NATTIKA SERVICE CO OPERATIVE BANK LTD NO R 308,NATTIKA vs. INCOME TAX OFFICER, GURUVAYUR

The appellant is a primary agricultural co-operative society. The return of income for AY 2009-10 was filed on 2 930 & 932/Coch/2024 Nattika Service Co-op. Bank Ltd. 21.11.2016 claiming deduction u/s. 80P(2)(a)(i) of its entire gross income of Rs. 12,75,604/-. Against the said return of income the assessment was completed by the Income Tax Officer, Guruvayur (hereinafter called "the AO") vide order dated 22.03,2022 passed u/s. 147 r.w.s. 254 r.w.s. 144B of the Act disallowing the claim of deduction u/s. 80P(2)(d) of the Act holding that the interest earned from co-operative banks amounting to Rs. 14,83,083/- does not qualify for deduction u/s. 80P(2)(d) 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 appellant is in appeal before the Tribunal in the present appeal.

I heard the rival contentions of both the parties and perused the material available on record. I notice that the issue related to interest income received from the District Co-operative bank stands adjudicated by Hon'ble Jurisdictional High Court’s decision 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 3 930 & 932/Coch/2024 Nattika Service Co-op. Bank Ltd. 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 deduction under section 80P(2)(d) of the Act on account of interest received from co-operative banks.

The above discussions and finding shall mutatis mutandis apply to the appeals for AYs 2013-14 & 2015-16.

In the result, the appeals filed by the assessee are allowed.