Nallepilly Service Co-op. Bank Ltd. Vs ITO (ITAT Cochin)
In a significant ruling for cooperative banks, the Income Tax Appellate Tribunal (ITAT) in Cochin has quashed a tax demand against the Nallepilly Service Co-operative Bank Ltd., affirming that a primary agricultural credit society is entitled to a tax deduction on interest income earned from a District Co-operative Bank and the Treasury. The decision centered on the interpretation of Section 80P of the Income Tax Act, 1961, which provides for deductions for co-operative societies.
The case originated from the Assessment Year (AY) 2020-21, where the assessee, Nallepilly Service Co-operative Bank Ltd., a primary agricultural credit co-operative society, had filed its income tax return claiming a deduction of Rs. 51,48,484 under Section 80P. The Income Tax Officer (ITO) denied a portion of this deduction, specifically the interest income of Rs. 43,08,485 received from the District Co-operative Bank, arguing that such income was not eligible for deduction under Section 80P. This position was upheld by the National Faceless Appeal Centre (NFAC).
The ITAT, in its review, noted a delay of 27 days in the filing of the appeal by the assessee, which it condoned after the appellant cited procedural delays in obtaining permission from higher authorities. The Tribunal then proceeded to decide the case based on a precedent set by the Kerala High Court.
