THE ITO WARD-2(1), TRIVANDRUM vs. PEROORKADA SERVICE CO-OP BANK LTD, TRIVANDRUM

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ITA 306/COCH/2023Status: DisposedITAT Cochin25 September 2024AY 2016-17Bench: Shri Satbeer Singh Godara (Judicial Member), Shri Amarjit Singh (Accountant Member)3 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, finding no evidence that the interest was paid to non-members. It also noted that the assessee is eligible for Section 80P deduction, making any disallowance of business income increase the deductible amount.

What were the facts?

The Assessing Officer disallowed interest expenses claimed by the assessee, a cooperative bank, on the grounds that proof of identity of interest recipients was not furnished. The CIT(A) deleted this disallowance, noting that similar interest expenses were allowed in other assessment years and that the assessee primarily deals with its members.

What were the issues?

Whether interest paid by a cooperative bank to its members on deposits is disallowable due to lack of identity proof, especially when consistently allowed in other years.

Which sections of the Income-tax Act were involved?

Section 80P

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN

Before: Shri Satbeer Singh Godara & Shri Amarjit Singh

For Appellant: Shri C.A. Jojo, Advocate
For Respondent: Shri Sanjit Kumar Das, CIT-DR
Hearing: 12.08.2024Pronounced: 25.09.2024

Heard together (2 matters)

ITA No. 306/Coch/2023
CO No. 03/Coch/2023

Read from the judgment's own cause title. This page is filed under one of them.

Assessee by: Shri C.A. Jojo, Advocate Revenue by: Shri Sanjit Kumar Das, CIT-DR Date of Hearing: 12.08.2024 Date of Pronouncement: 25.09.2024 O R D E R Per Bench This Revenue’s appeal CO No. 3/Coch/2023 for AY 2016-17 arises against the National Faceless Appeal Centre, Delhi [CIT(A)]’s DIN & Order No. ITBA/NFAC/S/250/20232- 23/1050071382(1) dated 23.02.2023 in proceedings u/s. 250 of the Income Tax Act, 1961 (the Act).

2.

Learned CIT- DR vehemently argued during the course of hearing in Revenue’s appeal ITA 306/Coch/2023 that the CIT(A) herein has erred in law on facts in deleting the impugned interest disallowance of Rs. 52,40,40,560/- made by the Assessing Officer in his assessment order dated 24.12.2018, vide following lower appellate discussion: -

“6.5 Ground no. 8 of the appeal is related to disallowance of interest expenses by the AO. It is seen that the assessing officer has disallowed the entire claim of interest expenses, debited to profit and loss account on the grounds that proof of identity of the persons to whom this interest has been paid is not furnished. This conclusion of the assessing officer is inconsistent with the fact that in all the other assessment years, disallowance of interest expenditure has not been made and it is accepted in all those years that such interest is paid to the members of the society on their deposits with the society. This accepted and consistent position cannot be changed in one assessment year when in the earlier and succeeding assessment years, the interest expense has been allowed as being interest paid to the members on their deposits. Accordingly, the addition made is directed to be deleted. Accordingly ground no. 8 of the appeal is Allowed.” Shri Das submits in this factual backdrop that the assessee had made interest payments to non-members as well which stood disallowed in assessment order.

3.

We find that there is no such material either in the assessment order as well as in the appeal which could slightly indicate that the assessee has paid interest to non- members. We reiterate that this assessee is a cooperative institution carrying out its regular business activities with its members only. That being the case and in light of the fact that the CITA has already held that no such disallowance has been made in the preceding assessment years, we find no substance in Revenue’s instant sole substantive grievance as well as the appeal . We further wish to make it clear that this assessee has been held eligible to section 80P deduction, therefore, any disallowance made under regular business head increases it’s income eligible for deduction going by the CBDT Circular No. 37/16. This Revenue’s appeal fails therefore.

4.

The assessee’s cross objection No. 3/Coch/2023 is found to be supportive of the CIT(A)’s findings deleting the interest expenses and the same stands rendered infructuous in light of above findings in the Revenue appeal hereinabove.

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