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Facts
The appellant, a co-operative society, filed a nil return claiming deduction under Section 80P of the Income Tax Act for AY 2016-17. The AO initially denied the claim stating the appellant was not a co-operative society, and after a remand, disallowed it based on non-agricultural loans and lending to non-members. The CIT(A) confirmed the disallowance, relying on a High Court decision.
Held
The Tribunal noted that the Full Bench decision of the Jurisdictional High Court (Mavilayi Service Co-operative Bank Ltd. v. CIT [2019]), relied upon by the lower authorities, was overruled by the Hon'ble Supreme Court (431 ITR 1 (SC)). Consequently, in light of the Supreme Court's judgment, the appellant co-operative society is entitled to the deduction under Section 80P(2)(a)(i) of the Act.
Key Issues
Whether a co-operative society is entitled to deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961, given that the Supreme Court has overruled the High Court's previous interpretation regarding lending to non-members or for non-agricultural purposes.
Sections Cited
80P, 80P(2)(a)(i), 143(3), 254, 144B
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI PRAKASH CHAND YADAV, JM
O R D E R Per: Inturi Rama Rao, AM These appeals filed by the assessee are directed against different orders of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 04.12.2024 for Assessment Years (AY) 2016-17 & 2017-18.
Since identical issues and facts are involved in these appeals, they are heard together and disposed of by this common order.
For the sake of convenience and clarity the facts relevant to the appeal bearing for AY 2016-17 are stated herein.
& 110/Coch/2025 Chittur Service Co-op. Bank Ltd.
The appellant is a co-operative society registered under the Kerala State Co-operative Societies Act, 1969. The return of income for AY 2016-17 was filed on 24.03.2018 declaring Nil income after claiming deduction u/s. 80P of the Act. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-1, Palakkad (hereinafter called "the AO") denying the claim by holding that the appellant is not a co-operative society.
Being aggrieved, an appeal was filed before the CIT(A), who placing reliance on the decision of the Hon'ble Jurisdictional High Court in the case of Mavilayi Service Co-operative Bank Ltd. v. CIT [2021] 431 ITR 1 (SC) held that the appellant is not entitled for deduction us 80P of the Act.
On further appeal before this Tribunal, vide order dated 09.07.2020 in the Tribunal set aside the matter to the file of AO with a direction to examine the nature of each loan disbursement for which it was disbursed, whether it is agricultural or not. However, pursuant to the order of the Tribunal the AO passed assessment order u/s. 143(3) r.w.s. 254 & 144B of the Income Tax Act, 1961 (the Act) at a total income of Rs. 2,24,84,244/- by disallowing by disallowing the claim u/s. 80P of the Act.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order confirmed the action of the AO for the
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
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 entitled for deduction u/s. 80P(2)(a)(i) of the Act or not. Admittedly, the appellant is a co- operative society registered under the Kerala State Co-operative Societies Act, 1969. It is formed with the object of accepting deposits from members and lending money to its members. In the original round of assessment proceedings, the claim for deduction u/s. 80P(2)(a)(i) was disallowed solely on the ground that the appellant is engaged in lending money to non-members also, placing reliance on the Full Bench decision of the Hon'ble Jurisdictional High Court in the case Mavilayi Service Co-operative Bank Ltd. v. CIT [2019] 414 ITR 67 (Ker) (FB). On appeal before this Tribunal the matter was remanded back to the file of the AO with a direction to examine whether the loans were provided for non-agricultural purposes or not. We find that the Full Bench judgement of the Hon'ble High Court in the case Mavilayi Service Co-operative Bank Ltd. v. CIT [2019] 414 ITR 67 (Ker) (FB) was overruled by the Hon'ble Supreme Court in the case of 431 ITR 1 (SC). Therefore, in the light of the judgement of the Hon'ble Supreme Court the & 110/Coch/2025 Chittur Service Co-op. Bank Ltd. appellant society is entitled for deduction u/s. 80P(2)(i)(a) of the Act. Accordingly, the appeal filed by the assessee co-operative society stands allowed.
In the result, the appeals filed by the assessee stand allowed.
Order pronounced in the open court on 23rd June, 2025.