Kerala Co-op Bank Secures Tax Win: ITAT allows ₹16.5 Lakh Deduction u/s 80P [Read Order]

The Income Tax Appellate Tribunal (ITAT), Cochin bench, has ruled in favor of the appellant a Co-operative Bank, allowing a deduction of ₹16.48 lakh under Section 80P of the Income Tax Act, 1961. The decision overturns the earlier denial of the claim by tax authorities, marking a significant relief for the cooperative bank.

Kalliad Service Co-operative Bank, registered under the Kerala Co-operative Societies Act, provides financial assistance to its members for agricultural purposes. For the assessment year 2017-18, the bank filed its return declaring nil income after claiming the deduction under Section 80P. However, the Assessing Officer (AO) rejected the claim, citing Section 80P(4), and assessed the income at ₹16.48 lakh. The bank appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], which upheld the AO’s order, prompting the bank to approach the ITAT.

During the hearing, no representative appeared for the bank despite notice, leading the tribunal to proceed based on available records. The ITAT examined the case and found that the issue was already settled by the Supreme Court in the Mavilayi Service Co-operative Bank Ltd. case (2021). In that ruling, the apex court clarified the eligibility of cooperative societies for deductions under Section 80P, particularly those engaged in providing credit facilities to members.

Following the Supreme Court’s precedent, the ITAT directed the AO to allow the bank’s deduction claim. The tribunal emphasized that the denial of the deduction was unjustified, as the bank’s activities aligned with the provisions of Section 80P. The ruling brings clarity to similar disputes faced by cooperative societies, ensuring they receive the tax benefits intended by the law.

Single Member Bench of Accountant Member Inturi Rama Rao pronounced the order, allowing the bank’s appeal and setting aside the earlier decisions of the AO and CIT(A). The decision underscores the importance of adhering to settled legal principles and provides a clear directive for tax authorities in such cases.

The ITAT’s ruling is a significant win for Kalliad Service Co-operative Bank and reinforces the applicability of Section 80P deductions for cooperative societies engaged in agricultural credit services. The order ensures that such institutions are not unfairly taxed on income meant to support their member-driven financial activities.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates