ITA No.112/Coch/2024 : The Ernakulam Urban Co-operative Society Limited v. The Assistant Commissioner of Income-tax Ernakulam

Parties Involved

Facts Summary

The Ernakulam Urban Co-operative Society Limited, an assessee, filed an appeal against the disallowance of a deduction claim under section 80P(2)(a)(i) of the Income-tax Act, 1961. The claim was for interest income from deposits made in cooperative Banks, which the assessee argued should be eligible for tax deduction. The case was heard and decided ex parte as the appellant did not appear. The assessee's grievance was to reverse the action of the lower authorities that disallowed the deduction claim. The respondent argued that the interest income could not be derived from the assessee's regular credit facilities. The learned Senior DR quoted a case from the Karnataka High Court to support the disallowance. However, the Tribunal relied on a recent decision from the High Court of Kerala, which rejected the Revenue's identical stand and held that the interest income earned by the assessee does not come within the ambit of Section 80P(2)(a)(i) and permissible deduction of interest income is limited to Cooperative Societies/Banks registered under Kerala Cooperative Societies Act.…

Legal Issues

• 1. Whether the interest income from deposits made in cooperative Banks is eligible for tax deduction under section 80P(2)(a)(i) of the Income-tax Act, 1961?

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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