligibility under sec. 80P, that the principle of mutuality was absent, and therefore rejected the claim. including proof of registration under the Kerala Co-operative Societies Act, assertion that it functions as a PACS, reliance on Mavilayi (SC) holding that classification under the State law determines eligibility for 80P, explanation regarding the filing of return and the notices under section 148. However, the CIT(A) focused primarily on the technical issue of filing return u/s 139(1), relied on Sun Engineering Works (SC), Nileshwar Range Kallam Co-op. Bank (Kerala HC), concluded that the assessee is not eligible to claim deduction u/s 80P when the return is filed in response to notice u/s 148 rather than u/s 139(1), held that issue of mutuality has become academic, and dismissed grounds 1 to 11.
Now assessee is in appeal before us. We have carefully heard the rival submissions and perused the record. It is evident that the CIT(A) did not render findings on critical factual issues, namely i. whether the assessee is in fact a Primary Agricultural Credit Society, ii. whether its activities satisfy the statutory tests laid down in Mavilayi (SC), iii. whether the AO’s reliance on mutuality is irrelevant post- Mavilayi, Kadukutty Service Co.operative Bank Ltd. :- 4 -: iv. whether the AO made correct factual observations regarding cash deposits, surplus allocation, and nature of operations, v. whether the return filing issue under section 139(1) affects eligibility, and whether the judicial precedents relied upon truly apply.
The CIT(A) decided the entire appeal only on the basis of return- filing technicality, without examining the nature of the institution, applicability of section 80P(2)(a)(i), statutory definition under Kerala Co-operative Societies Act, or the binding ratio of Mavilayi Service Co- operative Bank Ltd. that requires fact-based examination and does not bar 80P relief merely on the basis of 80P(4). Since the CIT(A) has not adjudicated the matter on merits, and since several material facts and legal positions require fresh and proper examination, we are of the view that the interests of justice require that the matter be restored to the file of the CIT(A) for de novo adjudication. Accordingly, the impugned order of the CIT(A) is set aside, and the matter is remanded back to the CIT(A) with the following directions:
Examine afresh the assessee’s eligibility for deduction u/s 80P(2)(a)(i), strictly in light of the Supreme Court decision in Mavilayi Service Co-operative Bank Ltd. Give proper findings on: o the nature and classification of the assessee under the Kerala Co-operative Societies Act, o whether its operations align with a PACS, Kadukutty Service Co.operative Bank Ltd. :- 5 -: o whether mutuality is relevant or irrelevant post-Mavilayi, o and the factual evidence produced. Consider the assessee’s submissions and documents filed before the AO and CIT(A). Provide the assessee an adequate opportunity of hearing. Pass a speaking, reasoned order in accordance with law.
The assessee is directed to co-operate and furnish all required details.
In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 28th day of November, 2025 at Cochin.