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Facts
The assessee, a primary agricultural credit co-operative society, filed its return for AY 2020-21 declaring Nil income after claiming deduction of Rs. 51,48,484/- under Section 80P. The AO added Rs. 43,08,485/- to its income, disallowing the deduction for interest received from a District Co-operative Bank, which was confirmed by the CIT(A). The assessee filed an appeal before the ITAT with a 27-day delay.
Held
The Tribunal condoned the delay in filing the appeal, finding reasonable cause. Following the jurisdictional High Court decision in *PCIT v. Peroorkada Service Co-op. Bank Ltd.*, the Tribunal held that the assessee is entitled to a deduction under Section 80P(2)(d) of the Income Tax Act for interest income received from District Co-operative Banks and Treasury.
Key Issues
1. Whether the delay in filing the appeal should be condoned. 2. Whether a primary agricultural credit co-operative society is entitled to a deduction under Section 80P(2)(d) for interest income from District Co-operative Banks and Treasury.
Sections Cited
139(1), 80P, 80P(2)(d)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM
O R D E R This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 12.07.2024 for Assessment Year (AY) 2020-21.
Brief facts of the case are that the assessee is primary agricultural credit co-operative society registered under the Kerala Co-Operative Societies Act, 1969. The assessee filed the return of income u/s. 139)1) of the Income Tax Act, 1961 (the Act) for AY 2020-21 declaring Nil income after claiming deduction of Rs. 51,48,484/- u/s. 80P of the Income Tax Act, 1961 (the Act). Against the said return of income, the Nallepilly Service Co-op. Bank Ltd. Income Tax Officer, Ward-1, Palakkad (hereinafter “the AO”) completed the assessment at a total income of Rs. 43,08,485/- by making an addition of Rs. 43,08,485/- on account of interest received from District Co- operative Bank by holding that such interest income does not qualify for deduction 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.
Being aggrieved, the assessee is in appeal before the Tribunal in the present appeal.
At the outset I find that there is a delay of 27 days in filing the present appeal. The appellant filed petition for condonation of delay stating that the delay had occurred due to the procedural delays in getting the permission from the higher authorities. It is prayed that the delay is not willful, therefore, the delay may be condoned. On a perusal of the averments made in the condonation petition, it is evident that the appellant is prevented by reasonable cause from filing the appeal. Therefore, we condone the delay and admit the appeal for adjudication.
When the appeal was called on, nobody appeared on behalf of the assessee despite due service of notice of hearing. Therefore, we proceeded to dispose of the appeal after hearing the learned Sr. DR.
I notice that the issue of liability of deduction u/s. 80P in respect of interest income received from the District Co-operative bank stands Nallepilly Service Co-op. Bank Ltd. settled by the decision of the Hon'ble Jurisdictional High Court in the case of PCIT v. Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker) 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 co-operative society is entitled for deduction under section 80P(2)(d) of the Act on account of interest received from District Co-operative Bank and Treasury.
Order pronounced in the open court on 19th February, 2025. 10.