M/s. Ananthavoor Service co-op Bank Ltd, Malappuram V. The ITO, Tirur

CO 37/COCH/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2780 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 22-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 19-12-2016
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: S JRI JOJO
• Keywords: Competent authority
• Section: 263; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI ABRAHAM P. GEORGE, AM & GEORGE GEORGE K., JM I.T.A. NO S.4 4 0 - 4 43 /COCH/ 201 6 ASSESSMENT YEAR S : 2009 - 10 - 2012 - 13 THE INCOME TAX OFFICER, WARD - 1 , TIRUR. VS. M/S. ANANTHAVOOR CO - OPERATIVE BANK LTD., ANANTHAVOOR, P.O., TIRUR TALUK, DISTT. MALAPPURAM. [PAN: AADAA 0368F] ( REVENUE - APPELLANT) ( ASSESSEE - RESPONDENT) C.O. NOS.36 - 39/COCH/2016 (ARSG. OUT OF I.T.A. NOS.440-443/COCH/2016 ASSESSMENT YEARS : 2009 - 10 - 2012 - 13 M/S. ANANTHAVOOR CO - OPERATIVE BANK LTD., ANANTHAVOOR, P.O., TIRUR TALUK, DISTT. MALAPPURAM. [PAN: AADAA 0368F] VS. THE INCOME TAX OFFICER, WARD - 1, TIRUR. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) REVENUE BY SHRI A. DHANARAJ, SR. DR ASSESSEE BY S JRI JOJO, CA DATE OF HEARING 2 2 / 0 3 / 201 7 DATE OF PRONOUNCEMENT 22 / 0 3 /201 7 I.T.A. NOS.440-443/COCH/2016 & C .O. NOS.36-39/COCH/2016 2 O R D E R PER BENCH: THESE ARE APPEALS FILED BY THE REVENUE AND C ROSS OBJECTS FILED BY THE ASSESSEE AGAINST A CONSOLIDATED ORDER DATED 23/06/2 016 PASSED BY CIT(A)-III, KOCHI FOR THE IMPUGNED ASSESSMENT YEARS. 2. REVENUE IS AGGRIEVED BY THE ORDER OF CIT(A) WHICH HELD ASSESSEE TO BE ELIGIBLE FOR DEDUCTION U/S. 80P(2) (A)(I) OF THE IN COME TAX ACT, 1961 (IN SHORT THE ACT). LD. COUNSEL FOR THE REVENUE SUBMITTED THAT A SSESSEE DID NOT PURSUE ITS PRINCIPAL OBJECT WHICH WAS OF PROVIDING AGRICULTURA L CREDITS TO ITS MEMBERS. AS PER LD. DR, THE SOCIETY, THEREFORE, LOST ALL THE CH ARACTERISTICS OF A PRIMARY AGRICULTURAL CREDIT SOCIETY. RELYING ON THE JUDGME NT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PERITHALMANNA SERVICE CO- OPERATIVE BANK VS. ITO (363 ITR 268), LD. AR SUBMITTED THAT A FACTUAL ENQUIRY H AD TO BE CONDUCTED BEFORE CONCLUDING WHETHER ASSESSEE WAS CONDUCTING BUSINESS OF A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTUR AL AND RURAL DEVELOPMENT BANK. AS PER LD. DR, CIT(A) HAD WENT BY REGISTRATI ON CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY UNDER THE KERALA CO-OPERATIVE S OCIETIES ACT, 1969 AND GAVE UNDUE IMPORTANCE TO THE CLASSIFICATION GIVEN TO THE ASSESSEE IN THE SAID CERTIFICATE. ACCORDING TO LD. DR, CIT(A) HIMSELF FELL IN ERROR WHEN HE RELIED ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD. V. CIT (384 ITR 490). I.T.A. NOS.440-443/COCH/2016 & C .O. NOS.36-39/COCH/2016 3 3. PER CONTRA, LD. AR, IN SUPPORT OF THE ORDER OF CIT(A), SUBMITTED THAT RELIANCE PLACED BY THE LD. CIT(A) ON THE JUDGMENT OF HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD . V. CIT (SUPRA) WHILE GIVING RELIEF TO THE ASSESSEE WAS CORRECT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS. IT HAS NOT BEEN DISPUTED BY THE REVENUE THAT DURING THE COURSE OF O RIGINAL ASSESSMENT PROCEEDINGS, ASSESSEE HAD PRODUCED CERTIFICATE FROM THE COMPETENT AUTHORITY UNDER THE PROVISIONS OF KERALA CO-OPERATIVE SOCIETI ES ACT, 1969 WHICH CLASSIFIED IT AS A PRIMARY AGRICULTURAL CREDIT SOCIETY. ASSESSIN G OFFICER HELD THAT ASSESSEE WAS IN THE BUSINESS OF BANKING AND SECTION 80P(4) S TOOD ATTRACTED AND DISALLOWED THE CLAIM OF THE ASSESSEE U/S. 80P(2)(A) (I) OF THE ACT. ASSESSEE WAS SUCCESSFUL BEFORE THE CIT(A) SINCE, CIT(A), BY RELY ING ON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD. V. CIT (SUPRA) ACCEPTED THE CLAIM OF THE ASSESSEE U /S. 80P(2)(A)(I) OF THE ACT. RELEVANT PART OF THE JUDGMENT OF HONBLE JURISDICTI ONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD. V. CIT (SU PRA) IS REPRODUCED HEREUNDER: APPELLANT IN THESE DIFFERENT APPEALS ARE INDISPUTA BLY SOCIETIES REGISTERED UNDER THE KERALA CO-OPERATIVE SOCIETIES ACT, 1969 F OR SHORT, KCS ACT AND THE BYE-LAWS OF EACH OF THEM, AS MADE AVAILABLE TO THIS COURT AS PART OF THE PAPER BOOKS, CLEARLY SHOWS THAT THEY HAVE BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTH ORITY UNDER THE PROVISIONS OF THAT ACT. THE PARLIAMENT, HAVING DEF INED THE TERM CO- I.T.A. NOS.440-443/COCH/2016 & C .O. NOS.36-39/COCH/2016 4 OPERATIVE SOCIETY FOR THE PURPOSES OF THE BR ACT W ITH REFERENT TO, AMONG OTHER THINGS, THE REGISTRATION OF A SOCIETY UNDER A NY STATE LAW RELATING TO CO-OPERATIVE SOCIETIES FOR THE TIME BEING, IT CANNO T BUT BE TAKEN THAT THE PURPOSE OF THE SOCIETIES SO REGISTERED UNDER THE ST ATE LAW AND ITS OBJECTS HAVE TO BE UNDERSTOOD AS THOSE WHICH HAVE BEEN APPR OVED BY THE COMPETENT AUTHORITY UNDER STATE LAW. THIS, WE VISUA LIZE AS DUE RECIPROCATE LEGISLATURE EXERCISE BY THE STATE LAW. IN THIS VIE W OF THE MATTER, ALL THE APPELLANTS HAVING BEEN CLASSIFIED AS PRIMARY AGRICU LTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE KCS ACT, IT HAS N ECESSARILY TO BE HELD THAT THE PRINCIPAL OBJECT OF SUCH SOCIETIES IS TO U NDERTAKE AGRICULTURAL CREDIT ACTIVITIES AND TO PROVIDE LOANS AND ADVANCES FOR AGRICULTURAL PURPOSES, THE RATE OF INTEREST ON SUCH LOANS AND AD VANCES TO BE AT THE RATE FIXED BY THE REGISTRAR OF CO-OPERATIVE SOCIETI ES UNDER THE KCS ACT AND HAVING ITS AREA OF OPERATION CONFINED TO A VILLAGE, PANCHAYAT OR MUNICIPALITY. THIS IS THE CONSEQUENCE OF THE DEFIN ITION CLAUSE IN SECTION 2(OAA) OF THE KCS ACT. THE AUTHORITIES UNDER THE I T ACT CANNOT PROBE INTO ANY ISSUE OR SUCH MATTER RELATING TO SUCH APPLICANT S. THE POSITION OF LAW BEING AS ABOVE WITH REFERENCE T O THE STATUTORY PROVISIONS, THE APPELLANTS HAD SHOWN TO THE AUTHORI TIES AND THE TRIBUNAL THAT THEY ARE PRIMARY AGRICULTURAL CREDIT SOCIETIES IN TERMS OF CLAUSE(CCIV) OF SECTION 5 OF THE BR ACT, HAVING REGARD TO THE PR IMARY OBJECT OR PRINCIPAL BUSINESS OF EACH OF THE APPELLANTS. IT IS ALSO CLE AR FROM THE MATERIALS ON RECORD THAT THE BYE LAWS OF EACH OF THE APPELLANTS DO NOT PERMIT ADMISSION OF ANY OTHER CO-OPERATIVE SOCIETY AS MEMBER EXCEPT MAY BE, IN ACCORDANCE WITH THE PROVISO TO SUB-SECTION 2 OF SEC TION 5(CCIV) OF THE BR ACT. THE DIFFERENT ORDERS OF THE TRIBUNAL WHICH AR E IMPEACHED IN THESE APPEALS DO NOT CONTAIN ANY FINDING OF FACT TO THE E FFECT THAT THE BYE LAWS OF ANY OF THE APPELLANT OR ITS CLASSIFICATION BY TH E COMPETENT AUTHORITY UNDER THE KCS ACT IS ANYTHING DIFFERENT FROM WHAT W E HAVE STATED HEREIN ABOVE. FOR THIS REASON, IT CANNOT BUT BE HELD THAT THE APPELLANTS ARE ENTITLED TO EXEMPTION FROM THE PROVISIONS OF SECTIO N 80 P OF THE IT ACT BY VIRTUE OF SUB-SECTION 4 OF THAT SECTION. IN THIS V IEW OF THE MATTER, THE APPEALS SUCCEED. 5. ASSESSEE HAVING PRODUCED THE CERTIFICATE WHIC H CLEARLY INDICATED ITS NATURE AS A PRIMARY AGRICULTURAL CREDIT SOCIETY , IN OUR OPINION, SECTION 80P(4) COULD NOT HAVE BEEN INVOKED FOR DENYING THE CLAIM U/S. 80P(2) (A)(I) OF THE ACT. WE CANNOT FIND FAULT WITH THE ORDER OF THE CIT(A). AS FOR TH E JUDGMENT OF HONBLE I.T.A. NOS.440-443/COCH/2016 & C .O. NOS.36-39/COCH/2016 5 JURISDICTIONAL HIGH COURT IN THE CASE OF PERITHALMA NNA SERVICE CO-OPERATIVE BANK VS. CIT (SUPRA) RELIED ON BY LD. DR, THIS WAS PRONO UNCED ON 31 ST JANUARY, 2014 PRIOR TO THE JUDGMENT OF HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD. V. CIT (SUPRA) WHICH CAME ON 15 TH FEBRUARY, 2016. FURTHER THE SAID CASE DEALT WITH THE REVISION ARY POWERS OF THE CIT U/S. 263 OF THE ACT WHEN THE ASSESSING OFFICER HAD FAILED TO MAKE NECESSARY ENQUIRIES. UNDER SUCH CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 6. SINCE CROSS OBJECTIONS FILED BY THE ASSESSEE A RE SUPPORTIVE OF THE ORDER OF THE LD. CIT(A), THEY ARE INFRUCTUOUS. 7. IN THE RESULT, APPEALS OF THE REVENUE AS WELL AS CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 22 ND -03-2017. SD/- SD/- (GEORGE GEORGE K.) ( ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 22 ND MARCH, 2017 GJ COPY TO: 1. THE KARUVRARAKUNDU SERVICE CO-OPERATIVE BANK LTD ., KARUVARAKUNDU, THARISH, NILAMBUR TALUK, MALAPPURAM-676 523. 2. THE INCOME TAX OFFICER, WARD-2, TIRUR.. I.T.A. NOS.440-443/COCH/2016 & C .O. NOS.36-39/COCH/2016 6 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-III,KOCH I 4. THE PRINCIPAL COMMISSIONER OF INCOME-TAX, CALICU T.. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN