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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Satbeer Singh Godara & Shri Amarjit Singh
Appellant by : Sri.George Thomas, CA Respondent by : Smt.V.Swarnalatha, Sr.DR Date of Pronouncement : 25.09.2024 Date of Hearing : 13.08.2024 O R D E R Per Bench : This assessee’s appeal in 2016-2017 arises out of the order of the Commissioner of Income-tax (Appeals) / NFAC vide DIN & Order No.ITBA/NFAC/S/250/2023- 24/1053669436(1) dated 12.06.2023, in proceedings u/s.143(3) of the Income-tax Act, 1961; in short “the Act” hereinafter.
Heard both the parties. Case file perused.
The assessee’s sole substantive ground in the instant appeal reading as under:-
“1. The order of the Commissioner of Income-tax (Appeal) is against the facts and circumstances of the case and hence opposed to the provisions of Income-tax Act. 2. The learned Commissioner of Income tax (Appeals) ought to have allowed interest on investments with Kannur District Co-operative Bank u/s 80P(2)(d) of the Income Tax Act.
. Narath SCB Ltd. The entire amount disallowed is the interest received from Kannur District Cooperative Bank. 3. The Appellant's case is grossly in tune with the decision of jurisdictional High Court decision in the case of CIT v. Peroorkada Service Co-operative Bank 442 ITR 0141, wherein, It has been held in the connected cases that the assessee is entitled to deduction of interest income earned from Co- operative Banks/Societies/ Federation registered under the Co-operative Societies Act.”
Learned Sr. DR vehemently argued in the course of hearing that such interest income could have hardly be held even derived from assessee’s regular credit facilities made available to the members concerned. She further quotes PCIT & Anr. v. Totagars Co-operative Sales Society reported in (2017) 395 ITR 611 (Kar.) and submitted that the impugned disallowance has been rightly made in assessee’s hand.
We notice in this background that the very issue stands adjudicated in Hon'ble Jurisdictional High Court’s recent decision in of 2019 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 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 . Narath SCB Ltd. 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.”
We adopt the above detailed discussion mutatis mutandis in the case of assessee’s identical submission on section 80P deduction. Necessary computation shall follow as per law in very terms. Assessee’s appeal succeeds.