MALAYINKIL SERVICE CO-OPERATIVE BANK LTD,THIRUVANANTHAPURAM vs. ITO, THIRUVANANTHAPURAM
Facts
The assessee, a co-operative bank, filed an appeal against the CIT(A)'s order concerning the taxability of interest income received from District Co-operative Banks and Treasury for AY 2016-17. The core issue was whether this interest income qualified for deduction under Section 80P of the Income Tax Act.
Held
Following the Jurisdictional High Court's decision in PCIT v. Peroorkada Service Co-op. Bank Ltd., the Tribunal held that interest income received by the assessee from District Co-operative Bank and Treasury is eligible for deduction under Section 80P(2)(d) of the Income Tax Act.
Key Issues
Whether interest income earned by a co-operative society from District Co-operative Banks and Treasury is eligible for deduction under Section 80P(2)(d) of the Income Tax Act.
Sections Cited
80P, 80P(2)(d), 80P(2)(a)(i)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 17.01.2025 for Assessment Year (AY) 2016-17.
I notice that the issue related to interest income received from the District Co-operative bank stands adjudicated by the Hon'ble Jurisdictional High Court’s decision in the case of PCIT v. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker)
2 ITA Nos. 457 & 548/Coch/2025 Malayinkil Service Co-op. Society Ltd. wherein their Lordships have rejected the Revenue’s identical stand as under: - “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.”
Respectfully following the above decision of the Hon'ble Jurisdictional High Court, I hold that the assessee is entitled for
3 ITA Nos. 457 & 548/Coch/2025 Malayinkil Service Co-op. Society Ltd. deduction under section 80P(2)(d) of the Act on account of interest received from District Co-operative Bank and Treasury.
In the result, appeals filed by the assessee are allowed.
Order pronounced in the open court on 31st July, 2025.
Sd/- (INTURI RAMA RAO) ACCOUNTANT MEMBER Cochin, Dated: 31st July, 2025 vr/- Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File By Order
Assistant Registrar ITAT, Cochin
