MAVOOR SERVICE CO-OP BANKLTD,MAVOOR vs. ITO,WARD-2(3), KOZHIKODE

. Mavoor SCB Ltd. 2. It emerges at the outset that both the learned lower authorities have rejected the assessee’s sec.80P deduction claim for the sole reason that the same had not been raised in a return or by filing a return, as the case may be, within the “due” date prescribed u/sec.139(1) of the Act. The assessee raises the following substantive grounds in the instant appeal:

The appellant filed the return of income with a gross income of Rs.4,29,44,9541-, which includes interest and dividend received from other co-operative societies and the return is filed after claiming deduction u/s.80P of the Act to the extent of Rs.4,29,44,954/-, to the extent of income from . Mavoor SCB Ltd. business calculated. The Assessing Officer has decided that the return of income is filed u/s. 139(4) and not u/s. 139(1) of the Act and hence not eligible for deduction u/s.8OP.

The appellant society went on appeal before the Commissioner of Income Tax (Appeals). NFAC, but dismissed the appeal.

The Assessing Officer or the Commissioner of Income Tax (Appeals) has not considered the order of the CBDT in F.No. F.No.22S/1S/2019/ITA.11 dt.27.02.2019, extending the time limit for filing of the return of income for the AY 2018-19 and hence the filing of the return of income of the appellant on 07.11.2018 should be considered as within the time allowed u/s. 139(1) of the Act and the benefit of section 80P should have been granted.

The assessment is completed without considering the fact that the appellant society is registered under the Kerala State Co-operative Societies Act and Ruies 1969 as a PRIMARY AGRICULTURAL CREDIT SOCIETY and the appellant society is not a bank . Mavoor SCB Ltd. with License from Reserve Bank for banking. This is evident as per the certificate dt.22.11.2016 issued by the Joint Registrar of Co-op Societies (General), Kozhikode.

Further, the following decisions may also be considered: The Hon'ble High Court of Kerala, in the case of Principal Commissioner of Income Tax vs.

Peroorkada Service Co-operative Bank Ltd. (ITA Nos.323 of 2019 and 5 of 2020) and 2. Vilappil Service Co-operative Bank Ltd (ITA No.142 of 2019) [2022) 442 ITR 141 (Ker), has held that the interest income earned by the assessee comes with the category of 'income from other sources' and is eligible for deduction u/s.80P(2)(d) of the Act, since the interest income earned from co-operative banks, societies, etc registered under the Co-operative Societies Act are eligible for the same.

The investment by the society is made out of the surplus fund, which is forming part of the business income and hence the income from the investment should be considered as part of the business income . Mavoor SCB Ltd. and hence exempted u/s.80P of the Act, as per the decision of the Hon'ble Supreme Court of India in the case of Mavilayi Service Co-op Bank Ltd & Others in Civil Appeal No.8315 of 2019. [2021] 431 ITR 1 (SC) may also be referred.

It is held that the interest income earned by the society comes with the category of income from business or income from other sources and the assessee is eligible for deduction u/s.80P(2)(a)(i) or section 80P(2)(d) of the Act. It has been held in the connected cases that the assessee is entitled to deduction of interest income earned from co-op banks/societies/federation registered under the Co- operative Societies Act.

For the above reasons and other arguments that may be put forward, the appellant may request that the assessment made, disallowing the deduction claimed by the appellant, may be cancelled.”