AVINISSERY SERVICE COOPERATIVE BANK LTD NO R 689,THRISSUR vs. ITO WARD 1(1), THRISSUR

This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [“CIT(A)” in short] dated 25.08.2025 for Assessment Year (AY) 2022-23.

The registry has noted delay of 318 days in filing the appeal. Considering the period of delay and reasons stated at para 1 & 2 of the condonation petition, which is supported by an affidavit, we condone the delay and admit the appeal for adjudication.

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 return of income for AY 2018-19 was filed on 27.10.2018 disclosing Nil income after claiming deduction of Rs.3,91,63,795/- u/s. 80P of the Income Tax Act, 1961 (the Act). Against the said return of income, the assessment was completed by the Assessment Unit, Income Tax Department (hereinafter called "the AO") vide order dated 13.06.2021 passes u/s. 143(3) r.w.s. 144B of the Act at a total income of Rs.3,91,63,795/-. While doing so, the AO denied deduction u/s.80Pof the Act.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO placing reliance on the decision of the Hon'ble Apex Court in the case of Totgar’s Co-operative Sale Society Ltd. v. ITO [2010] 322 ITR 283 (SC).

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

In this regard the Appellant wishes to rely on the Judgment by the Hon'ble Supreme Court of India (Hon'ble SC) in the Civil Appeal Nos. 7343-7350 of 2019 between the Mavilayi Service Avinissery Service Co-op. Bank Ltd. Cooperative Bank Ltd. and Ors vs Commissioner of Income Tax, Calicut and Anr. that income earned by the Co-operative Societies providing credit facilities to its members including for purposes other than agriculture are entitled to deductions under Section 80P(2)(a)(i) of the Income-Tax Act, 1961.

We have heard the rival contentions and perused the material available on record. The issue in the present appeal is whether income earned by the Cooperative Societies providing credit facilities to its members are entitled to deduction u/s. 80P(2)(a)(i) of the Act.

In our view, given the facts and circumstances, the above judgment is applicable to the present case. The Revenue has failed to bring on record any material to distinguish the above judgment either on facts or in law. Accordingly, respectfully following the above judgment of the Hon'ble Supreme Court in the case of Mavilayi Services Co-operative Bank Limited (supra), we hold that the deduction claimed by the Assessee under Section 80P(2)(a)(i) of the Act in respect of income earned by the Assessee from its members/nominal members in the present case cannot be denied and therefore, the Assessing Officer is directed to grant deduction as claimed by the Assessee under Section 80P(2)(a)(i) of the Act. We also find that for AY 2016-17, the same issue has been decided by the Tribunal in favour of assessee in assessee’s own

In the result, appeal of the assessee is partly allowed.