The Elapulli Service Co-op Bank Ltd, Palakkad V. The ITO, Wd-2, Palakkad

CO 81/COCH/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0971 (ITAT-COCHIN)
• Duration Of Justice: 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 26-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Keywords: Question of law; Competent authority
• Section: 143(3); 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI, AM & GEORGE GEORGE K., J M I .T . A. NO. 471 / COCH/20 1 8 ASSESSMENT YEAR : 20 1 4 - 15 THE INCOME TAX OFFICER, WARD - 2 , PALAKKAD . VS. M / S . ELAPULLY S ERVICE CO - OPERATIVE BANK LTD . , ELAPULLY , PALAKKAD - 678 622 . [ PA N : AA D A T 5 6 9 4 D ] (REVENUE - APPELLANT) (ASSESSEE - RESPONDENT) C.O. NO. 81 /COCH/2018 (ARSG. OUT OF I .T.A. NO. 471/ COCH/2018) ASSESSMENT YEAR : 2014 - 15 M / S . ELAPULLY SERVICE CO - OPERATIVE BANK LTD . , ELAPULLY , PALAKKAD - 678 622 . [ PAN : AADAT 5694 D ] VS. THE INCOME TAX OFFICER, WARD - 2, PA LAKKAD. (ASSESSEE - APPELLANT) (REVENUE - RESPONDENT) REVENUE BY S MT . A.S. BINDHU, DR ASSESSEE BY NONE DATE OF HEARING 2 8 / 11 /2018 DATE OF PRONOUNCEMENT 2 8 / 11/20 18 ITA NO. 471 / COCH/201 8 & CO NO. 81 /COCH/2018 2 O R D E R PER GEORGE GEORGE K. , JUDICIAL MEMBER: THIS APPEAL AT THE INSTANCE OF THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) , THRISSUR DATED 19/07/ 2018. THE RELEVANT ASSESSMENT YEAR IS ASSESSMENT YEAR 201 4 - 15 . 2. IN THE REVENUES APPEAL, THOUGH AS MANY AS EIGHT GROUNDS ARE RAISED, ALL THE GROUNDS RELATE TO THE ISSUE WHETHER THE CIT(A) WAS JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO GRANT DEDUCTION U/S. 80P (2)(A)(I) OF THE I.T. ACT TO THE ASSESSEE - SOCIETY . 3. BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIE S ACT, 1969. FOR THE ASSESSMENT YEAR 201 4 - 15 , THE ASSESSEE HAD FILED RETURN OF INCOME ON 1 4/ 07 /201 5 , DECLARING NIL INCOME AFTER CLAIMING D EDUCTION AMOUNTING TO RS .2,25,02,320/ - U/S. 80P OF THE I.T. ACT. THE ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED V IDE ORDER DATED 2 0 / 12 /201 6. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER DID NOT GRANT DEDUCTION U/S. 80P(2) OF THE I.T. ACT . THE REASONING OF THE ASSESSING OFFICER TO DISALLOW THE CLAIM OF DEDUCTION U/S. 80P OF THE ACT WAS THAT THE ASSESSEE WAS PRIMAR ILY ENGAGED IN THE BUSINESS OF BANKING AND BY VIRTUE OF INSERTION OF SUB - SEC TION (4) ITA NO. 471 / COCH/201 8 & CO NO. 81 /COCH/2018 3 TO SECTION 80P OF THE I.T. ACT WITH EFFECT FROM 1/4/2007, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S. 80P(2) OF THE ACT. 4. AGGRIEVED BY THE DENIAL OF THE BENEFIT O F DEDUCTION U/S. 80P(2) OF THE ACT , THE ASSESSEE PREFERRED A PPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A), FOLLOWING THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVI CE CO - OPERATIVE SOCIETY (384 ITR 490) HELD THAT THE A SSESSEE IS ENTITLED TO DEDUCTION U/S. 80P (2) OF THE I.T. ACT AND DIRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S. 80P OF THE ACT . 5 . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. THE LD. DR RELIE D ON THE GROUNDS RAISED. NONE WAS PRESENT ON BEHALF OF THE ASSESSEE. HOWEVER, WE PROCEEDED TO DISPOSE OF THE MATTER ON MERITS. 6 . WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THE ASSESSEE IS A PRIMARY AGRICULTURAL CR EDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT, 1969. THE HONBLE HIGH COURT OF KERALA IN THE CASE OF CHIRAK KAL SERVICE CO - OP BANK LTD. (SUPRA) HAD HELD THAT A PRIMARY AGRICULTURAL CREDIT SOCIETY, REGISTERED UNDER THE KERALA COOPERAT IVE SOCIETIES ACT, 1969 IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S. 80P(2). THE HONBLE HIGH COURT WAS CONSIDERING THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: ITA NO. 471 / COCH/201 8 & CO NO. 81 /COCH/2018 4 A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION, THE TRIBUNAL IS CORRECT IN LAW IN DECIDING AGAINST THE ASSESSEE, THE ISSUE REGARDING ENTITLEMENT FOR EXEMPTION UNDER SECTION 80P, IGNORING THE FACT THAT THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY? 6 .1 IN CONSIDERING THE ABOVE QUESTION OF LAW, THE HONBL E HIGH COURT RENDERED THE FOLLOWING FINDINGS: 15. APPELLANTS IN THESE DIFFERENT APPEALS ARE INDISPUTABLY SOCIETIES REGISTERED UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969, FOR S H ORT, KCS ACT AND THE BYE - LAWS OF EACH OF THEM, AS MADE AVAILABLE TO THI S COURT AS PART OF THE PAPER BOOKS, CLEARLY SHOW THAT THEY HAVE BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE PROVISIONS OF THAT ACT. THE PARLIAMENT, HAVING DEFINED THE TERM 'CO - OPERATIVE SOCIETY' FOR THE PUR POSES OF THE BR ACT WITH REFERENCE TO, AMONG OTHER THINGS, THE REGISTRATION OF A SOCIETY U N DER ANY STATE LAW RELATING TO CO - OPERATIVE SOCIETIES FOR THE TIME BEING; IT CANNOT BUT BE TAKEN THAT THE PURPOSE OF THE SOCIETIES SO REGISTERED UNDER THE STATE LAW A ND ITS OBJECTS HAVE TO BE UNDERSTOOD AS THOSE WHICH HAVE BEEN APPROVED BY THE COMPETENT AUTHORITY UNDER SUCH STATE LAW. THIS, WE VISUALISE AS DUE RECIPROCATIVE LEGISLATIVE EXERCISE BY THE PARLIAMENT RECOGN I SING THE PREDOMINANCE OF DECISIONS RENDERED UNDER THE RELEVANT STATE LAW. IN TH I S VIEW OF THE MATTER, ALL THE APPELLANTS HAV I NG BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CRED I T SOC I ET I ES B Y THE COMPETENT AUTHOR I TY UNDE R TH E KCS ACT , I T HAS NECESSAR IL Y TO BE HELD THAT THE PRINCIPAL OBJECT OF SUCH SOCIETIES I S TO UNDERTAKE AGR I CULTURAL 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 FIXED BY THE REGISTRAR OF CO - OPERATIVE SOCIETIES UNDER THE KCS ACT AND HAV I NG I TS AREA OF OPERATION CONFINED TO A VILLAGE, PANCHAYAT OR A MUNICIPALITY. THIS IS THE CONSEQUENCE OF THE DEFINITION CLAUSE IN SECTION 2(OAA) OF THE KCS ACT. THE AUTHORITIES UNDER THE IT ACT CANNOT PROBE INTO ANY ISSUE OR SUCH MATTER RELATING TO SUCH APPLICANTS . 16. THE POSITION OF 1AW BEING AS ABOVE WITH REFERENCE TO THE STATUTORY PROVISIONS, THE APPELLANTS HAD SHOWN TO THE AUTHORITIES AND THE TRIBUNAL THAT THEY ARE PRIMARY AGRICULTURA L CREDIT SOCIETIES IN TERMS OF CLAUSE (CCIV) OF SECTION 5 OF THE BR ACT, HA VING REGARD TO THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF EACH OF THE APPELLANTS. IT IS ALSO CLEAR FROM THE MATERIALS ON ITA NO. 471 / COCH/201 8 & CO NO. 81 /COCH/2018 5 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 - CLAUSE 2 OF SECTION 5(CCIV) OF THE BR ACT. THE DIFFERENT ORDERS OF THE TRIBUNAL WHICH ARE IMPEACHED IN THESE APPEALS DO NOT CONTAIN ANY FINDING OF FACT TO THE EFFECT THAT THE BYE - 1AWS OF ANY OF THE APPELLANT OR ITS C LASS I FICATION BY THE COMPETENT AUTHORITY UNDER THE KCS ACT I S ANYTHING DIFFERENT FROM WHAT WE HAVE STATED HEREIN ABOVE. FOR THIS REASON, IT CANNOT BUT BE HELD THAT THE APPELLANTS ARE ENTITLED TO EXEMPTION FROM THE PROVISIONS OF SECTION 80P OF THE IT ACT BY VIRTUE OF SUB - SECTION 4 OF THAT SECT; ON. IN THIS VIEW OF THE MATTER, THE APPEALS SUCCEED. 17. IN THE LIGHT OF THE AFORESAID, WE ANSWER SUBSTANTIA1 QUESTION 'A' IN FAVOUR OF THE APPELLANTS AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE RE GARDING THE ENTITLEMENT OF EXEMPTION UNDER SECTION 80P AGAINST THE APPELLANTS. WE HOLD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETIES, REGISTERED AS SUCH UNDER THE KCS ACT; AND CLASSIFIED SO, UNDER THAT ACT, INCLUDING THE APPELLANTS ARE ENTITLED TO SUCH EX EMPTION. 6 .2 IN VIEW OF THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO - OP BANK LTD. (SUPRA), WE HOLD THAT THE ASSESSEE - SOCIETY IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S. 80P(2 ) OF THE ACT. IT IS ORDERED ACCORDINGLY. C.O. NO.81 /COCH/2018 7. THE C ROSS OBJECTION RAISED BY THE ASSESSEE IS ONLY SUPPORTIVE OF THE ORDER OF THE CIT(A). SINCE WE HAVE DISMISSED THE REVENUES APPEAL, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND THE SAME IS DISMISSED AS INFRUCTUOUS. IT IS ORDERED ACCORDINGLY. ITA NO. 471 / COCH/201 8 & CO NO. 81 /COCH/2018 6 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION AT THE INSTANCE OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER , 2018 SD/ - SD/ - ( CHANDRA POOJARI ) ( GEORGE GEORGE K . ) ACCOUNTANT MEMBE R JUDICIAL MEMBER PLACE: KOCHI DATED: 2 8 TH NOVEMBER , 2018 GJ COPY TO: 1 . M / S . ELAPULLI SERVICE C O - OPERATIVE BANK LTD . , NO . 4246 , VAKATHANAM P . O . , CHANGANACHERRY , KOTTAYAM - 686 583 . 2. THE INCOME T AX OFFICER, WARD - 2 , PALAKKAD. 3. THE COMMISSIONER OF INCOME - TAX (AP P EALS) , THRISSUR. 4. THE PR. COMMISSIONER OF INCOME - TAX, THRISSUR. 5. D. R., I.T.A.T., COC HIN BENCH, COCHIN. 6 . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN ITA NO. 471 / COCH/201 8 & CO NO. 81 /COCH/2018 7