Loading judgment…
Facts
The assessee, a co-operative society, claimed deduction under section 80P, including for interest income under section 80P(2)(d). The Assessing Officer and CIT(A) denied this, classifying the assessee as a co-operative bank and thus not eligible for the deduction. The assessee then appealed to the ITAT.
Held
The Tribunal, citing Supreme Court and Kerala High Court precedents, held that the assessee is a co-operative society, not a co-operative bank, as it does not possess banking licenses. Therefore, the interest income earned from co-operative banks is eligible for deduction under section 80P(2)(d) of the Income-tax Act, 1961.
Key Issues
Whether interest income received by a co-operative society from co-operative banks qualifies for deduction u/s 80P(2)(d) when the lower authorities classified the society as a co-operative bank.
Sections Cited
80P, 80P(2)(d), 250
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri George George K, Vice- & Shri Inturi Rama Rao
:Asst.Year 2020-2021 The Kerala High Court The Income Tax Officer Employees Credit Co-operative v. Ward 2(1) Society Limited No.E-830 Kochi. Ernakulam – 682 031. PAN : AAEAT6869P. (Appellant) (Respondent) Appellant by : Sri.M.R.Sasi, Advocate Respondent by :Smt.Leena Lal, Sr.AR Date of Date of Hearing :03.04.2025 Pronouncement : 08.04.2025 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 Assessment Centre / Commissioner of Income-tax (Appeals), [“CIT(A)”] passed u/s.250 of the Income-tax Act, 1961 [“the Act”] for the assessment years 2017-2018, 2018-2019 and 2020-2021.
Since common issues are involved in these appeals, they were heard together and are being disposed of by this consolidated order for the sake of convenience. We take the appeal bearing for assessment year 2017-2018 as the lead appeal
Briefly the facts of the case are that the appellant is a co-operative society registered under the Kerala Co-operative Societies Act, 1969. It is engaged in the activity of accepting deposits and lending money from its the members. The return of income for the assessment year 2017- 2018 was filed on 07.10.2017 disclosing Nil income after claiming deduction u/s.80P of the Income-tax Act, 1961 “(the Act”). Against the said return of income, the assessment was completed by the Assessing Officer (“the AO”) vide order dated 29.12.2019 by denying the deduction u/s.80P of the Act by holding that the appellant society is a co-operative bank and not a co-operative.
Being aggrieved, an appeal was filed before the CIT(A), who vide the impugned order denied the deduction u/s.80P(2)(d) of the Act in respect of interest income of Rs.1,15,42,832 by holding that the appellant is a co-operative bank.
Being aggrieved by the order confirming the action of the AO, the appellant is in appeal before the Tribunal.
The issue in the present appeal is as to whether the interest income received by the co-operative society from a co-operative bank qualifies for deduction u/s.80P(2)(d) of the Act or not. On a mere perusal of the orders passed by the lower authorities, it would be clear that the AO as well as the CIT(A) denied the claim for deduction u/s 80P(2)(d) of the Act on the ground that the appellant is a co-operative -1051/Coch/2024. The Kerala High Court Employees Cr.Co-op.So.Ltd. bank. The finding of the lower authorities is contrary to the law in view of the settled position of law in the absence of any licenses to carry on the banking business, the co-operative society cannot be considered as a co-operative bank. Reliance is placed on the judgment of the Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr. (2021) 431 ITR 1 (SC).
The issue whether the interest income earned by the co-operative society from the co-operative banks qualifies for deduction is now settled by the decision of the Hon’ble jurisdictional High Court in the case of PCIT v. Peroorkada Service Co-operative Bank Ltd. and Vilappil Service Co-operative Bank Ltd. 442 ITR 141 (Ker.). In the light of this, we hold that the appellant is entitled for deduction in respect of interest income earned from co-operative banks u/s.80P(2)(d) of the Act.
In the result, the appeals filed by the assessee are allowed.
Order pronounced on this 08th day of April, 2025.