M/s. Kozhuvanal Service Co-op Bank Ltd, Kottayam V. ITO, Kottayam

CO 16/COCH/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8909 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 08-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: PA JOSEPH

Judgement Text

1 ITA NO. 344 & 345/COCH/2013 CO 15 & 16/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 344 & 345/COCH/2013 (ASSESSMENT YEARS 2008-09 & 2009-10) THE ITO, WD.2 VS THE KOZHUVANAL SERVICE CO-OP KOTTAYAM BANK LTD, NO.213, W/VII/9 PULIYANUR, KOZHUVANAL PO MEENACHI, KOTTAYAM PAN : AABAT3141P (APPELLANT) (RESPONDENT) C.O NOS 15 & 16/COCH/2013 (ARISING OUT OF I.T.A NO. 344 & 345/COCH/2013) (ASSESSMENT YEARS 2008-09 & 2009-10) THE KOZHUVANAL SERVICE CO-OP BANK LTD VS THE ITO, W D.2 PULIYANUR, KOZHUVANAL PO KOTTAYAM (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI M ANIL KUMAR ASSESSEE BY : SHRI PA JOSEPH DATE OF HEARING : 04-09-2013 DATE OF PRONOUNCEMENT : 13-09-2013 O R D E R PER N.R.S. GANESAN (JM) THE REVENUE HAS FILED THE PRESENT APPEALS AGAINST THE COMMON ORDER PASSED BY THE CIT(A)-IV, KOCHI DATED 25-03-20 13 FOR THE 2 ITA NO. 344 & 345/COCH/2013 CO 15 & 16/COCH/2013 ASSESSMENT YEARS 2008-09 AND 2009-10. THE ASSESSEE HAS FILED THE CROSS OBJECTIONS TO SUPPORT THE ORDER OF THE CIT(A) FOR BOTH THE ASSESSMENT YEARS. THEREFORE, WE HEARD THE APPEALS AND THE CRO SS OBJECTIONS TOGETHER AND DISPOSE OF THE SAME BY THIS COMMON ORDER. 2. SHRI M ANIL KUMAR, THE LD.DR SUBMITTED THAT THE ASSESSEE BANK CLAIMED BEFORE THE ASSESSING OFFICER THAT THEY ARE ENGAGED IN BANKING AND TRADING ACTIVITIES. ACCORDING TO THE LD.DR, ONCE T HE ASSESSEE CLAIMS THAT THEY ARE ENGAGED IN BANKING ACTIVITY, THEN THEY ARE NOT ENTITLED FOR EXEMPTION U/S 80P IN VIEW OF SECTION 80P(4) OF THE ACT. APART FROM THAT THE LD.DR SUBMITTED THAT THERE IS NO MATERIAL AVAILABLE ON RECORD TO SHOW THAT THE ASSESSEE HAD TRANSACTION ONLY WITH MEMBERS OF T HE CO-OPERATIVE SOCIETY, WHO ARE AGRICULTURISTS. THERE IS ALSO NO MATERIAL AVAILABLE ON RECORD TO SUGGEST THAT THE MANURE SAID TO BE SOLD B Y THE ASSESSEE WAS ONLY TO ITS MEMBERS. IN THE ABSENCE OF ANY MATERIAL THAT THE TRANSACTION OF THE ASSESSEE WAS RESTRICTED ONLY TO ITS MEMBERS, AC CORDING TO THE LD.DR, THE ASSESSEE IS NOT ENTITLED FOR EXEMPTION SU/S 80P OF THE ACT. THE LD.DR SUBMITTED THAT THE ASSESSEE HAS GRANTED LOAN NOT ON LY TO AGRICULTURISTS BUT ALSO TO OTHERS. REFERRING TO THE ASSESSMENT ORDER, MORE PARTICULARLY, PAGE 4, THE LD.DR SUBMITTED THAT THE ASSESSEE HAS ARRANG ED HIRE PURCHASE LOAN, MEDIUM TERM LOAN, DEMAND LOAN, GOLD LOAN, ETC. APAR T FROM KISAN CREDIT 3 ITA NO. 344 & 345/COCH/2013 CO 15 & 16/COCH/2013 CARD LOAN. EXCEPT FOR KISAN CREDIT CARD LOAN, ALL OTHER LOANS WERE FOR NON AGRICULTURAL PURPOSE. THEREFORE, ACCORDING TO THE LD.DR, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASS ESSEE. THE CIT(A) WITHOUT VERIFYING THE FACTS OF THE CASE ALLOWED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THE UNREPORTED JUDGMENT OF THE KERALA HIGH COURT IN THE CASE OF ELAMGULAM SERVICE CO-OPERATIVE BANK LTD , NO.357 6 IN W.P. NO.2363 OF 2006 DATED 13-02-2007. 3. ON THE CONTRARY, SHRI P.A. JOSEPH, THE LD.REPRES ENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE SOCIETY WAS RE GISTERED AS PRIMARY AGRICULTURAL SOCIETY AND ENGAGED ITSELF IN BANKING BUSINESS APART FROM TRADING IN MANURE. ACCORDING TO THE LD.REPRESENTAT IVE, ONLY THE AGRICULTURISTS ARE THE MEMBERS OF THE SOCIETY. REF ERRING TO THE BANKING REGULATION ACT, THE LD.REPRESENTATIVE SUBMITTED THA T PRIMARY AGRICULTURAL SOCIETY MEANS A CO-OPERATIVE SOCIETY, WHOSE PRINCIP AL BUSINESS / OBJECT IS TO PROVIDE FINANCIAL ASSISTANCE TO ITS MEMBERS FOR AGRICULTURAL PURPOSE. IN THIS CASE, ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSEE IS PROVIDING FINANCIAL ASSISTANCE ONLY FOR AGRICULTURAL PURPOSE TO ITS MEMBERS. ON A QUERY FROM THE BENCH WHETHER ANY FINANCIAL ASSISTAN CE WAS GIVEN TO A NON AGRICULTURIST, THE LD.REPRESENTATIVE SUBMITTED THAT NO ADVANCE WAS MADE TO NON AGRICULTURISTS. ACCORDING TO THE LD.REPRESENTA TIVE, ALL THE MEMBERS OF 4 ITA NO. 344 & 345/COCH/2013 CO 15 & 16/COCH/2013 THE SOCIETY ARE AGRICULTURISTS AND THE LOAN WAS ADV ANCED ONLY FOR AGRICULTURAL PURPOSE. HOWEVER, THE LD.REPRESENTATI VE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE COULD NOT PRODUCE ANY M ATERIAL BEFORE THIS TRIBUNAL TO SUPPORT THIS FACTUAL ASPECT. THE LD.RE PRESENTATIVE FURTHER SUBMITTED THAT HE KNEW THE FACTS OF THE CASE SINCE HE IS ONE OF THE DIRECTORS OF THE ASSESSEE SOCIETY. APART FROM THE ASSESSEE SOCIETY, THE LD.REPRESENTATIVE FOR THE ASSESSEE FURTHER CLAIMED THAT HE IS ALSO A DIRECTOR IN OTHER TWO CO-OPERATIVE BANKS. THEREFORE, THE L D.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT AS PER HIS KNOWLEDGE, THE A SSESSEE SOCIETY IS ADVANCING LOANS ONLY TO THE AGRICULTURISTS FOR AGRI CULTURAL PURPOSE. REFERRING TO THE ASSESSMENT ORDER, MORE PARTICULARL Y PAGE 4, THE LD.REPRESENTATIVE SUBMITTED THAT THE GOLD LOAN, DEM AND LOAN, HIRE PURCHASE LOAN, MEDIUM TERM LOAN, ETC. ARE ALL GIVEN ONLY TO AGRICULTURISTS FOR AGRICULTURAL PURPOSE. THE ASSESSING OFFICER, WITHO UT ANY REASON, HAS TAKEN THE KISAN CREDIT CARD LOAN ALONE SINCE THE WORD KI SAN IS MENTIONED IN THE SCHEME OF THE LOAN. SINCE THE WORD KISAN IS ABSE NT IN THE CASE OF OTHER LOANS, THE ASSESSING OFFICER PRESUMED THAT THE LOAN WAS NOT FOR AGRICULTURAL PURPOSE. ACCORDING TO THE LD.REPRESENTATIVE, UNDER THE CO-OPERATIVE SOCIETIES LEGISLATION, THE SOCIETY COULD TRANSACT ONLY WITH MEMBERS AND NOT WITH A NON MEMBER. ACCORDING TO THE LD.REPRESENTAT IVE, ONLY AN AGRICULTURIST CAN BECOME MEMBER IN THE PRIMARY AGRI CULTURAL SOCIETY. 5 ITA NO. 344 & 345/COCH/2013 CO 15 & 16/COCH/2013 THEREFORE, THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THE JUDGMENT OF THE KERALA HIGH COURT IN E LAMGULAM SERVICE CO- OPERATIVE BANK LTD (SUPRA). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE ASSESSING OFFICER FOUND THAT THERE IS NO EVIDENCE TO INDICATE THAT THE SALES WERE MADE ONLY TO MEMBERS OF THE SOCIETY. HOWEVER, THE ASSESSEE CLAIMS THAT ALL THE TRANSACTIONS WERE MADE ONLY WITH THE MEMBERS OF THE SOCIETY, WHO ARE AGRICULTURISTS. HOWEVER, NO MATERIAL IS FILED BEFORE THIS TRIBUNAL FOR VERIFICATION. WHEN THE ASSESSING OFFICER, AFTER VERIFYING THE SALES RECEIP T SAYS THAT NO EVIDENCE IS AVAILABLE, HE OUGHT TO HAVE BROUGHT ON RECORD THE N AMES OF THE INDIVIDUAL PERSONS WITH WHOM THE ASSESSEE HAD SUCH TRANSACTION S. UNFORTUNATELY, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD THE NAMES OF THE INDIVIDUAL PERSONS, WHO ARE NON MEMBERS AND TRANSACTED WITH TH E ASSESSEE SOCIETY. THEREFORE, THIS TRIBUNAL IS UNABLE TO FIND OUT WHET HER THE TRANSACTIONS DONE BY THE ASSESSEE WERE ONLY WITH THE MEMBERS OR THE A SSESSEE ALSO HAD TRANSACTIONS WITH NON MEMBERS. THIS FACT NEEDS VER IFICATION AT THE LEVEL OF THE ASSESSING OFFICER. MOREOVER, THOUGH THE ASSESS EE HAD SEVERAL SCHEMES OF LOANS, THE ASSESSING OFFICER HAS TAKEN O NLY KISAN CREDIT CARD 6 ITA NO. 344 & 345/COCH/2013 CO 15 & 16/COCH/2013 LOAN SINCE THE WORD KISAN IS INDICATED IN THE SCH EME OF THE LOAN. IT IS TO BE REMEMBERED THAT WHEN THE LOAN WAS GIVEN TO AN AG RICULTURIST ON PLEDGE OF GOLD JEWELLERY FOR THE PURPOSE OF AGRICULTURE, T HAT LOAN HAS TO BE TREATED AS AGRICULTURAL LOAN EVEN THOUGH THE LOAN WAS SANCT IONED ON PLEDGE OF GOLD JEWELLERY. IN THE ABSENCE OF ANY MATERIAL TO SUGGE ST THAT THE TRANSACTION WAS MADE WITH AGRICULTURISTS, WHO ARE MEMBERS, THIS TRIBUNAL IS UNABLE TO EXPRESS ANY OPINION WITH REGARD TO THE NATURE OF LO AN ADVANCED BY THE ASSESSEE. THESE ARE ALL FACTUAL ASPECTS WHICH HAVE TO BE VERIFIED AND BROUGHT ON RECORD BY THE ASSESSING OFFICER. THEREF ORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE STATUS OF THE INDIV IDUAL MEMBERS OF THE SOCIETY NEEDS TO BE EXAMINED AND THE ASSESSING OFFI CER HAS TO SPECIFICALLY BRING ON RECORD THE DETAILS OF TRANSACTIONS ENTERED BY THE ASSESSEE WITH NON MEMBERS. EVEN IN RESPECT OF TRANSACTIONS ENTER ED WITH THE MEMBERS, THE ASSESSING OFFICER HAS TO SPECIFICALLY BRING ON RECORD THE NAMES OF THE PERSONS, WHO ARE NON AGRICULTURISTS. SINCE THIS MA TTER NEEDS EXAMINATION AT THE LEVEL OF THE ASSESSING OFFICER, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE REMANDED BACK T O THE FILE OF THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSUE OF EXEMPTION U/S 80P IS REMANDE D BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE ISSUE AFRESH AND BRING ON RECORD THE NATURE OF TRANSACTIO NS ENTERED INTO BY THE 7 ITA NO. 344 & 345/COCH/2013 CO 15 & 16/COCH/2013 ASSESSEE WITH MEMBERS AS WELL AS NON MEMBERS. THE ASSESSING OFFICER SHALL ALSO BRING ON RECORD AS TO WHETHER ANY NON AG RICULTURIST WAS MEMBER OF THE ASSESSEE SOCIETY. IF SO, THE TRANSACTIONS O F THE SOCIETY WITH NON AGRICULTURISTS, WHO ARE MEMBERS OF THE SOCIETY SHAL L ALSO BE BROUGHT ON RECORD SPECIFICALLY. THE ASSESSING OFFICER, AFTER DETAILED EXAMINATION ON THESE LINES SHALL DECIDE THE ISSUE AFRESH IN ACCORD ANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. THE CROSS OBJECTIONS ARE FILED ONLY TO SUPPORT T HE ORDERS OF CIT(A), THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT TO SUPPORT THE ORDERS OF THE CIT(A) THE CROSS OBJECTIONS ARE NOT M AINTAINABLE. THIS TRIBUNAL ALSO IS OF THE CONSIDERED OPINION THAT THE ASSESSEE IS ENTITLED TO SUPPORT THE ORDER OF THE CIT(A) EVEN WITHOUT FILING THE CROSS OBJECTION. THEREFORE, THE CROSS OBJECTIONS FILED BY THE ASSESS EE ARE DISMISSED AS NOT MAINTAINABLE. 6. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH SEPTEMBER, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 13 TH SEPTEMBER, 2013 PK/- 8 ITA NO. 344 & 345/COCH/2013 CO 15 & 16/COCH/2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH