M/s.The chombal Service Co-op Bank Ltd, Kozhikkode vs The iTO, Wd-2(2), Kozhikoden

This case involves The Chombal Service Co-op Bank Ltd appealing against the Income Tax Officer's disallowance of a deduction under Section 80P of the Income Tax Act for the assessment year 2010-2011. Initially, the Commissioner of Income Tax (Appeals) allowed the deduction, following a High Court judgment. However, the CIT(A) later issued a rectification order under Section 154, disallowing the deduction based on a subsequent Full Bench judgment of the High Court.

IN THE INCOME TAX APPELLATE TRIBUNAL
COCHIN BENCH, COCHIN

Before Shri Chandra Poojari, AM & Shri George George K, JM

ITA No.89/Coch/2020 : Asst.Year 2010-2011

M/s. The Chombal Service Cooperative Bank Limited H.O.ChombalaChombala Post Vadakara – 673 308.[PAN : AAAAT6777E.
(Appellant) 

Vs.

The Income Tax Officer Ward -2(2) Kozhikode.
(Respondent)

Appellant by : --- None ---
Respondent by : Sri.Sudhanshu Shekhar Jha
Date of Hearing : 04.03.2020
Date of Pronouncement : 04.03.2020

O R D E R

Per George George K, JM :

This appeal at the instance of the assessee is directed against the order of the CIT(A), dated 21.11.2019 passed u/s. 154 r.w.s. 250 of the I.T.Act. The relevant assessment year is 2010-2011.

2. The brief facts of the case are as follow: The assessee is a co-operative society registered under the Kerala Co-operative Societies Act, 1969. For theassessment year under consideration, the return of income was filed after claiming deduction u/s 80P of the I.T.Act. The Assessing Officer passed order, disallowing the claim of deduction u/s 80P of the I.T.Act. The reasoning of the Assessing Officer to disallow the claim of deduction u/s 80P(2) of the I.T.Act was that the assessee was doing thebusiness of banking, and therefore, in view of insertion ofsection 80P(4) of the I.T.Act with effect from 01.04.2007, the assessee will not be entitled to the deduction u/s 80P(2) of the I.T.Act.

3. Aggrieved by the order of assessment denying the claim of deduction u/s 80P(2) of the I.T.Act, the assessee preferredappeal to the first appellate authority. The CIT(A) allowed the appeal by holding that the assessee was eligible for deductionu/s 80P of the I.T.Act. The interest income received from other banks and treasury also was allowed as deduction u/s 80P(2)(a)(i) of the I.T.Act. In allowing the appeal of the assessee, the CIT(A) followed the judgment of the Hon’ble jurisdictional High Court in the case of Chirakkal Service Cooperative Co-operative Bank Ltd. v. CIT [(2016) 384 ITR 490 (Ker.).

4. Subsequently, the CIT(A) issued notice u/s 154 of the I.T.Act proposing to rectify his order passed, in view of the subsequent judgment of the Full Bench of the Hon’ble jurisdictional High Court in the case of The Mavilayi Service Co-operative Bank Ltd. v. CIT [ITA No.97/2016 order dated 19th March, 2019]. The assessee objected to the issuance of notice. However, the CIT(A) rejected the objections raised by the assessee and passed order u/s 154 of the I.T.Act, disallowing the claim of the assessee u/s 80P(2) of the I.T.Act.

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