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Facts
The assessee, a co-operative society registered as a primary agricultural credit co-operative society, filed its return of income for AY 2014-15. The AO completed the assessment by denying deduction u/s. 80P(2)(a)(i), classifying the society as a co-operative bank.
Held
The Tribunal held that the appellant is a co-operative society duly registered under the Kerala State Co-operative Societies Act, 1969, classified as a primary agricultural credit co-operative society and it does not enjoy banking licence. The ratio of the decision of the Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. (supra) is squarely applicable.
Key Issues
Whether the appellant co-operative society is eligible for deduction u/s. 80P(2)(a)(i) of the Act.
Sections Cited
80P(2)(a)(i)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI ANIKESH BANERJEE, JM
Assessment Year: 2014-15 Hosdurg Service Co-op. Bank Ltd. .......... Appellant Kanhangad, Hosdurg, Kasaragod 671315 [PAN: AAAAH0337C] vs. The Income Tax Officer, WD-2, Kasaragod ......... Respondent Assessee by: Shri Suresh Kumar Varma, CA Revenue by: Shri Sanjit Kumar Das, CIT-DR Date of Hearing: 28.10.2025 Date of Pronouncement: 30.10.2025 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 02.09.2025 for Assessment Year (AY) 2014-15.
Brief facts of the case are that the appellant is co-operative society registered under the Kerala State Co-operative Societies Act, 1969. It is classified as a primary agricultural credit co-operative society. The return of income for AY 2014-15 was filed on 22.11.2014 disclosing income of Rs. 7,800/- after claiming Hosdurg Service Co-op. Bank Ltd. deduction u/s. 80P(2)(a)(i) of the Income Tax Act, 1961 (the Act). 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 28.12.2016 at a total income of Rs. 4,69,57,671/-. While doing so, the AO had denied deduction by holding that the appellant society is a co-operative bank and also declined to follow the judgement of the Hon'ble Jurisdictional High Court in the case of Chirakkal Service Co-operative Bank Ltd. v. CIT[2016] 384 ITR 490 (Ker).
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO by holding that the decision of the Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC) is applicable only in respect of co-operative societies engaged in the business of providing credit facilities to its members.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
The learned counsel for the assessee submits before us that the appellant is a co-operative society classified as a primary agricultural credit co-operative society engaged in the business of providing credit facilities to its members and accepting deposits from members and does not enjoy in banking licence. Therefore, it cannot be classified as a co-operative bank and the ratio of the Hosdurg Service Co-op. Bank Ltd. decision of the Hon'ble Apex Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC) is squarely applicable to the facts of the case.
On the other hand, the CIT-DR opposed the above submissions.
We have heard the rival contentions and perused the material available on record. The issue that arises for our consideration is whether the appellant co-operative society is eligible for deduction u/s. 80P(2)(a)(i) of the Act or not. Undisputedly, the appellant is a co-operative society duly registered under the Kerala State Co- operative Societies Act, 1969 classified as a primary agricultural credit co-operative society and it does not enjoy banking licence. Therefore, the ratio of the decision of the Hon'ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. (supra) is squarely applicable and we direct the AO to allow deduction u/s. 80P(2)(a)(i) of the Act.
In the result, the appeal filed by the assessee stands allowed.
Order pronounced in the open court on 30th October, 2025.