COMMISSIONER OF INCOME TAX V. GENERAL INSURANCE EMPLOYEES CO OPERATIVE

ITA/347/2014

AI Insights

The case revolves around an appeal by the Commissioner of Income Tax and the Income Tax Officer against the General Insurance Employees Co-operative Credit Society Ltd., concerning the entitlement of the society to deductions under Section 80P(2)(a)(i) of the Income Tax Act, 1961 for the Assessment Year 2010-11. The primary legal question was whether the society, which engaged in banking activities but was not a cooperative bank exclusively carrying on banking business, was eligible for the deductions claimed. The ITAT had previously ruled in favor of the society, a decision which the Revenue challenged in the High Court.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 740357 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 22-09-2014
• Assessment Year: misc
• Other Referred Cases: THE COMMISSIONER OF INCOME TAX (APPEALS) VS. GENERAL INSURANCE EMPLOYEES' CO-OPERATIVE CREDIT SOCIETY LIMITED, THE COMMISSIONER OF INCOME TAX VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGALKOT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: MAHESH UPPIN
• Assessee Lawyers: E I SANMATHI
• Keywords: Banking Business; Co-operative Society; Deduction; Income Tax
• Section: 80P(2)(a)(i); 260-A

Judgement Text

" : : 1 IN THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THE 22ND DAY OF SEPTEMBER 2014 PRESENT: THE HON'BLE MR.JUSTICE N.KUMAR AND THE HON'BLE MRS.JUSTICE RATHNAKALA ITA NO.347 OF 2014 BETWEEN: 1. Commissioner of Income Tax Mangalore. 2. Income Tax Officer Ward 1(2), Mangalore. …APPELLANTS (By Sri.E.I.Sanmathi, Advocate) AND: General Insurance Employees Co-operative Credit Society Ltd., ‘Krishna’, Ajjarkad Court Road Udupi – 576 101. ...RESPONDENT (By Sri.Mahesh R.Uppin, Advocate for caveator/respondent) : : 2 This ITA is filed under Section 260-A of Income Tax Act, 1961 arising out of Order dated 21.02.2014 passed in ITA No.83/Bang/2014, for the Assessment Year 2010-11 praying to decide the foregoing question of law and/or such other questions of law as may be formulated by the Hon’ble Court as deemed fit and to set aside the appellate order dated 21.02.2014 passed by the ITAT ‘A’ Bench, Bangalore, in appeal proceedings ITA No.83/Bang/2014 for Assessment Year 2010-11. This Appeal coming on for Admission, this day, N.KUMAR, J., delivered the following: J U D G M E N T The Revenue has preferred this appeal against the order passed by the Tribunal. 2. The substantial question of law, which is raised in this appeal, is as under:- “Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee – society is entitled to deduction under Section 80P(2)(a)(i) of the Income Tax Act?” 3. The said questions came up for consideration before this Court in the case of THE COMMISSIONER OF : : 3 INCOME TAX (APPEALS) VS. GENERAL INSURANCE EMPLOYEES’ CO-OPERATIVE CREDIT SOCIETY LIMITED in ITA NO.273/2013 wherein at Para 4 it was held as under:- “4. This Court had an occasion to consider the said question in ITA No.5006/2013 dated 05.02.2014 in the case of THE COMMISSIONER OF INCOME TAX VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGALKOT, where, after referring to the relevant provisions of the Income Tax Act, and the banking Regulation Act, held as under: “If a Co-operative Bank is exclusively carrying banking business, then the income derived from the said business cannot be deducted in computing the total income of the assessee. The said income is liable for tax. A Co-operative bank as defined under the Banking Regulation Act includes the primary agricultural credit society or a primary co- operative agricultural rural development bank. The Legislature did not want to deny the said benefit to a primary agricultural credit society : : 4 or a primary co-operative agricultural and rural development bank. They did not want to extend the said benefit to a co-operative bank which is exclusively carrying on banking business i.e., the purport of the amendment. If the assessee is not a Co-operative bank carrying on exclusively banking business and if it does not possess a license from the Reserve Bank of India to carry on business, then it is not a Co-operative bank. It is a Co-operative society which also carries on the business of lending money to its members which is covered under Section 80P(2)(a)(i) i.e., carrying on the business of banking for providing credit facilitates to its members. The object of the aforesaid amendment is not to exclude the benefit extended under Section 80P(i) to the society. Therefore the said issue was held in favour of the assessee and against the revenue”. 4. Following the aforesaid judgment, as the said question is answered in favour of the assessee and against : : 5 the revenue, we do not see any merit in this appeal Accordingly, the appeal is dismissed. Sd/- JUDGE Sd/- JUDGE Prs* "