THIROOR SERVICE CO OPERATIVE BANK LIMITED 4140,THIROOR vs. INCOME TAX OFFICER, THRISSUR

This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated30/12/2024.

Brief facts of the case are that the assessee is a cooperative society that filed its return of income for the assessment year 2022–23 under section 139(1) of the Income-tax Act, 1961 on 21.11.2022. The return was selected for scrutiny under CASS and the assessment was completed under section 143(3) read with section 144B of the Act. During the assessment proceeding, AO denied deduction under section 80P of the Act in respect of interest income amounting to Rs. 4,61,90,161, received from Co-operative Bank and private sector banks.

Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The appeal was partly allowed. The CIT(A) held that the interest received from South Indian Bank and ICICI Bank was not eligible for deduction under section 80P(2)(d), and directed the AO to assess the same under the head Income from Other Sources.

At the time of hearing before the Tribunal, the assessee contended that the issue is no longer res Integra in view of the judgment of the Hon’ble Kerala High Court in the case of PCIT v. M/s Sahyadri Co- operative Credit Society Ltd. “Whether or not the income received by the respondent society by way of interest on deposit of surplus funds would qualify for the deduction contemplated under section 80P(2)(a) of the Act, depends on whether such income is attributable to the business of providing credit facilities to its members.”