The Akathethara Service co-op Bank Ltd, Palakkad V. The ITO, Wd-2, Palakkad

CO 37/COCH/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7493 (ITAT-COCHIN)
• Duration Of Justice: 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 12-07-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Keywords: Competent authority
• Section: 80P; 37

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M C.O. NO. 3 6/ COCH/2019 (ARISING OUT OF I .T . A. NO .249/ COCH/ 2019) ASSESSMENT YEAR : 201 3 - 14 M/S. KANHIKULAM . SERVICE CO - OPERATIVE BANK LTD., KANHIKULAM POST, PALAKKAD - 678 596 . [PAN: AAAA K 3048B] VS. THE INCOME TAX OFFICER, WARD - 1, PALAKKAD. (ASSE SSEE - APPELLANT) (REVENUE - RESPONDENT) C.O. NO. 3 7/ COCH/2019 (ARISING OUT OF I .T.A. NO .252/ COCH/2019) ASSESSMENT YEAR : 201 0 - 11 M/S. AKATHETHARA SERVICE CO - OPERATIVE BANK LTD., NO.F - 1514, AKATHETHARA P.O., P ALAKKAD - 678 008. . [PAN: AA D A T 5044M] VS. THE INCOME TAX OFFICER, WARD - 2 , PALAKKAD. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) ASSESSEE BY NONE (ADJOURNMENT APPLICATION REJECTED) REVENUE BY SMT. A.S. BINDHU, SR. DR D ATE OF HEARING 2 5 /07/20 19 DATE OF PRONOUNCEMENT 25 / 07 /201 9 C.O. NO S . 3 6&37 /COCH/201 9 2 O R D E R PER CHANDRA POOJARI, AM: TH ESE CROSS OBJECTION FILED BY THE A SSESSES ARE DIRECTED AGAINST THE APPEALS OF THE REVENUE IN ITA NOS. 249 & 252/COCH/2019 AND PERTAIN TO THE ASSESSMENT YEAR S 2010 - 11 AND 2013 - 14. 2. AT THE TIME OF HEARING OF THIS CROSS OBJECTION, NONE APPEARED ON BEHALF OF TH E ASSESSEE , THOUGH THE LD. AR HAS FILED ADJOURNMENT APPLICATION DATED 22/07/2019. WHEREIN IT WAS STATED THAT HE WAS PRE - OCCUPIED WITH PROFESSIONAL WORK AND HE WANTED TO ADJOURN THE CASES TO 30 TH JULY, 2019 AS THERE WAS ONE MORE CASE OF HIS LISTED FOR HEAR ING ON THAT DATE. IN OUR OPINION, IT IS A COVERED MATTER BY THE ORDER OF THE TRIBUNAL AS WELL AS THE HIGH COURT. HENCE, WE ARE INCLINED TO REJECT THE ADJOURNMENT APPLICATION FILED BY THE ASSESSEE AND PROCEED TO DECIDE THE ISSUE EXPARTE AFTER HEARING THE LD. DR . 3 . THE ASSESSEE S HA VE RAISED THE FOLLOWING COMMON GROUNDS IN THEIR CROSS OBJECTION S : 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). THRISSUR IN ITA NO. 586/2016 - 17 DATED 02 - 01 - 2019 IS IN ACCORDANCE WITH LAW , FACTS, CIRCUMSTANCES OF T HE CASE AND NO INTERFERENCE IS CALLED FOR. 2. IT IS SUBMITTED THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CORRECTLY GRANTED THE CLAIM OF DEDUCTION OF RS. 1 , 72,82,270/ - U/S. 80P(2)(A)(I) ON THE BASIS OF LAW AS IT WAS ON THE DATE OF PASSING HIS OR DER AND CANNOT BE SAID TO BE AN ORDER UNSUSTAINABLE IN LAW. 3. BE THAT AS IT MAY, STILL THE DECISION IN PERI NT HALMANNA SERVICE CO - OPERATIVE BANK [(2014) 363 ITR 268 (KER)] RELIED ON BY THE APPELLANT MERELY GRANTED POWER C.O. NO S . 3 6&37 /COCH/201 9 3 TO THE ITO TO MAKE ENQUIRIES RELATE D TO THE CLASSIFICATION OF THE CO - OPERATIVE SOCIETY UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT 1969 AND ELIGIBILITY TO 80 P DEDUCTION WAS NOT EXPRESSLY DECIDED. 4. IT IS SUBMITTED THAT THE LEARNED CIT(A) FAILED TO CONSIDER THE GROUNDS 3 TO 10 AND RELIED S OLELY ON THE DECISION OF THE HON'BLE HIGH COURT OF KERALA IN CHIRAKKAL SERVICE CO - OPERATIVE BANK LTD [(2016) 384 ITR 490 (KER)]. THEREFORE, IT IS REQUESTED THAT THE HON'BLE ITAT MAY CONSIDER THE GROUNDS MENTIONED BELOW OR DIRECT THE CIT(A) TO CONSIDER THE SAME. 3. THE AO ACTED ILLEGALLY WHILE IGNORING THE SUBMISSION OF THE APPELLANT THAT THE SOCIETY FALLS UNDER THE DEFINITION OF CO - OPERATIVE CREDIT SOCIETY U/S 5 (CCII) OF THE BANKING REGULATION ACT 1949. 4 . IT IS SUBMITTED THAT THE APPELLANT IS NOT C ARRYING ON BANKING BUSINESS AND ITS PRINCIPAL OBJECT AND BUSINESS IS PROVIDING FINANCIAL ACCOMMODATION TO ITS MEMBERS AND HENCE CLEARLY ELIGIBLE FOR DEDUCTION U/S 80 P (2) (A) (I). A DETAILED NOTE SHALL BE SUBMITTED ON THIS POINT BEFORE THE FINAL HEARING OF THIS APPEAL. 5. IT IS SUBMITTED THAT THE APPELLANT SHALL NOT FALL UNDER THE DEFINITION OF 'PRIMARY COOPERATIVE BANK' AS PER BANKING REGULATION ACT 1949 SO AS TO DENY THE BENEFIT BY APPLYING PROVISIONS OF SECTION 80P (4). A DETAILED NOTE ON THIS POINT SHAL L BE SUBMITTED BEFORE THE HEARING OF THIS APPEAL. 6. IT IS SUBMITTED THAT WHENEVER A DISPUTE ARISES WHETHER A SOCIETY IS CARRYING ON BANKING BUSINESS OR NOT THE DECISION OF THE RBL SHALL BE FINAL. THE APPELLANT IS PLANNING TO MOVE THE RBI IN THIS REGARD AND HENCE IT IS REQUESTED THAT THE PROCEEDINGS BE STAYED TILL THE DISPUTE BETWEEN THE DEPARTMENT AND THE APPELLANT IS FINALLY SETTLED IN ACCORDANCE WITH THE LAW. 7. THE ORDER IS ILLEGAL SINCE MANY OF THE CONCLUSIONS MADE BY THE AO ARE AFTER THE CONCLUSIO N OF THE FINAL HEARING AND WERE NEVER PUT TO THE APPELLANT. 8. IT IS SUBMITTED THAT IF THE DEPARTMENT IS TREATING THE APPELLANT AS A COOPERATIVE BANK THEN ALL THE OTHER DEDUCTIONS AND RELIEFS PROVIDED TO THE SAID BANKS SHOULD ALSO BE MADE AVAILABLE TO THE APPELLANT 9. THE STATUS OF THE APPELLANT AS AOP AS FIXED BY THE ASSESSING OFFICER IS NOT CORRECT. IT IS HEREBY REQUESTED TO PASS THE ORDER CONSIDERING THE ABOVE GROUNDS WHICH WERE NOT ALREADY CONSIDERED. 5. FOR THESE AMONGST OTHER GROUNDS THAT MAY PER MITTED TO BE RAISED AND EVIDENCES ADDUCED AT THE TIME OF HEARING IT IS PRAYED THAT THE JUSTICE BE DONE TO THE RESPONDENT BY QUASHING OR MODIFYING THE IMPUGNED ORDER OF ASSESSMENT. C.O. NO S . 3 6&37 /COCH/201 9 4 6. THE RESPONDENT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 4 . WE HAVE HEARD THE LD. DR. COMING TO THE MERITS OF THE ISSUE, TH E ASSESSEE S FILED THE CROSS OBJECTION S ON 12 /07/2019. HOWEVER, BY THAT TIME , THE DEPARTMENT APPEAL S WERE HEARD ON 26/06 /2019 AND THE APPEAL S WERE DISPOSED OF BY THE TRIBUNAL IN ITA NO S . 249 & 252 /COCH/2019 VIDE ORDER DATED 08/07/2019 WHEREIN IT WAS HELD AS FOLLOWS: 9. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MATERIAL ON RECORD. THE LARGER BENCH OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE MAVILAYI SERVICE CO - OPERATIVE BANK LTD. (SUPRA) HELD THAT THE ASSESSING OFFICER HAS TO CONDUCT AN INQUIRY INTO THE FACTUAL SITUATION AS TO THE ACTIVITIES OF THE ASSESSEE SOCIETY TO DETERMINE THE ELIGIBILITY OF DEDUCTION U/S 80P OF THE I.T. ACT. IT WAS HEL D BY THE HONBLE HIGH COURT THAT THE ASSESSING OFFICER IS NOT BOUND BY THE REGISTRATION CERTIFICATE ISSUED BY THE REGISTRAR OF KERALA CO - OPERATIVE SOCIETY CLASSIFYING THE ASSESSEE - SOCIETY AS A CO - OPERATIVE SOCIETY. THE HONBLE HIGH COURT HELD THAT EACH ASS ESSMENT YEAR IS SEPARATE AND ELIGIBILITY SHALL BE VERIFIED BY THE ASSESSING OFFICER FOR EACH OF THE ASSESSMENT YEARS. THE FINDING OF THE LARGER BENCH OF THE HONBLE HIGH COURT READS AS FOLLOWS: - 33. IN VIEW OF THE LAW LAID DOWN BY THE APEX COURT IN CITIZ EN CO - OPERATIVE SOCIETY [397 ITR 1] IT CANNOT BE CONTENDED THAT, WHILE CONSIDERING THE CLAIM MADE BY AN ASSESSEE SOCIETY FOR DEDUCTION UNDER SECTION 80P OF THE IT ACT, AFTER THE INTRODUCTION OF SUB - SECTION (4) THEREOF, THE ASSESSING OFFICER HAS TO EXTEND T HE BENEFITS AVAILABLE, MERELY LOOKING AT THE CLASS OF THE SOCIETY AS PER THE CERTIFICATE OF REGISTRATION ISSUED UNDER THE CENTRAL OR STATE CO - OPERATIVE SOCIETIES ACT AND THE RULES MADE THEREUNDER. ON SUCH A CLAIM FOR DEDUCTION UNDER SECTION 80P OF THE IT A CT, THE ASSESSING OFFICER HAS TO CONDUCT AN ENQUIRY INTO THE FACTUAL SITUATION AS TO THE ACTIVITIES OF THE ASSESSEE SOCIETY AND ARRIVE AT A CONCLUSION WHETHER BENEFITS CAN BE EXTENDED OR NOT IN THE LIGHT OF THE PROVISIONS UNDER SUB - SECTION (4) OF SECTION 8 0P. 33.IN CHIRAKKAL [384 ITR 490] THE DIVISION BENCH HELD THAT THE APPELLANT SOCIETIES HAVING BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE KCS ACT, IT HAS NECESSARILY TO BE HELD C.O. NO S . 3 6&37 /COCH/201 9 5 THAT THE PRINCIPAL OBJECT OF SUCH SOCIETIES IS TO UNDERTAKE AGRICULTURAL CREDIT ACTIVITIES AND TO PROVIDE LOANS AND ADVANCES FOR AGRICULTURAL PURPOSES, THE RATE OF INTEREST ON SUCH LOANS AND ADVANCES TO BE AT THE RATE TO BE FIXED BY THE REGISTRAR OF CO - OPERATIVE SOCIETIES UNDER THE K CS ACT AND HAVING ITS AREA OF OPERATION CONFINED TO A VILLAGE, PANCHAYAT OR A MUNICIPALITY AND AS SUCH, THEY ARE ENTITLED FOR THE BENEFIT OF SUB - SECTION (4) OF SECTION 80P OF THE IT ACT TO EASE THEMSELVES OUT FROM THE COVERAGE OF SECTION 80P AND THAT, THE AUTHORITIES UNDER THE IT ACT CANNOT PROBE INTO ANY ISSUES OR SUCH MATTERS RELATING TO SUCH SOCIETIES AND THAT, PRIMARY AGRICULTURAL CREDIT SOCIETIES REGISTERED AS SUCH UNDER THE KCS ACT AND CLASSIFIED SO, UNDER THE ACT, INCLUDING THE APPELLANTS ARE ENTITLE D TO SUCH EXEMPTION. 34. IN CHIRAKKAL [384 ITR 490] THE DIVISION BENCH EXPRESSED A DIVERGENT OPINION, WITHOUT NOTICING THE LAW LAID DOWN IN ANTONY PATTUKULANGARA [2012 (3) KHC 726] AND PERINTHALMANNA [363 ITR 268]. MOREOVER, THE LAW LAID DOWN BY THE DIVIS ION BENCH IN CHIRAKKAL [384 ITR 490] IS NOT GOOD LAW, SINCE, IN VIEW OF THE LAW LAID DOWN BY THE APEX COURT IN CITIZEN CO - OPERATIVE SOCIETY [397 ITR 1], ON A CLAIM FOR DEDUCTION UNDER SECTION 80P OF THE INCOME TAX ACT, BY REASON OF SUB - SECTION (4) THEREOF, THE ASSESSING OFFICER HAS TO CONDUCT AN ENQUIRY INTO THE FACTUAL SITUATION AS TO THE ACTIVITIES OF THE ASSESSEE SOCIETY AND ARRIVE AT A CONCLUSION WHETHER BENEFITS CAN BE EXTENDED OR NOT IN THE LIGHT OF THE PROVISIONS UNDER SUB - SECTION (4) OF SECTION 80P OF THE IT ACT. IN VIEW OF THE LAW LAID DOWN BY THE APEX COURT IN CITIZEN CO - OPERATIVE SOCIETY [397 ITR 1] THE LAW LAID DOWN BY THE DIVISION BENCH PERINTHALMANNA [363 ITR 268] HAS TO BE AFFIRMED AND WE DO SO. 35.IN VIEW OF THE LAW LAID DOWN BY THE APEX COU RT IN ACE MULTI AXES SYSTEMS CASE (SUPRA), SINCE EACH ASSESSMENT YEAR IS A SEPARATE UNIT, THE INTENTION OF THE LEGISLATURE IS IN NO MANNER DEFEATED BY NOT ALLOWING DEDUCTION UNDER SECTION 80P OF THE IT ACT, BY REASON OF SUB - SECTION (4) THEREOF, IF THE ASS ESSEE SOCIETY CEASES TO BE THE SPECIFIED CLASS OF SOCIETIES FOR WHICH THE DEDUCTION IS PROVIDED, EVEN IF IT WAS ELIGIBLE IN THE INITIAL YEARS. 9.1 IN VIEW OF THE DICTUM LAID DOWN BY THE FULL BENCH OF THE HONBLE HIGH COURT, THE ISSUE OF DEDUCTION U/S 80P (2)(A)(I) IS RESTORED TO THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE ACTIVITIES OF THE ASSESSEES AND DETERMINE WHETHER THEIR ACTIVITIES ARE IN COMPLIANCE WITH THE ACTIVITIES OF A CO - OPERATIVE SOCIETY FUNCTIONING UNDER THE KERALA CO - OPERA TIVE SOCIETIES ACT, 1969 AND GRANT DEDUCTION U/S 80P(2) IN ACCORDANCE WITH LAW. IT IS ORDERED ACCORDINGLY. 10. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. C.O. NO S . 3 6&37 /COCH/201 9 6 5 . SINCE THE ISSUE RAISED BY THE ASSESSEE S IN THEIR CROSS OBJECTION S ARE SUPPORTIVE OF THE ORDER S OF THE CIT(A), IT DOES NOT REQUIRE SEPARATE ADJUDICATION AND THE APPEA LS OF THE REVENUE IN ITA NO S . 249 & 252 /COCH/2019 HA VE ALREADY BEEN REMITTED TO THE FILE OF THE ASSESSING OFFICER AS DISCUSSED ABOVE, THE CRO SS OBJECTION S FILED BY THE ASSESSEE IN C.O. NO S . 3 6 & 37 /COCH/2019 HA VE BECOME INFRUCTUOUS AND ARE DISMISSED AS SAME. 6 . IN THE RESULT, THE CROSS OBJECTION S O F THE ASSESSES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 5 TH JULY , 2019 SD/ - SD/ - (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 2 5 TH JULY, 2019 GJ COPY TO: 1 . M/S. KANHIKULAM SERVICE CO - OPERATIVE BANK LTD., KANHIKULAM POST, PALAKKAD - 678 596. 2 . M /S. AKATHETHARA SERVICE CO - OPERATIVE BANK LTD., NO.F - 1514, AKATHETHARA P.O., PALAKKAD - 678 008. 3. THE INCOME TAX OFFICER, WARD - 1, PALAKKAD. 4. THE INCOME TAX OFFICER, WARD - 2, PALAKKAD. 5. T HE COMMISSIONER OF INCOME - TAX (AP P EALS) , T HRISSUR. 6 . THE PR. COMMIS SIONER OF INCOME - TAX, T HRISSUR. 7 . D. R., I.T.A.T., COCHIN BENCH, COCHIN. 8 . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN C.O. NO S . 3 6&37 /COCH/201 9 7