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Facts
The assessee, a co-operative society engaged in accepting deposits and providing credit, filed a return of income declaring Nil income after claiming a deduction under section 80P. The Assessing Officer (AO) denied the deduction, holding that the assessee was not a primary agricultural credit co-operative society. This was upheld by the CIT(A).
Held
The Tribunal held that the assessee, being a primary agricultural society that does not hold a banking license and operates within the scope of accepting deposits and providing credit, cannot be classified as a co-operative bank. Therefore, it is not hit by the provisions of section 80P(4) of the Act.
Key Issues
Whether the assessee co-operative society is eligible to claim deduction u/s. 80P(2)(a)(i) of the Act or not, given it does not hold a banking license.
Sections Cited
80P, 80P(2)(a)(i), 80P(4), 143(3)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI MANU KUMAR GIRI, JM
Assessment Year: 2014-15 Thimiri Service Co-op. Bank Ltd. .......... Appellant Nhanumaki, Chervathur, Kasaragod 671313 [PAN: AABAT0462H] vs. The Income Tax Officer, Ward-2, Kasaragod ......... Respondent Assessee by: Shri Ramanatha Prabhu N., Advocate Revenue by: Smt. Leena Lal, Sr. D.R. Date of Hearing: 06.11.2025 Date of Pronouncement: 07.11.2025 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 28.08.2025 for Assessment Year (AY) 2014-15.
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 return of income for AY 2014-15 was filed on 24.11.2014 declaring Nil Thimiri Service Co-op. Bank Ltd. income after claiming deduction u/s. 80P of the Income Tax Act, 1961 (the Act) of Rs. 1,08,08,129/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward -2, Kasaragod (hereinafter called "the AO") vide order dated 22.12.2016 passed u/s. 143(3) of the Act at a total income of Rs. 1,11,65,550/-. While doing so, the AO denied the claim for deduction u/s. 80P on the ground that it is not a primary agricultural credit co-operative 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.
The learned A.R. submits that the appellant is a primary agricultural credit co-operative society. It cannot be classified as a co-operative bank for the reason that it does not enjoy any banking licence and the ratio of the decision of the Hon'ble Apex Court in the case Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC) is clearly applicable to the facts of the case.
On the other hand the learned Sr. DR had not opposed the above submission.
We have heard the rival contentions and perused the material available on record. The issue that arose for our consideration is Thimiri Service Co-op. Bank Ltd. 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 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 7th November, 2025.