The Bhiloda Taluka Primary Teacher Co.op.Credit So.Ltd., Sabarkantha V. The Income tax Officer,S.K.Ward-2, Himatnagar

CO 97/AHD/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9222 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 09-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: A C SHAH
• Keywords: Business income; Opportunity of being heard
• Section: 56

Judgement Text

I.T.A NOS.410-425/AHD/2013 A.Y. 2007-08 &200 9-10 PAGE NO & CO NOS. 82 & 97/AHD/2013 ITO VS. DIFFERENT ASSESSEES 1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI T.R.MEENA, ACCOUNTAN T MEMBER SL NO. ITA NO. A.Y. APPELLANT RESPONDENT 1 ITA NO. 410/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR SHRI MEGHRAJ TALUKA PRIMARY TEACHERS CO- OP. CREDIT SOCIETY LTD 2 ITA NO. 411/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR SRINATH CO.OP CREDIT SOCIETY LTD 3 ITA NO. 412/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE S.K. DISTRICT TELECOM EMPLOYEE CO- OP CREDIT SOCIETY LTD 4 ITA NO. 413/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE PRANTIJ TALUKA PRIMARY TEACHERS CO-OP CREDIT SOCIETY LTD 5 ITA NO. 414/AHD/2013 2007-08 THE ITO, S.K. WARD- 2, HIMATNAGAR THE HIMATNAGAR TALUKA PRIMARY TEACHERS CO-OP CREDIT SOCIETY LTD 6 ITA NO. 415/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE HIMATNAGAR TALUKA PRIMARY TEACHERS CO-OP CREDIT SOCIETY LTD 7 ITA NO. 416/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE SABAR DAIRY KARMCHARI SAHKARI MANDALI LTD I.T.A NOS.410-425/AHD/2013 A.Y. 2007-08 &200 9-10 PAGE NO & CO NOS. 82 & 97/AHD/2013 ITO VS. DIFFERENT ASSESSEES 2 8 ITA NO. 417/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE MODASA DHANSURA TALUKA PRIMARY TEACHERS CO-OP CREDIT SOCIETY LTD 9 ITA NO. 418/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE IDAR JADAR TALUKA PRIMARY TEACHERS CO-OP CREDIT SOCIETY LTD 10 ITA NO. 419/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE BHILODA TALUKA PRIMARY TEACHERS CO.OP CREDIT SOCIETY LTD 11 ITA NO. 420/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE TALOD TALUKA PRIMARY TEACHER CO-OP CREDIT SOCIETY LTD 12 ITA NO. 421/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE KHEDBRAHMA TALUKA PRIMARY TEACHERS CO-OP CREDIT SOCIETY 13 ITA NO. 422/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE PEOPLE SAHKARI MANDALI LTD 14 ITA NO. 423/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE BAYAD TALUKA PRIMARY TEACHERS CO-OP CREDIT SOCIETY LTD 15 ITA NO. 424/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE STATE TRANSPORT EMPLOYEES CO- OP CREDIT & THRIFT SOCIETY LTD 16 ITA NO. 425/AHD/2013 2009-10 THE ITO, S.K. WARD- 2, HIMATNAGAR THE GABAT NAGARIK SAHAKARI SHARAFI MANDALI LTD I.T.A NOS.410-425/AHD/2013 A.Y. 2007-08 &200 9-10 PAGE NO & CO NOS. 82 & 97/AHD/2013 ITO VS. DIFFERENT ASSESSEES 3 SHRI MEGHRAJ TALUKA PRIMARY TEACHERS CO-OP. CREDIT SOCIETY LTD, AT & PO: MEGHRAJ TAL: MEGHRAJ PAN: AAGTS469D (CROSS OBJECTOR) VS THE ITO, S.K. WARD-2, HIMATNAGAR (RESPONDENT) THE BHILODA TALUKA PRIMARY TEACHERS CO.OP CREDIT SOCIETY LTD, NEAR TALUKA PANCHAYAT, NR. COTTAGE HOSPITAL, POST: BHILODA-383245, TALUKA: BHILODA, DIST: SABARKANTHA (CROSS OBJECTOR) VS THE ITO, S.K. WARD-2, HIMATNAGAR (RESPONDENT) REVENUE BY: SRI O.P.BATHEJA, SR.D.R. ASSESSEE BY: SRI A.C.SHAH, A.R. DATE OF HEARING : 24-01-2014 DATE OF PRONOUNCEMENT : 31-01-20 14 CO NO. 82/AHD/2013 (IN ITA NO. 410/AHD/2013) ASSESSMENT YEAR 2009-10 CO NO. 97/AHD/2013 (IN ITA NOS. 419/AHD/2013) ASSESSMENT YEAR 2009-10 I.T.A NOS.410-425/AHD/2013 A.Y. 2007-08 &200 9-10 PAGE NO & CO NOS. 82 & 97/AHD/2013 ITO VS. DIFFERENT ASSESSEES 4 / ORDER PER BENCH:- THESE APPEALS EMANATING FROM THE ORDER OF CIT(A)-V III, AHMEDABAD ORDER DATED 26-11-2012 & 29-11-2012 FOR A.Y. 2009-1 0 IN ALL THE CASES EXCEPT 2007-08 IN ITA NO. 414/AHD/2013 2. EFFECTIVE GROUND OF APPEAL IS AS UNDER IN ITA NO . 410/AHD/2013:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 18,94,555/- MADE U/S. 80P(2)(A)(I) OF THE ACT ON ACCOUNT OF DEDUCTION CLAIMED U/S. 80P(2)(A)(I) & 80 P(2)(D) WITHOUT APPRECIATING THE FACT THAT AS PER SUB SECTION(4) OF SECTION 80, THE SCOPE OF DEDUCTION HAS BEEN RESTRICTED TO ONLY PRIM ARY AGRICULTURAL CREDIT SOCIETY AND PRIMARY CO-OPERATIVE AGRICULTURA L AND RURAL DEVELOPMENT BANK. 3. IN ALL THE CASES IDENTICAL GROUNDS HAVE BEEN TAK EN BY THE REVENUE. 4. THE AO OBSERVED IN CASE OF MEGHRAJ TALUKA PRIMAR Y TEACHERS CO- OPERATIVE CREDIT SOCIETY THAT ASSESSEE HAD SHOWN GR OSS TOTAL INCOME AT RS. 18,94,555/- WHICH HAS BEEN CLAIMED AS DEDUCTION U/S . 80P(2)(A)(I), 80P(2)(A)(C) AND 80P(2)(D) OF THE IT ACT. THE AO D ENIED THE DEDUCTION U/S. 80P ON THE GROUND THAT AS PER SECTION 2(24)(VIIA), IT IS INCOME OF THE ASSESSEE AND ASSESSEE IS NOT ALLOWED DEDUCTION UNDER SUB-SEC TION (4) OF SECTION 80P INSERTED BY THE FINANCE ACT 2006 FROM 2007-08. THE AO GAVE REASONABLE OPPORTUNITY OF BEING HEARD. AFTER CONSIDERING THE ASSESSEES REPLY HE HELD THAT ANY COOPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING I.T.A NOS.410-425/AHD/2013 A.Y. 2007-08 &200 9-10 PAGE NO & CO NOS. 82 & 97/AHD/2013 ITO VS. DIFFERENT ASSESSEES 5 IS GOVERNED BY GUJARAT CO-OPERATIVE SOCIETY ACT AND ALSO GOVERNED BY BANKING REGULATION ACT 1949 WHEREAS CO-OPERATIVE SO CIETY ENGAGED IN PROVIDING CREDIT FACILITY TO ITS MEMBER GOVERNED BY GUJARAT COOPERATIVE SOCIETY ACT ONLY AND NOT BY BANKING REGULATION ACT. THE PROVISION OF SUB-SECTION (4) ARE UNAMBIGUOUS A ND THAT IT IS CLEARLY PROVIDED THAT IT IS APPLICABLE ONLY TO CO-O P. BANK AND NOT TO SOCIETY PROVIDING CREDIT FACILITIES. IT THEREFORE FOLLOWS THAT THE PROVISIONS OF SECTION 80P(2)(A)(I) ARE NOW APPLICAB LE ONLY TO CO-OP. SOCIETIES ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. IN OTHER WORDS, INSERTION OF SUB-CLAUSE(4) TO SECTION 80P WITH EFFECT FROM 01/04/2007 HAS TAKEN AWAY THE EXEMPTION FROM A SOCI ETY ENGAGED IN CARRYING ON BUSINESS OF BANKING AND THAT THE EXEMPT ION GRANTED TO SOCIETY CARRYING ON BUSINESS OF PROVIDING CREDIT FA CILITY TO ITS MEMBERS STILL CONTINUE. YOU ARE REQUESTED TO GRANT EXEMPTI ON TO THE ASSESSEE SOCIETY U/S. 80P(2)(A)(I) AS CLAIMED IN THE RETURN FOR THE REASONS STATED ABOVE. IT WAS HELD THAT ASSESSEE IS A COOPERATIVE SOCIETY BUT NEITHER PRIMARY AGRICULTURAL CREDIT SOCIETY NOR A PRIMARY COOPERATI VE AGRICULTURAL AND RURAL DEVELOPMENT BANK, THEREFORE HE DENIED THE DEDUCTION U/S. 80P(2)(A)(I) AND 80P(2)(D). 5. SIMILAR FINDINGS WERE GIVEN BY THE AO IN ALL THE CASES. 6. THE ASSESSEE BEING AGGRIEVED BY THE ORDER OF AO WENT BEFORE CIT(A) WHO HAD ALLOWED THE APPEAL BY CONSIDERING THE SUBMI SSION OF THE ASSESSEE AND RATIO IN CASE OF ITO VS. SRI RAMA CO-OPERATIVE BANK LTD IN ITA NO. 1182/BANG/2010 FOR A.Y. 2005-06, JAFARI MOMIN VIKAS COOPERATIVE SOCIETY LTD IN ITA NO. 1491/AHD/2012 FOR A.Y. 2009-10, ACIT VS. M/S BANGALORE I.T.A NOS.410-425/AHD/2013 A.Y. 2007-08 &200 9-10 PAGE NO & CO NOS. 82 & 97/AHD/2013 ITO VS. DIFFERENT ASSESSEES 6 COMMERCIAL TRANSPORT CREDIT CO-OP SOCIETY LTD IN IT A NO. 1069/BANG/2010 ORDER DATED 8 TH APRIL 2011, DCIT VS. JAVALAKXMI MANILA VIVIDODESHAQALA SOUDHARDA SAHARKARI LTD IN ITA NO. 1TO3/PNJ/2012 AND 4TO6/PNJ/2012 DATED 30-03-2012, TOTGAR COOPERATIVE SALES SOCIETY LTD VS. ITO 322 ITR 283 (SC), CIT VS. MANEKBANG CO-OPERATIV E HOUSING SOCIETY LTD (2012) 22 TAXMAN.COM 220 (GUJ), AND IT WAS HELD THAT ASSESSEE IS NOT A COOPERATIVE BANK AS ASSESSEE ONLY ACTIVITY THAT SOC IETY IS PROVIDING CREDIT FACILITY TO ITS MEMBERS THAN THE WHOLE OF THE INCOM E IS ELIGIBLE FOR DEDUCTION U/S. 80P(2)(A)(I). 7. NOW REVENUE IS IN APPEAL BEFORE US. 8. LD. DR RELIED UPON THE ORDER OF AO WHEREAS LEARN ED COUNSEL OF THE ASSESSEE HAS RELIED IN CASE OF ITAT AHMEDABAD DECI SION IN CASE OF JAFARI MOMIN VIKAS CO-OPERATIVE CREDIT SOCIETY IN ITA NO. 1491/AHD/2012 A.Y. 2009-10 ORDER DATED 31-10-2010 WHEREIN IDENTICAL IS SUE HAS BEEN ALLOWED BY HONBLE BENCH IN FAVOUR OF THE ASSESSEE. HE ARGUED THAT ASSESSEE IS NOT A COOPERATIVE BANK AS DEFINED IN PART-V OF THE BANKIN G REGULATION ACT, 1949. THE ASSESSEE HAS BORROWED FUND FROM THE MEMBERS ONL Y AND PROVIDED CREDIT FACILITY TO ITS MEMBER ONLY. THE SUB-SECTION (4) O F SECTION 80P IS NOT APPLICABLE IN CASE OF ASSESSEE AS RECENTLY HELD BY THE HONBLE GUJARAT HIGH COURT IN CASE OF JAFARI MOMIN VIKAS CO-OPERATIVE PV T LTD IN CASE OF TAX APPEAL NO. 442,443 AND 863 OF 2013 ORDER DATED 15-0 1-2004 WHEREIN IT WAS HELD THAT SUB-SECTION (4) OF SECTION 80P WILL NOT A PPLY TO A ASSESSEE WHICH IS NOT A CO-OPERATIVE BANK. THE HONBLE JURISDICTIONA L HIGH COURT HAS ALSO I.T.A NOS.410-425/AHD/2013 A.Y. 2007-08 &200 9-10 PAGE NO & CO NOS. 82 & 97/AHD/2013 ITO VS. DIFFERENT ASSESSEES 7 CONSIDERED CBDT CIRCULAR NO. 133 OF 2007 DATED 09-0 5-2007 IN THIS ORDER. THUS HE REQUESTED TO DISMISS THE REVENUES APPEALS. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND FACTS OF THE CASE ARE IDENTICAL IN ALL APPEALS OF THE REVENUE. THE ISSUE IS WHETHER CO-OPERATIVE SOCIETY PROVIDING CREDIT FACIL ITIES TO ITS MEMBERS COVERED IN SUB-SECTION (4) OF SECTION 80P OR NOT. THE ASSESSEE IS IN THE BUSINESS OF PROVIDING CREDIT FACILITY TO ITS MEMBER AND ACCEPTING THE DEPOSITS FROM THE MEMBER. THE HONBLE GUJARAT HIGH COURT IN CASE OF JAFARI MOMI VIKAS CREDIT SOCIETY IS AS UNDER:- 7. FROM THE ABOVE, IT IS CLEAR THAT THE INCOME OF THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) S INCE THE ONLY ACTIVITY OF THE ASSESSEE IS TO PROVIDE CREDIT FACIL ITY TO THE MEMBERS AND THEREFORE THE INTEREST EARNED FROM SHORT TERM DEPOS ITS IS BUSINESS INCOME AND IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) AND NO PORTION THEREOF CAN BE TAXED UNDER SECTION 56 AS INCOME FROM OTHER SOURCES . RESPECTFULLY FOLLOWING THE DECISION OF HONBLE HIG H COURT ON IDENTICAL FACTS IN ALL THE CASE, WE HAVE CONSIDERED VIEW THAT SUB-SECTION (4) OF SECTION 80P IS NOT APPLIED IN ALL THE CASES. ACCORDINGLY W E CONFIRMED THE ORDER OF LD. CIT(A) AND DISMISSED THE REVENUES APPEALS. 10. THE ASSESSEES CO NOS. 82/AHD/2013 AND 97/AHD/2 013 IN CASE OF MEGHRAJ TALUKA PRIMARY CO-OP. CREDIT SOCIETY LTD AN D THE BHILODA TALUKA PRIMARY TEACHERS CO-OP CREDIT SOCIETY LTD RE SPECTIVELY ARE AGAINST THE CONFIRMATION OF ADDITION BY THE LD. CIT (A). IN CASE OF MEGHRAJ I.T.A NOS.410-425/AHD/2013 A.Y. 2007-08 &200 9-10 PAGE NO & CO NOS. 82 & 97/AHD/2013 ITO VS. DIFFERENT ASSESSEES 8 TALUKA PRIMARY CO-OP. CREDIT SOCIETY LTD RS. 75,000 /- AND IN CASE OF BHILODA TALUKA PRIMARY TEACHERS CO-OP CREDIT SOCIET Y LTD RS. 50,000/- WERE CONFIRMED BY LD. CIT(A) ON THE GROUND ADDITION UNDER THE HEAD BUILDING FUND IS NOT ELIGIBLE FOR DEDUCTION U/ S. 80P(2)(A)(I) AND NOT COVERED WITH THE DECISION OF VIJAYA BANK VS. CIT 32 3 ITR 166 (SC). 11. NOW ASSESSEE IS BEFORE US. 12. LD. AR DRAWN OUR ATTENTION ON HONBLE BOMBAY H IGH COURT DECISION IN CASE OF CIT VS. GEM PLUS JEWELLEARY INDIA LTD [2 011] 300 ITR (BOM) WHEREIN AO MADE ADDITION ON ACCOUNT OF DISALLOWANCE OF EMPLOYERS AND EMPLOYEES CONTRIBUTION TOWARDS PF/ESIC ON WHICH DE DUCTION U/S. 10A WAS ALLOWED BY HONBLE BOMBAY HIGH COURT. ACCORDINGLY, HE REQUESTED TO ALLOW THE DEDUCTION U/S. 80P OF THE IT ACT. LD. D R RELIED ON THE ORDER OF AO. 13. WE HAVE HEARD THE RIVAL CONTENTIONS IN BOTH THE CASES THAT ADDITION WAS MADE ON ACCOUNT OF BUILDING FUND IN THE INCOME OF THE ASSESSEE BUT DEDUCTION U/S. 80P WAS NOT ALLOWED. BY CONSIDERING THE SUPREME COURT IN THE CASE OF VIJAYA BANK(SUPRA) BUT IN THAT CASE DIS ALLOWANCE WAS MADE ON ACCOUNT OF DOUBTFUL DEBT AND TO THAT EXTENT ASSESSE E-BANK INCOME INCREASED. BUT IN ALL CASES THE ADDITIONS WERE MADE ON ACCOUNT OF BUILDING FUNDS HAD BEEN DEBITED IN THE ASSESSEES INCOME GENERATED FRO M PROVIDING CREDIT FACILITY TO ITS MEMBERS. THEREFORE IT IS EQUALLY ELIGIBLE FOR DEDUCTION U/S. 80P THUS WERE ALLOWED THE APPEAL OF THE ASSESSEE. I.T.A NOS.410-425/AHD/2013 A.Y. 2007-08 &200 9-10 PAGE NO & CO NOS. 82 & 97/AHD/2013 ITO VS. DIFFERENT ASSESSEES 9 14. IN THE RESULT, REVENUES APPEALS ARE DISMISSED AND CO FILED BY ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (D.K. TYAGI) (T.R.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 31/01/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,