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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Satbeer Singh Godara & Shri Amarjit Singh
Per Bench : These assessee’s appeals for assessment years 2014-15 & 2015-16 arise against separate orders of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 31.10.20023, 10.10.2023 & 31.10.20023, respectively passed u/s. 250 of the Income Tax Act, 1961 (the Act). The assessee has also filed stay applications qua these appeals. These appeals were taken up together with its corresponding stay application for hearing and disposed off by the common order for the sake of convenience.
Heard both parties. Case files perused.
& SA Nos.218-220/Coch/2023 Vallapuzha SCB Limited. 2. The assessee’s lead appeal, ITA O. 874/Coch/2023 for the first the foremost AY 2014-15 canvases its sole substantive grievance seeking to reverse both the lower authorities action disallowing s. 80P(2)(a)(i) deduction claim of Rs.27,99,630/- in the course of assessment framed on 20.12.216, as upheld in the proceedings as well as follows: -
“7. APPELLATE FINDINGS: 7.1 Ground of Appeal
No. 1, 3 and 4 are general and consequential and no specific findings are required. 7.2 Ground of Appeal No. 2 pertains to the disallowance of Rs. 1,36,33,449/- under the provisions for NPA and disallowance of Rs. 27,99,630/- u/s 80P(2)(a)(i) of the Act. The Ld. A.O. has given his findings on the nature of business of the appellant in Para 14 and 15 in his order which are reproduced as under:-
14. On analysis of the bye-law of the society, it is found that the M/s The Vallapuzha Service Co-operative Bank Ltd is doing true banking business. It is seen that the assessee is carrying out the following activities: -
1. Providing various kinds of loans (Gold loan. Mortgage loan, Mortgage loan etc.) 2 Accepting deposits from members as well as non members 3 Maintaining Savings Bank, A/c, Current A/c, Daily Deposit Scheme. MIS. 4 Chitty Business etc.
5. Providing Cheque facility 6. Providing Demand Draft facility 7. Providing Locker Facility
1. On analysis of the activities of the assessee, it is evident that the agricultural credits provided by the assessee bank are negligible. The details of various loans issued by the bank during the F.Y. 2013-2014 are tabulated as below. In the assessee's case the breakup of the loans as per the details filed by the assessee are as under- AGRICULTURAL LOANS Short Term Agricultural Loans : Rs. 7,94,58,431/- Medium Term Agricultural Loan : Rs. 3,51,927/- Total : Rs. 7,98,10,358/- & SA Nos.218-220/Coch/2023 Vallapuzha SCB Limited. NON-AGRICULTURAL LOANS Ordinary Loan : Rs. 14,75,45,722/- Gold Loan : Rs. 60,41,14,076/- Total : Rs. 75,16,59,798/- Total Loans & Advances during the year : Rs. 83,14,70,156/- On further verification of the loan documents of the Bank, it is seen that the major portion of the agricultural loans are agricultural mortgage loan advanced by the mortgage of gold ornaments and there is no mechanism to ensure that whether the amounts has been actually utilized for agricultural purpose."
Suffice to say that it is clear from a perusal of the CITA’s above extracted observation that the assessee has been held to have been claiming itself as a co-operative society only but treated as the co-operative Bank. The CIT(A) failed to indicate any clinching finding against the assessee in his discussion holding the assessee as a co-operative Bank attracting the impugned disallowance u/s. 80P(4) of the Act. The Revenue seeks to buttress the point that once the assessee’s loans are not related to agriculture and rural development, the interest derived there from does not give rise to income which in turn is eligible for section 80P deduction. Faced with this situation we sought to know whether the impugned interest income is derived from the members of the co-operative society or not. We make it clear that there is no denial of this clinching fact either in the assessment order or in the CITA’s detailed discussion that the assessee has indeed derived its income representing interest from members only. We thus quote Mavilayi Service Co-op. Bank Ltd. v. CIT [2021] 431 ITR 1 (SC) and Chirakkal Service Co-op. Bank Ltd. v. CIT [2016] 384 ITR 490 (Ker) to conclude that both the lower authorities have erred in law and in facts in disallowing assessee’s claim of s. 80P deduction representing interest income from its members only. The assessee succeeds on this sole issue.
& SA Nos.218-220/Coch/2023 Vallapuzha SCB Limited. 4. Same order follows in assessee’s next twin appeals in ITA No. 875 & 876/Coch/2023 relating to assessment years 2014-15 & 2014-16.
Delay of 12 days in filing it’s appeal in stands condoned considering the reasons given in the condonation application. Ordered accordingly.
The assessee’s three appeals to 876/Coch/2023 are allowed and as many stay applications SA Nos. 218, 219 & 220/Coch/2023 are dismissed as rendered infructuous in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open court on this 12th September, 2024.
Sd/- Sd/- (Amarjit Singh) (Satbeer Singh Godara) Accountant Member Judicial Member Cochin ; Dated : 12th September, 2023. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT(A), Concerned. 4. The CIT Concerned. 5. The DR, ITAT, Cochin. 6. Guard File.
Asst. Registrar/ITAT, Cochin