PANNIYANKARA SERVICE CO OPERATIVE BANK LIMITED NOD 2694,KOZHIKODE, KERALA vs. INCOME TAX OFFICER, WARD-1 (3), KOZHIKODE , KOZHIKODE

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ITA 823/COCH/2023Status: DisposedITAT Cochin25 September 2024AY 2016-2017Bench: Shri Satbeer Singh Godara (Judicial Member), Shri Amarjit Singh (Judicial Member)3 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that interest income earned from deposits in co-operative banks is eligible for deduction under Section 80P(2)(d). The Tribunal followed the jurisdictional High Court's decision in a similar case.

What were the facts?

The assessee, a co-operative bank, claimed a deduction under Section 80P(2)(d) for interest income earned from deposits made in other co-operative banks. The Assessing Officer disallowed this deduction, and the assessee appealed.

What were the issues?

Whether interest income earned by a co-operative society from deposits in other co-operative banks is eligible for deduction under Section 80P(2)(d) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 80P(2)(d)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN

Before: Shri Satbeer Singh Godara & Shri Amarjit Singh

For Appellant: Shri Arun Raj S., Advocate
For Respondent: Smt. V. Swarnalatha, Sr. D.R
Hearing: 13.08.2024Pronounced: 25.09.2024

Appellant by: Shri Arun Raj S., Advocate Respondent by: Smt. V. Swarnalatha, Sr. D.R. Date of Hearing: 13.08.2024 Date of Pronouncement: 25.09.2024 O R D E R Per Bench This assessee’s appeal for A.Y. 2016-17 arises against the National Faceless Appeal Centre, Delhi [CIT(A)]’s DIN & Order No. ITBA/ NFAC/S/250/2023- 24/1057323865(1) dated 25.10.2023 in proceedings u/s. 250 of the Income Tax Act, 1961 (the Act).

Heard both parties. Case file perused.

2.

It merges at the outset that the assessee’s sole substantive grievance raised in the instant appeal seeks to reverse the action of the lower authorities disallowing sections 80P(2)(d) deduction amounting to Rs. 43,17,534/- representing interest income from deposits made in co-operative Banks as eligible for tax deduction.

Panniyankara Service Co-op. Bank Ltd. 3. 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.

4.

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 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.”

Panniyankara Service Co-op. Bank Ltd. 5. 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. This assessee’s appeal is allowed. Order pronounced on 25th September, 2024 under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963.

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