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Facts
The appellant, a primary agricultural credit society, filed a nil return for AY 2014-15. The Assessing Officer denied the deduction under Section 80P, treating it as a co-operative bank, which was subsequently confirmed by the CIT(A).
Held
The Tribunal held that the appellant is a primary agricultural credit society and does not possess a banking license, thus not falling under the restrictions of Section 80P(4). Relying on the Supreme Court's decision in *Mavilayi Service Co-operative Bank Ltd.*, the Tribunal allowed the Section 80P deduction.
Key Issues
Whether a primary agricultural credit society, which does not hold a banking license, is eligible for deduction under Section 80P of the Income Tax Act, 1961, or if it is restricted by the provisions of Section 80P(4).
Sections Cited
143(3), 80P, 80P(4)
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Income Tax Appellate Tribunal, “SMC” BENCH, COCHIN
Before: Shri Inturi Rama Rao
Asst.Year 2014-2015 Kolavalloor Service Co-operative The Income Tax Officer Bank Limited, Cheruparamba v. Ward 2 Thalassery Kannur. Kannur – 670 693. PAN : AACAK2696M. (Appellant) (Respondent) Appellant by : Sri.Arun Raj S, Advocate Respondent by : Smt.Leena Lal, Senior AR Date of Date of Hearing : 13.03.2025 Pronouncement : 27.03.2025 O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Assessment Centre / Commissioner of Income- tax (Appeals) [“CIT(A)” for short] dated 10.12.2024 for the assessment years 2014-2015.
The appellant is a co-operative society registered under the Kerala Co-operative Societies Act, 1969 and it is classified as a primary agricultural credit society. It is engaged in extending credit facilities to its members. The return of income for the assessment year 2014-2015 was filed on 3rd February, 2015 declaring Nil income. Against the said return of income, the assessment was completed by the Assessing Officer (“the AO” hereinafter) vide order dated 21.12.2016 passed u/s.143(3) of the Income-tax Act, 1961 (“the Act” hereinafter) at a total . Kolavalloor SCB Limited. income of Rs.27,59,253. While doing so, the AO denied deduction u/s.80P of the Act by holding that the appellant is a co-operative bank and not a primary agricultural credit society.
Being aggrieved by the assessment order, the appellant filed an appeal before the CIT(A), who vide the impugned order confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before me in the present appeal. The learned Counsel for the assessee submits that the lower authorities have grossly erred in holding that the appellant is a co- operative bank but not a primary agricultural credit society and not hit by the provisions of sub-section (4) of section 80P of the Act. The learned Counsel further submits that for the assessment year 2017-2018, the CIT(A) had held that the appellant-society is eligible for claiming deduction u/s.80P of the Act. It is therefore prayed that orders of the lower authorities may be set aside.
On the other hand, the learned Sr.AR by placing support on the orders of the authorities below submits that no interference is called for therein.
I heard the rival submissions and perused the material available on record. The solitary issue that arises for my consideration is whether the appellant is eligible for deduction u/s.80P of the Act or not. There is no dispute that the appellant is classified as a primary agricultural credit society and as per the certificate issued by the Registrar of Co-operative Societies, the appellant does not enjoy the license to carry on the . Kolavalloor SCB Limited. business of banking. Therefore, the appellant society cannot be considered or classified as a co-operative bank and it is not hit by the provisions of sub-section (4) of section 80P of the Act. The ratio of the decision of the Hon’ble Supreme Court in the case of Mavilayi Service Co-operative Bank Ltd. & Ors. v. CIT & Anr. reported in (2021) 431 ITR 1 (SC), squarely applicable to the facts of the present case. Therefore, I set aside the orders of the authorities and direct the AO to allow the claim of the assessee.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on this 27th day of March, 2025.