M/S THE GENERAL INSURANCE EMPLOYEES CO-OPERATIVE SOCIETY LIMITED,ERNAKULAM vs. ITO, NON CORPORATE WARD 1 (5), KOCHI
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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Waseem Ahmed & Shri Soundararajan K
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Waseem Ahmed, Accountant Member & Shri Soundararajan K, Judicial Member ITA No.217/Coch/2024 :Asst.Year 2017-2018 & SA No.19/Coch/2024 The General Insurance Employees The Income Tax Officer Co-operative Society Limited Non-Corporate Ward 1(5) v. F-2. Sitaram Complex, Kochi. Chittoor Road, Kacheripady Ernakulam – 682 018. PAN : AAAAT3074A. (Appellant/Applicant) (Respondent)
Appellant /Applicant by :--- None --- Respondent by :Smt.Girly Albert, Sr.DR Date of Pronouncement : 30.09.2024 Date of Hearing : 30.09.2024 O R D E R Per Bench : This is an appeal filed by the assessee, along with stay petition therein, challenging the order of the NFAC/CIT(A) dated 27.02.2024 in respect of the assessment year 2017- 2018
When the case was called, none appeared on behalf of the assessee, therefore, we proceed to dispose of the appeal ex parte qua the assessee, after hearing the learned DR.
Briefly stated the facts of the case are that the assessee is a co-operative society and rendering services to its members
2 ITA No.217/Coch/2024 & SA19/.Coch/2024. The General Insurance Employees co-op So.Ltd. by providing credit facilities. The Assessing Officer relied on the judgment of the Hon’ble Supreme Court in The Citizen Co- operative Society Ltd. v. ACIT reported in 397 ITR 1 (SC) and the full bench judgment of the Hon’ble Kerala High Court in the case of CIT v. Mavilayi Service Co-operative Bank Ltd. [2019] 414 ITR 67 (FB) (Ker.) had disallowed the deduction claimed u/s 80P of the Act. As against the said order the assessee filed an appeal before the ld.CIT(A) and contended that 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) had reversed the Full Bench order of the Kerala High Court, and therefore, is entitled for deduction u/s.80P of the Act. The ld.CIT(A) relying on the Full Bench judgment of the Hon’ble Kerala High Court had dismissed the appeal filed by the assessee. As against the said order of the ld.CIT(A), the assessee is in appeal before the Tribunal with the following grounds of appeal:-
“1. The order dated 27-2-2024 passed by the CIT(Appeals), National Faceless Appeal Centre, Delhi confirming the order dated 29-12-2019 of the assessing officer for the AY 2017-18 is erroneous, illegal, arbitrary and unjustified. 2. The CIT (Appeals) thoroughly erred in confirming the disallowance of the claim under section 80P (2) (a) (i) of the IT Act on an erroneous finding that the assessing officer has established the violation of the principle of mutuality by explaining that the associate/nominal members deposits are used for lending to the members in the form gold loans. The CIT (Appeals) failed to understand that the assessing officer rendered the said finding on an erroneous understanding of associate/nominal members as in the case of M/s Citizen Co- operative Societies Ltd Vs Asst. Commissioner of Income Tax decided by the Apex Court.
3 ITA No.217/Coch/2024 & SA19/.Coch/2024. The General Insurance Employees co-op So.Ltd. 3. The CIT (Appeals) erred in not following the decision of the Apex Court in the case of Mavilayi Service Co-operative Bank Ltd Vs CIT [reported in 431ITR 1 (SC) and further erred in holding that the decision of the Apex Court in Citizens Co- operative Societies case is applicable. The Apex Court in the Mavilayi's case cited supra has categorically held that associate members/nominal members are members as per the KCS Act unlike in the case of Citizens Co-operative Societies Ltd's case and therefore interest received from the members (whether it be associate members or nominal members) are eligible and entitled for deduction under section 80P (2) (a) (i) of the IT Act. 4. The CIT (Appeals) thoroughly erred in referring to the Apex Court judgment in the case of Citizen's Co-operative Society Ltd to hold that there is absence of principles of mutuality in this case. The CIT (Appeals) failed to consider, understand and apply the decision of the Apex Court in the case of Mavilayi Service Co-operative Bank Ltd's case: 5. The CIT (Appeals) have committed the same error as was done by the assessing officer by referring and applying the Apex Court judgment in the case of Citizen's Co-operative Society Ltd case for deciding the eligibility and entitlement of claim of deduction under section 80 P (2) (a) (i) of the IT Act. The CIT(Appeals) failed to consider the mater in the right perspective. 6. The CIT(Appeals) failed to note that the assessment was completed by the assessing officer relying on Citizens Co- operative Societies case and the Full Bench judgment of the Kerala High Court in the case of Mavilayi Service Co-operative Bank and before the passing of the judgment by the Apex Court in the case of Mavilayi Service Co-operative Bank Lt Vs CIT (reported in 431 ITR 1 (SC) . The entire approach to the issue was on an erroneous understanding of the law and totally misconceived. 7. For these and other grounds to be urged at the time of hearing, it is most respectfully prayed that this Honourable Tribunal may be pleased to set aside the impugned order of the CIT (Appeals) dated 27-2-2024 and the assessment order dated 29-12-2019 for the AY 2017-18 and to grant the deduction u/s 80P (2) (a) (i) of the IT Act as claimed by the appellant and to allow the appeal.”
4 ITA No.217/Coch/2024 & SA19/.Coch/2024. The General Insurance Employees co-op So.Ltd. 4. The assessee strongly relied on the judgment 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), wherein the Full Bench judgment of the Hon’ble Kerala High Court was reversed and prayed to allow the appeal.
The learned Departmental Representative relied on the order of the lower authorities and prayed to dismiss the appeal.
We have heard the learned DR and perused the material available on record. There is no dispute with regard to the facts that the assessee is a co-op society registered under the provisions of Kerala Co-operative Societies Act, 1969 and therefore, they are entitled for the deduction u/s.80P(2)of the Act. But the AO as well as the ld.CIT(A) had wrongly applied the Full Bench judgment of the Hon’ble Kerala High Court and the judgment of the Hon’ble Supreme Court in The Citizen Co- operative Society Ltd. v. ACIT reported in 397 ITR 1 (SC) where the assessee had denied the deduction u/s.80P of the Act. We do not accept the view taken by the authorities since the Full Bench judgment of the Hon’ble Kerala High Court was overruled by the Hon’ble Supreme Court in the judgment cited supra and therefore the assessment order as well as the appellate order, without taking into consideration the latest law declared by the Hon’ble Supreme Court is liable to be set aside. The assessment was not made on verifying the documents and also applying the principles laid down by the
5 ITA No.217/Coch/2024 & SA19/.Coch/2024. The General Insurance Employees co-op So.Ltd. Hon’ble Supreme Court cited supra and therefore in the interest of justice, we are inclined to set aside the orders of the authorities below and remit the issue to the file of the AO to pass fresh orders in accordance with law after hearing the assessee and also by considering the judgment of the Hon’ble Supreme Court, cited supra. It is ordered accordingly.
Since we have disposed of the appeal, the stay petition becomes infructuous and accordingly the same dismissed as infructuous.
In the result, the appeal filed by the assessee is allowed for statistical purposes and the stay petition is dismissed as rendered infructuous.
Order pronounced on this 30th day of September, 2024. Sd/- Sd/- (Waseem Ahmed) (Soundararajan K) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin ; Dated : 30th September, 2024. Devadas G* Copy to :S 1. The Appellant. 2. The Respondent. 3. The CIT Concerned. 4. The DR, ITAT, Cochin. 5. Guard File. Asst.Registrar/ITAT, Cochin
