EDAKKADU URBAN SAHAKARANA SANGAM,KANNUR vs. ITO, WARD-1 & TPS, KANNUR

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ITA 440/COCH/2025Status: DisposedITAT Cochin31 July 2025AY 2020-21Bench: SHRI INTURI RAMA RAO (Accountant Member)4 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal, following the jurisdictional High Court's decision in PCIT v. Peroorkada Service Co-op. Bank Ltd., held that the assessee is entitled to deduction under Section 80P(2)(d) of the Income Tax Act for interest income received from District Co-operative Bank and Treasury.

What were the facts?

The assessee, a Primary Agricultural Credit Cooperative Society, filed its return for AY 2020-21 claiming nil income and deduction under Section 80P. The Assessing Officer assessed a total income of Rs. 25,31,977/-, treating interest income from a cooperative bank as income from other sources, which was confirmed by the CIT(A).

What were the issues?

Whether interest income earned by a Primary Agricultural Credit Cooperative Society from a District Co-operative Bank and Treasury is eligible for deduction under Section 80P of the Income Tax Act, 1961.

Which sections of the Income-tax Act were involved?

Section 80P,Section 143(3),Section 144B,Section 80P(2)(d),Section 80P(2)(a)(i)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, COCHIN BENCH

Before: SHRI INTURI RAMA RAO, AM

For Appellant: Shri Akhil Shaji, Advocate
For Respondent: Smt. Leena Lal, Sr. DR
Hearing: 21.07.2025Pronounced: 31.07.2025

This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 11.03.2025 for Assessment Year (AY) 2020-21.

2.

Brief facts of the case are that the assessee is a cooperative society registered under the Kerala Cooperative Societies Act, 1989. It is classified as Primary Agricultural Credit Cooperative Society and it engaged in the business of accepting deposits from its Edakkad Urban Sahakarana Sangam members and providing credit facilities to its members. Return of income for the A.Y. 2020-21 on 13.02.2021 declaring nil income after claiming deduction u/s. 80P of the Act. Against the said return of income, assessment was completed by the Assessment Unit, Income Tax Department (hereinafter called “the AO”) dated 28/09/2022 passed under section 143(3) r.w.s. 144B of the Income Tax Act, 1961 (the Act) at a total income of Rs. 25,31,977/-. While doing so, the AO treated the interest income earned from the cooperative bank of Rs. 25,31,977/- as income from other sources.

3.

Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order, confirmed the action of the AO.

4.

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

5.

I have heard rival submissions and perused the material on record.

6.

I notice that the issue related to interest income received from the District Co-operative bank stands adjudicated by Hon'ble Jurisdictional High Court’s decision in the case of PCIT v. Peroorkada Service Co-op.

“12.2 Section 80P deals with Co-operative Societies' computation of income. As already noted, it has four sections and several sub-sections and clauses. The Parliament has considered the various situations in which the exigible income and the deductable income of the assessee is considered while computing the income of the assessee. For getting deduction, in our considered view, the assessee must also establish that the interest income earned by the assessee is from a Co-operative Society. As a matter of fact, in the case on hand, there is no dispute that it is not from a Co-operative Society registered under Kerala Co- operative Societies Act. The interest income earned from District Co- operative Bank/State Co-operative Bank, in the facts and circumstances of the case, do come within Section 80P(2)(d). Therefore, the income constitutes income from other sources and the only eligible deduction is covered by Section 80P(2)(d) viz. Interest or dividend derived by the assessee from its investments with any other Co-operative Society. The source of interest income is from Bank and Treasury, interest income received from Treasury be included in the computation of total income of the assessee. In other words, interest earned from Treasury is inadmissible for deduction and interest income from Co-operative Societies registered under the Kerala Co-operative Societies Act are eligible for deduction. The contra consideration of Commissioner of Income Tax (Appeals) and the Tribunal is incorrect and liable to be modified as stated above. Hence, it is held that the interest income earned by the assessee does not come within the ambit of Section 80P(2)(a)(i) and permissible deduction of interest income is limited to Co-operative Societies/Banks registered under Kerala Co-operative Societies Act under clause (d) of the Act and effect order on the above lines is made by the Assessing Officer. The questions are accordingly answered.”

7.

Respectfully following the above decision of the Hon'ble Jurisdictional High Court, I hold that the assessee is entitled for

8.

In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 31st July, 2025.

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