KAYAMKULAM CO-OPERATIVE BANK LTD,ALAPPUZHA vs. THE ITO , ALAPPUZHA

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ITA 487/COCH/2023Status: DisposedITAT Cochin23 October 2024AY 2013-14Bench: SHRI SATBEER SINGH GODARA (Judicial Member), SHRI AMARJIT SINGH (Accountant Member)7 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal restored the Section 69A addition issue back to the CIT(A) for fresh consideration, requiring the assessee to prove the source of funds. For the Section 80P issue, the Tribunal allowed the deduction based on a jurisdictional High Court ruling.

What were the facts?

The assessee, Kayamkulam Co-Op. Bank Ltd., faced additions under Section 69A for unexplained investments and disallowance of deduction under Section 80P on interest income. The assessee's non-appearance during assessment was attributed to the Covid-19 pandemic.

What were the issues?

Whether additions under Section 69A for unexplained investments are justified, and whether interest income from deposits in a District Central Cooperative Bank is eligible for deduction under Section 80P.

Which sections of the Income-tax Act were involved?

Section 69A,Section 80P,Section 250

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(3)Show list

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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN

Before: SHRI SATBEER SINGH GODARA & SHRI AMARJIT SINGH

For Respondent: Shri Sanjit Kumar Das, CIT-DR &, Smt. V. Swarnalatha, Sr. D.R
Hearing: 14.08.2024Pronounced: 23.10.2024

DIN & Order No. Date No. 1 487/Coch/2023 2013-14 ITBA/NFAC/S/250/2022-23/1050994484(1) 20.03.2023 2 488/Coch/2023 2014-15 ITBA/NFAC/S/250/2022-22/1050993925(1) 20.03.2023 3 386/Coch/2023 2020-21 ITBA/NFAC/S/250/2022-22/1050995639(1) 20.03.2023

Case called twice. None appears at assessee’s behest. We accordingly proceed ex-parte against the assessee.

2.

We advert to the “lead” assessment year 2013- 2014 involving assessee’s appeal ITA.No.487/Coch./2023 wherein both the learned lower authorities have made sec.69A unexplained investment addition of Rs.5,37,00,000/- in the course of assessment dated 14.03.2022 as upheld in the learned CIT(A)-NFAC’s order.

3.

Learned DR vehemently supports the impugned addition on the ground that the assessee has never filed the relevant details either in the assessment or before the lower appellate authority; as the case may be. She fails to dispute the clinching fact that the main reason prima facie of the assessee’s non-appearance during assessment appears to to this effect in the lower appellate proceedings. Be that as it may, the assessee’s case all along is that it had collected the impugned cash deposits from it’s members only. That being the clinching case, we deem it appropriate to restore the assessee’s instant sole substantive ground back to the CIT(A)-NFAC for it’s afresh appropriate decision after obtaining necessary remand report from the Assessing Officer as per law, subject to a rider that it shall be the taxpayer’s responsibility only to plead and prove all the relevant facts in consequential proceedings. Ordered accordingly.

4.

This assessee’s instant “lead” appeal ITA.No.487/Coch./2023 is allowed for statistical purposes in above terms.

5.

Same order to follow in the assessee’s appeal ITA.No.488/ Coch./2023 since raising identical sole substantive issue of sec.69A addition of Rs.7.35 crores.

Ordered accordingly.

ITA.No.386/ Coch./2023 wherein both the learned lower authorities have treated it’s interest income of Rs.2,27,070/- derived from deposits made in District Central Cooperative Bank as not eligible for sec.80P deduction.

7.

Learned DR quotes PCIT & Anr. vs. Totagars Cooperative Sales Society [2017] 395 ITR 611 (Kar.) and The Totagars Cooperative Sales Society vs. ITO [2010] 322 ITR 283 (SC) and submitted that the impugned disallowance has been rightly made in assessee’s hand.

8.

We note in this factual backdrop that hon'ble jurisdictional high court’s latest decision in PCIT v.

Peroorkada Service Co-op. Bank Ltd. [2022] 442 ITR 141 (Ker) has already settled the issue in assessee’s favour and against the department 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 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 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.”

9.

We accordingly accept the assessee’s last appeal ITA.No.386/Coch./2023 in very terms. Necessary computation shall follow as per law. Ordered accordingly.

10.

To sum-up, these assessee’s twin appeals ITA.Nos.487 & 487 /Coch./2023 are allowed for statistical purposes and last appeal ITA.No.386/Coch./2023 is allowed the respective case files.

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