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Facts
The appellant, a primary agricultural credit co-operative society registered under the Kerala State Co-operative Societies Act, 1969, filed its return for AY 2017-18 claiming deduction under Section 80P. The Assessing Officer (AO) disallowed this claim, which was subsequently confirmed by the CIT(A).
Held
The Tribunal held that the appellant, being a primary agricultural credit co-operative society without a banking license from the RBI, is not classified as a co-operative bank and is therefore not hit by the provisions of Section 80P(4). Following the precedent set by the Apex Court in Mavilayi Service Co-operative Bank Ltd., the Tribunal directed the AO to allow the deduction under Section 80P.
Key Issues
Whether a primary agricultural credit co-operative society, not having a banking license from RBI, is eligible to claim deduction under Section 80P(2)(a)(i) of the Income Tax Act.
Sections Cited
80P, 143(3), 80P(2)(a)(i), 80P(4)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI MANU KUMAR GIRI, JM
Assessment Year: 2017-18 Avittahur Service Co-op. Bank Ltd. .......... Appellant Avittathur, Thrissur 680683 [PAN: AACAA0257E] vs. The Income Tax Officer, Ward-2(1), Thrissur ......... Respondent Assessee by: ------- None ------- Revenue by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 07.11.2025 Date of Pronouncement: 19.11.2025 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 (NFAC) dated 20.08.2025 for Assessment Year (AY) 2017-18.
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 classified as a primary agricultural credit co-operative society. It is engaged in the business of accepting deposits from members and providing credit facilities to members. The appellant Avittahur Service Co-op. Bank Ltd. filed the return of income for AY 2017-18 on 19.03.2018 declaring total income of Rs. 86,04,682/- after claiming deduction u/s. 80P of the Income Tax Act, 1961 (the Act) of Rs. 86,04,682/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward 2(1), Thrissur (hereinafter called "the AO") vide order dated 24.12.2019 passed u/s. 143(3) of the Act at a total income of Rs. 86,04,682/-. While doing so, the AO disallowed the claim of deduction u/s. 80P of Rs. 86,04,682/-.
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, we proceeded to dispose of the appeal after hearing the learned Sr. DR.
The issue that arises for our 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 Avittahur 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, we 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.
Order pronounced in the open court on 19th November, 2025.