THE THIMIRI SERVICE CO-OPERATIVE BANK LTD,KASARAGOD vs. ITO WARD, KASARAGOD

Brief facts of the case are that the appellant is a co-operative society registered under the Kerala State Co-operative Societies Act, 1969. It is engaged in the business of accepting deposits from members and providing credit facilities to members. The appellant had not filed regular return of income under the provisions of section 139(1) of the Income Tax Act, 1961 (the Act). a notice u/s. 148 of the Act was issued to the assessee on 30.10.2015. In response The Thimiri Service Co-op. Bank Ltd. to the notice the appellant filed the return of income on 08.12.2016 declaring total income as Nil after claiming deduction u/s. 80P(2)(a)(i) of Rs. 29,36,867/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-2, Kasaragod vide order dated 28.12.2017 passed u/s. 143(3) r.w.s 147 of the Act at total income of Rs. 29,38,867/-. While doing so, the AO denied deduction u/s. 80P(2)(a)(i) by holding that the appellant society is not a primary agriculture credit society.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO.

Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.

When the appeal was called on nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, I proceeded to dispose of the appeal after hearing the learned Sr. DR.

The issue that arose for my consideration is whether the appellant co-operative society is eligible to claim deduction u/s. 80P(2)(a)(i) of the Act or not. The undisputed facts of the case are that the appellant is a co-operative society formed with the object of accepting deposits from members and providing credit facilities to the members. It is classified as a primary agricultural society. It does not enjoy any banking licence to carry on the business of banking from Reserve Bank of India. Therefore, in the given circumstances it The Thimiri Service Co-op. Bank Ltd. cannot be classified as a co-operative bank and not hit by provisions of subsection (4) of section 80P of the Act. The ratio of the decision of the Hon'ble Apex Court in the case of Mavilayi Service Co- operative Bank Ltd. (supra) is clearly applicable to the facts of the case. In the circumstances, I direct the AO to allow the claim for deduction u/s. 80P of the Act.

In the result, the appeal filed by the assessee stands allowed.