Ita/7/2020 Of The Principal Commissioner Of Income Tax v. The Nadakkal Service Co-Operative Bank Ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI TUESDAY, THE 15 DAY OF MARCH 2022 / 24TH PHALGUNA, 1943 ITA NO. 7 OF 2020 AGAINST THE ORDER IN ITA 132/2019 OF I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/S: THE PRINCIPAL COMMISSIONER OF INCOME TAX THIRUVANANTHAPURAM BY ADV SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT RESPONDENT/S: M/S. THE NADAKKAL SERVICE CO-OPERATIVE BANK LTD KALLUVATHUKKAL P.O, KOLLAM 691 578 (PAN ) BY ADV SRI.C.A.JOJO THIS INCOME TAX APPEAL HAVING COME UP FOR HEARING ON 15.03.2022, ALONG WITH ITA.14/2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA Nos.7 & 14/2020 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI TUESDAY, THE 15 DAY OF MARCH 2022 / 24TH PHALGUNA, 1943 ITA NO. 14 OF 2020 AGAINST THE ORDER IN ITA 131/2019 OF I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT/S: THE PRINCIPAL COMMISSIONER OF INCOME TAX THIRUVANANTHAPURAM BY ADV SRI.CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT RESPONDENT/S: M/S. THE NADAKKAL SERVICE CO-OPERATIVE BANK LTD KALLUVATHUKKAL P.O, KOLLAM 691 578 (PAN ) BY ADV SRI.C.A.JOJO THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 15.03.2022, ALONG WITH ITA.7/2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA Nos.7 & 14/2020 J U D G M E N T [ITA No.7/2020 & 14/2020] S.V. Bhatti, J. The Principal Commissioner of Income Tax, Thiruvananthapuram/Revenue is the appellant. M/s. The Nadakkal Service Co-operative Bank Ltd/assessee is the respondent. The appeals are filed being aggrieved by the orders stated hereunder: ITA Nos.7 & 14/2020 -4- 2. The appeals raise the following substantial question of law: ITA 7/2020 “ Whether on the facts and in the circumstances of the case, the order of the ITAT is correct in not duly considering that the assessee had invested surplus funds like an ordinary investor and the interest on such deposits has to be taxed as "Income from other sources"?” ITA 14/2020 “Whether on the facts and in the circumstances of the case, the order of the ITAT is correct in not duly considering that the assessee had invested surplus funds like an ordinary investor and the interest on such deposits has to be taxed as "Income from other sources"?” The question deals with the income earned by way of interest from the investment made by the assessee of the surplus fund as an ordinary investor. Such income whether is entitled for deduction under Section 80P in its entirety or shall be ITA Nos.7 & 14/2020 -5- computed and taxed as income from other sources. 3. The counsel appearing for the parties bring to the notice of the Court the common judgment in I.T.A. No.323/2019 dated 1.11.2021 deciding a similar question as follows: “15. In ITA NO.142/2019 it has been held that the interest income earned by the Society comes with the category of income from other sources and Section 80P(2)(d) deals with the eligible deduction in this behalf. It has been held in the connected cases that the assessee is entitled to deduction of interest income earned from Co-operative Banks/Societies/ Federation registered under the Co-operative Societies Act and the income earned from Treasury is not included in Section 80P(2)(d) and is not entitled for deduction from computation of income. The Assessing Officer passes Effect Order on the lines indicated above.” 4. The view taken in I.T.A. No.323/2019 is followed. The questions are answered in favour of the Revenue and against the assessee. Having held so, we further hold that a sum of Rs.52,01,501/- is the interest income earned from the Treasury ITA Nos.7 & 14/2020 by the assessee in I.T.A. No.7/2020 and Rs.28,77,189/- is the interest income earned from the Treasury by the assessee in I.T.A. No.7/2020 4. The view taken in I.T.A. No.323/2019 is followed. The questions are answered in favour of the Revenue and against the assessee. Having held so, we further hold that a sum of Rs.52,01,501/- is the interest income earned from the Treasury ITA Nos.7 & 14/2020 by the assessee in I.T.A. No.7/2020 and Rs.28,77,189/- is the interest income earned from the Treasury by the assessee in I.T.A. No.7/2020 4.1 In view of the answers to the question considered in the appeals, we direct that a sum Rs.52,01,501/- is deleted from the deduction claimed by the assessee and added to the income of other sources in I.T.A. No.7/2020; and sum Rs.28,77,189/- is deleted from the deduction claimed by the assessee and added to the income of other sources in I.T.A. No.14/2020. The appeals are allowed to the extent indicated above. Sd/- S.V.BHATTI JUDGE Sd/- BASANT BALAJI JUDGE PETITIONER ANNEXURES ANNEXURE A ANNEXURE B ANNEXURE C APPENDIX OF ITA 14/2020 TRUE COPY OF THE ORDER U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 OF THE ASSESSING OFFICER DATD 12/12/2017 TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) TRIVANDRUM DATED 10/12/2018 TRUE COPY OF THE ORDER OF THE ITAT IN ITA NO. 131/COCH/2019, FOR THE ASST. YEAR 2013-14 DATED 17/05/2019 PETITIONER ANNEXURES ANNEXURE A ANNEXURE B ANNEXURE C APPENDIX OF ITA 7/2020 TRUE COPY OF THE ORDER U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT, 1961 OF THE ASSESSING OFFICER DATED 12/12/2017 TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS), TRIVANDRUM DATED 10/12/2018 TRUE COPY OF THE ORDER OF THE ITAT IN ITA NO. 132/COCH/2019, FOR THE ASST. YEAR 2014-15 DATED 17/05/2019