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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Sanjay Arora, AM & Shri Manomohan Das, JM
O R D E R Per Bench: This is a set of two Appeals by the Assessee, agitating part-confirmation of it’s assessments under section 143(3) of the Income-tax Act, 1961 (‘the Act’ hereinafter) for assessment years (AYs.) 2015-16 and 2016-17 by the National Faceless Appeal Centre (NFAC), vide its separate Orders of even date (02.01.2023). The appeals raising identical issues, were heard together, and are being disposed of per a common, consolidated order.
The only effective Ground, identically worded, raised per the instant appeals is Ground 2, as under; Gd. 1 being general in nature, warranting no adjudication: “The learned CIT(A) has erred in treating Rs.10,00,000 (Rs.15,00,000) as the interest received on investments in Treasury Small Savings and Rs.17,217 (Rs.17,217) as interest received on investments with other institutions as these figures are that of the investments itself and not interest. The interest earned on Treasury savings deposit was Rs.36,045(Rs.1,49,949) only.” [(*) figures in bracket are for the second year, i.e., AY 2016-2017] & 164/Coch/2023 (AYs. 2015-2016 & 2016-2017) Keezhallur SCB Ltd. v. ITO 3. The assessee, a society registered under the Kerala Co-operative Societies Act, 1969 as a primary agricultural credit society (PACS), claimed deduction for the entirety of it’s income for the relevant years u/s. 80P(1) r.w.s.80P(2). The same was disallowed in assessment following the decision in the case of The Citizen Co- operative Society Ltd. v. Asst. CIT 397 ITR 1 (SC), so that the assessee, extending the bulk of it’s loans to nominal members, was, as per the Assessing Officer (AO), hit by sec.80P(4), precluding deduction u/s. 80P. The same was though allowed in appeal, save to the extent of interest on investment in treasury savings and with other institutions, being covered neither u/s.80P(2)(a)(i) nor u/s. 80P(2)(d), relying on CIT v. Peroorkada SCB Ltd. [2022] 442 ITR 141 (Ker), by the first appellate authority, holding as under:- “8.10 In view of the above, respectfully following the latest decision of the Hon'ble jurisdictional High Court of Kerala in the cases of (1) CIT vs. Peroorkada Service Co-operative Bank; and (2) PCIT vs. Vilappil Service Co- op. Bank Ltd. (2022) 442 ITR 141, order dated 01.11.2021 (supra), I am of the considered opinion that, in the instant case, the assessee society, being a Co- operative Society / PACS, is entitled to claim interest received on fixed deposits made with the District Co-operative Banks and dividend on share capital as deduction u/s.80P(2)(d) of the Act. Accordingly, the AO is directed to allow deduction u/s 80P(2)(d) of the Act in respect of interest and dividend received from the Kannur District Co-operative Bank and other District/ State Co-operative Banks, if any. 8.11 However, it may be noted that the assessee is not entitled to claim deduction in respect of interest and dividend received from any other institutions, other than those registered as Co-operative Society / PACS under the provisions of the Kerala Co-operative Societies Act, 1969. Accordingly, I am of the considered opinion that interest received from investments made in Treasury Small Savings of Rs.10,00,000/- (Rs.15,00,000)and interest from investments in other institutions of Rs.17,217/- (Rs.17,217), aggregating to Rs.10,17,217/- (Rs.15,17,217), is not eligible for deduction either u/s.80P(2)(a)(i) or u/s.80P(2)(d) of the Act. As such, addition made by the AO to the extent of Rs.10,17,217/- (Rs.15,17,217) is sustained. Thus, the grounds of appeal raised by the assessee on the issue are treated as partly allowed.” [(*) figures in bracket are for the second year, i.e., AY 2016-2017]