Chittur Service Co-op. Bank Ltd Vs ITO (ITAT Cochin)
The Income Tax Appellate Tribunal (ITAT) Cochin has allowed the appeals of Chittur Service Co-op. Bank Ltd. for Assessment Years 2016-17 and 2017-18, ruling that its claim for deduction under Section 80P(2)(a)(i) of the Income Tax Act cannot be disallowed solely because it lends money to non-members. This decision overturns orders by the National Faceless Appeal Centre (CIT(A)) that had upheld the disallowance.
Chittur Service Co-op. Bank Ltd., a cooperative society registered under the Kerala State Co-operative Societies Act, 1969, had declared Nil income after claiming the Section 80P deduction. Initially, the Income Tax Officer (AO) denied the claim, asserting the appellant was not a cooperative society. This disallowance was confirmed by the CIT(A), relying on the Kerala High Court’s Full Bench decision in Mavilayi Service Co-operative Bank Ltd. v. CIT [2019] 414 ITR 67 (Ker) (FB).
In an earlier round of appeals, the ITAT had remanded the matter back to the AO, instructing an examination of whether the loans were for agricultural purposes. However, the AO again disallowed the Section 80P claim, and the CIT(A) confirmed this action, citing the appellant’s failure to substantiate the claim.
The ITAT, in its latest ruling, noted that the core issue was the entitlement to the Section 80P(2)(a)(i) deduction. It highlighted that the initial disallowance was based on the premise of lending to non-members, a position supported by the Kerala High Court’s Full Bench decision in Mavilayi Service Co-operative Bank Ltd. v. CIT.
