The ITO,S.K.Ward-2, Himatnagar V. The Kamran Vikas Co.Op. Credit Society Ltd., Sabarkantha

ITA 1004/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1411 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 11-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N P PATEL
• Keywords: Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER ./ ITA NO. 1004 /AHD/201 3 / ASSESSMENT YEAR : 2009 - 10 INCOME TAX OFFICER, S.K. WARD - 2, HIMATNAGAR VS THE KAMRAN VIKAS CO - OP. CREDIT SOCIETY LTD., AT & PO: ILLOL, TAL:HIMATNAGAR, DIST : SABARKANTHA 383220 PAN : AAAAT 5890 Q / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI N P PATEL, SR DR ASSESSEE BY : SHRI SANJAY R SHAH, AR / DATE OF HEARING : 08 / 0 6 /201 6 / DATE OF PRONOUNCEMENT: 09 / 06 /201 6 / O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME - TAX (APPEALS) - VIII , AHMEDABAD DATED 31 . 0 1 .201 3 FOR ASSESSMENT YEAR 200 9 - 1 0. 2. REVENUE HAS RAISED F OLLOWING GROUNDS : - 1 . THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.31,67,180/ - MADE U/S 80P(2)(A)(I) ON ACCOUNT OF DEDUCTION CLAIMED U/S 80P(2)(A) OF THE ACT WITHOUT APPRECIATING THE FACT THAT AS PER SUB SECTION (4) OF SECTION 80P, THE SCOPE OF DEDUCTION HAS BEEN RESTRICTED TO ONLY PRIMARY AGRICULTURAL CREDIT SOCIETY AND PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. 2 . THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.5,50,944/ - MADE ON ACCOUNT OF PROVISION FOR DOUBTFUL DEBTS WITHOUT APPRECIATING THE FACT THAT THE PROVISIONS ARE NOT ALLOWAB LE AS EXPENSES. 3 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. THE RELEVANT FACTS AND REASONS FOR THE DELETION OF ADDITION CAN BE ASCERTAINED FROM THE ORDER OF THE LD. CIT(A) AS UNDER: - SMC - ITA NO. 1004/AHD/ 2013 ITO VS. THE KAMRAN VIKAS CO - OP CREDIT SOCIETY LTD AY : 2009 - 10 2 2.4. THE CO - OP. SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING IS GOVERNED BY GUJARAT CO. OP. SOCIETIES ACT, 1961 AND ALSO GOVERNED BY BANKING REGULATION ACT, 1949 AS PER PART - V OF SECTION 56. AS PER SECTION 5(CCI) AS INSERTED BY SECTION 56, CO. OP. BANK IS DEFINED AS STATE CO.OP. BANK, CENTRAL CO. OP. BANK A ND A PRIMARY CO. OP. BANK. AS PER SECTION 5(CCII) CO.OP. CREDIT SOCIETY MEANS A CO.OP. SOCIETY, THE PRIMARY OBJECTS OF WHICH IS TO PROVIDE FINANCIAL ACCOMMODATION TO ITS MEMBERS AND INCLUDES A CO.OP. LAND MORTGAGE BANK. AS PER SECTION 5(B) OF BANKING REGUL ATION ACT, BANKING MEANS THE ACCEPTING, FOR THE PURPOSE OF LENDING OR INVESTMENT OF DEPOSITS OF MONEY FROM THE PUBLIC, REPAYABLE ON DEMAND OR OTHERWISE, AND WITHDRAWAL BY CHEQUE, DRAFT OR OTHERWISE. HOWEVER, EVEN AFTER A PRIMARY CREDIT SOCIETY BECOMES A CO - OPERATIVE BANK; IT HAS TO APPLY TO RBI FOR A LICENCE TO CARRY ON BANKING BUSINESS. CONSIDERING THE ABOVE FACTS, IT IS CLEAR THAT THE APPELLANT IS NOT ALLOWED TO DO BANKING BUSINESS AS DEFINED UNDER BANKING REGULATION ACT AND THEREFORE, IS NOT A CO - OPERATI VE BANK. THEREFORE, IT IS NOT EXCLUDED FROM THE BENEFIT OF DEDUCTION U/S 80P(2)(A)(I) OF THE IT ACT AS IT DOES NOT FALL UNDER THE EXCEPTIONS AS PROVIDED U/S 80P(4). 3.1 WHILE GIVING RELIEF, THE LD. CIT(A) RELIED ON THE JUDGMENT OF HONBLE SUPREME COURT I N THE CASE OF TOTGARS CO - OP. SALES SOCIETY LTD VS. ITO, REPORTED IN 322 ITR 283 , DECISION OF ITAT AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF JAFARI MOMIN VIKAS CO - OP. CREDIT SOCIETY LTD VS. CIT IN ITA N0.1491/AHD/2012 AND THE JUDGMENT OF HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF BARODA PEOPLES CO - OP. BANK LTD, REPORTED IN 149 TAXMAN 509 (GUJ.) . THE DECISION DELIVERED BY THE AHMEDABAD BENCH OF TRIBUNAL IN THE CASE OF JAFARI MOMIN VIKAS CO - OP. CREDIT SOCIETY LTD (SUPRA) IS CONFIRMED BY THE HONBLE GUJARAT HIGH COURT, BY HOLDING AS UNDER: - 7. FROM THE ABOVE CLARIFICATION, IT CAN BE GATHERED THAT SUB - SECTION(4) OF SECTION 80P WILL NOT APPLY TO AN ASSESSEE WHICH IS NOT A CO - OPERATIVE BANK. IN THE CASE CLARIFIED BY CBDT, DELHI COOP URBAN THRIFT & CREDIT SOCIETY LTD. WAS UNDER CONSIDERATION. CIRCULAR CLARIFIED THAT THE SAID ENTITY NOT BEING A COOPERATIVE BANK, SECTION 80P(4) OF THE ACT WOULD NOT APPLY TO IT. IN VIEW OF SUCH CLARIFICATION, WE CANNOT ENTERTAIN THE REVENUE'S CONTENTION THAT SECTION 80P (4) WOULD EXCLUDE NOT ONLY THE CO - OPERATIVE BANKS OTHER THAN THOSE FULFILLING THE DESCRIPTION CONTAINED THEREIN BUT ALSO CREDIT SOCIETIES, WHICH ARE NOT COOPERATIVE BANKS. IN THE PRESENT CASE, RESPONDENT ASSESSEE IS ADMITTEDLY NOT A CREDIT CO - OPERATIVE BAN K BUT A CREDIT CO - OPERATIVE SOCIETY. EXCLUSION CLAUSE OF SUB - SECTION(4) OF SECTION 80P, THEREFORE, WOULD NOT APPLY. IN THE RESULT, TAX APPEALS ARE DISMISSED. SMC - ITA NO. 1004/AHD/ 2013 ITO VS. THE KAMRAN VIKAS CO - OP CREDIT SOCIETY LTD AY : 2009 - 10 3 3.2 AFTER CONSIDERING ALL THE JUDGMENTS, THE LD. CIT(A) HELD THE ISSUE IN FAVOUR OF THE ASSESSE E. 4. APROPOS GROUND NO.2, I.E., DISALLOWANCE OF BAD DEBTS AND EXTENDING DEDUCTION U/S 80P(2 )(A)(I) ON THE INCREASED INCOME, LD. CIT(A) DELETED THE ADDITION BY FOLLOWING OBSERVATIONS: - 3.3. THE FACTS OF THE CASE HAVE BEEN CONSIDERED. IT IS SEEN FROM THE FACTS THAT THE PROVISION OF DOUBTFUL DEBTS IS NOT ALLOWABLE AS EXPENSES THE SAME IS DISALLOWED AND ADDED TO THE TOTAL INCOME BY THE AO. THERE IS NO DOUBT THAT THIS IS NOT ALLOWABLE AS THIS IS ONLY PROVISION AND CANNOT BE ALLOWED AND HENCE, ADDED TO THE TOTAL INCOME OF THE APPELLANT BY THE AO, IS HELD AS SUSTAINED ADDITION. THE APPELLANT HAS SUBMITTED THAT PROVISIONS OF SECTION 80P(2)(A)(I) MENTION THAT THE ENTIRE AMOUNT OF PROFITS AND GAINS OF BUSINESS OF THE PRIMARY COOPERATIVE CREDIT SOCIETY WILL HAVE TO BE ALLOWED AS DEDUCTION WHEN SUCH PROFIT IS ATTRIBUTABLE TO THE BUSINESS OF MONEY LENDING BY COOPERATIVE SOCIETIES. IN THE PRESENT CASE, THE AMOUNT OF PROVISION FOR DOUBTFUL DEBTS HAS DIRECT RELATION WITH THE ACTIVITY OF MONEY LENDING AND EVEN THE PROF IT EARNED BY THE APPELLANT IS ALSO ATTRIBUTABLE THE BUSINESS OF MONEY LENDING CARRIED ON BY THE APPELLANT. THE INCOME OF THE PRIMARY COOPERATIVE CREDIT SOCIETY HAS BEEN HELD IN THE PARA 2,7 OF THIS ORDER AS ELIGIBLE FOR DEDUCTION U/S80P(2)(A)(I). THE ABOVE ADDITION OF THE PROVISION OF DOUBTFUL DEBTS HAS BECOME THE PART OF INCOME WHICH IS ATTRIBUTABLE TO THE BUSINESS OF MONEY LENDING CARRIED ON BY THE APPELLANT. THEREFORE, THE ENTIRE ADDITION MADE BY THE LEARNED A.O. BY WAY OF DISALLOWANCE OF CLAIM OF PROVIS ION FOR DOUBTFUL DEBTS WOULD BE ALLOWABLE TO THE APPELLANT AS DEDUCTION U/S 80 P(2)(A)(I) AND THEREFORE, THE SAME IS ALLOWED. 5. AFTER HEARING BOTH THE PARTIES, I AM OF THE CONSIDERED VIEW THAT THE GROUND NO.1 OF THE REVENUES APPEAL IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE HONBLE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF JAFARI MOMIN VIKAS CO - OPERATIVE CREDIT SOCIETY LTD (SUPRA). RESPECTFULLY FOLLOWING THE SAME, THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS UPHELD. THIS GROUND OF THE REVEN UE IS THUS DISMISSED. 6. APROPOS SECOND GROUND ABOUT BAD DEBT, THE CLAIM OF DEBT HAS BEEN ADDED BACK TO THE INCOME BY THE ASSESSEE; CONSEQUENTLY THE AMOUNT OF SMC - ITA NO. 1004/AHD/ 2013 ITO VS. THE KAMRAN VIKAS CO - OP CREDIT SOCIETY LTD AY : 2009 - 10 4 INCREASE IS AN INCOME FROM THE CO - OPERATIVE ACTIVITIES WHICH ARE ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). IN VIEW THEREOF LD. CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT . TH ERE IS NO INFIRMITY IN HIS ORDER WHICH IS UPHE LD. ACCORDINGLY, THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 9 T H JUNE , 201 6 AT AHMEDABAD. SD/ - R.P. TOLANI ( JUDICIAL MEMBER ) AHMEDABAD; DATED 0 9 / 0 6 /201 6 *BIJU T. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD