The Janakalyan Cooperative Credit Society Limited , North 24 Parganas V. ITO, Ward - 11(2), Kolkata , Kolkata

ITA 1060/KOL/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 7205 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 18-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MD GHYAS UDDN
• Keywords: Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC KOLKATA BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.1060/KOL/2018 ASSESSMENT YEAR:2012-13 THE JANAKALYAN CO-OPERATIVE CREDIT SOCIETY LTD., N. GHOSH SARANI, P.O. HRIDAYPUR, BARASAT, 24 PARGANAS (NORTH)-700127 [ PAN NO.AACAT 1033 F ] / V/S . INCOME TAX OFFICER, WARD-11(2), AAYAKAR BHAWAN, 6 TH FLOOR, P- 7, CHOWRINGHEE SQUARE, KOLKATA-69 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI SANJAY BHATTACHARYA, FCA /BY RESPONDENT MD. GHYAS UDDN, ADDL. CIT-DR /DATE OF HEARING 13-09-2018 /DATE OF PRONOUNCEMENT 28-09-2018 /O R D E R THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 , ARISES AGAINST THE COMMISSIONER OF INCOME-TAX (APPEALS)-4, KOLKATAS O RDER DATED 08.03.2018 PASSED IN CASE NO. 79/CIT(A)-4/W.11(2)/2015-16 INVOLVING P ROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. I FIND AT THE OUTSET THAT THE ASSESSING OFFICER HAD DISALLOWED ASSESSEES DIVIDEND PAYABLE OF 5592/- IN ASSESSMENT ORDER DATED 12.03.2015. THE CI T(A)S ORDER IN PARA-4 HAS ACCEPTED ASSESSEES GRIEVANCE Q UA THE SAME SUBJECT TO VERIFICATION. I NOW COME TO ISSUE BEFORE ME. THE CIT(A) HAS HELD IN THE LOWER APPELLATE PROCEEDINGS THAT THE ASSESSEE IS A CO-OPERATIVE BAN K WITHIN THE MEANING OF SEC. 80P(4) ITA NO.1060/KOL/2018 A.Y. 2012-1 3 THE JANAKALYAN CO-OP. CREDIT SOCIETY LTD. VS. ITO WD.11(2) KOL. PAGE 2 OF THE ACT NOT ENTITLED FOR THE DEDUCTION RELIEF TO CO-OPERATIVE SOCIETY IN RESPECT OF INCOME DERIVED FROM ITS MEMBERS. LEARNED DEPARTMENT AL REPRESENTATIVE VEHEMENTLY CONTENDS DURING THE COURSE OF HEARING THAT THE CIT( A) HAS RIGHTLY HELD THE ASSESSEE TO BE A CO-OPERATIVE BANK SINCE DERIVING INTEREST INCO ME FROM ITS MEMBERS ALIKE ON BANK. I FIND NO MERIT IN THE INSTANT REASONING HON'BLE GU JARAT HIGH COURTS DECISION IN (2014) 362 ITR 331 (GUJ) CIT VS. JAFARI MOMI VIKAS CO-OP CREDIT SOCIETY LTD. , HAS REJECTED THE IDENTICAL REASONING IN CASE OF CO-OPERATIVE CRE DIT SOCIETY AFTER TAKING INTO ACCOUNT THE CBDTS 133/2007 DATED 09.05.2007 AS FOLLOWS:- 3. ISSUE PERTAINS INTERPRETATION OF SECTION TO 80P( 2) AND 80P(4) OF THE INCOME TAX ACT, 1964 ('THE ACT' FOR SHORT). RESPONDENT ASS ESSEE IS A COOPERATIVE CREDIT SOCIETY AND CLAIMS BENEFIT OF DEDUCTION UNDE R SECTION 80P(1) OF THE ACT BY VIRTUE OF THE PROVISIONS CONTAINED IN SECTION 80 P(2) (A) (I) OF THE ACT. AS IS WELL KNOWN UNDER SUB-SECTION (L) OF SECTION 80P CER TAIN CO-OPERATIVE SOCIETIES ARE GRANTED DEDUCTIONS OF THE SUM SPECIFIED IN SUB- SECTION (2) IN COMPUTING THE TOTAL INCOME. AS PER SECTION 80P(2) (A) (I), THE SU MS REFERRED IN SUB-SECTION(L) WOULD BE IN CASE OF A CO-OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS ME MBERS THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBUTABLE TO AN YONE OR MORE OF SUCH ACTIVITIES. REVENUE, HOWEVER, CONTENDS THAT BY VIRT UE OF NEWLY AMENDED SUB- SECTION (4) OF SECTION 80P INSERTED WITH EFFECT FRO M 1.4.2007 BY FINANCE ACT, 2006, SECTION 80P WOULD NOT APPLY TO THE RESPONDENT ASSESSEE. SECTION 80P(4) IN THE PRESENT FORM REFERS AS UNDER:- ' (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPL Y IN RELATION TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT BANK. EXPLANATION-FOR THE PURPOSES OF THIS SUB-SECTION,- (A) 'CO-OPERATIVE BANK' AND 'PRIMARY AGRICULTURAL C REDIT SOCIETY' SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949) ; (B) 'PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DE VELOPMENT BANK' MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFIN ED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG-TE RM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES.' 4. AS PER SECTION BOP(4), THE PROVISIONS OF SECTION 80P WOULD NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER THAN PRIMAR Y AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVE LOPMENT BANK. AS PER THE EXPLANATION, THE TERMS 'CO-OPERATIVE BANK' AND 'PRI MARY AGRICULTURAL CREDIT SOCIETY' SHALL HAVE THE MEANINGS RESPECTIVELY ASSIG NED TO THEM IN PART V OF THE BANKING REGULATION ACT, 1949. ITA NO.1060/KOL/2018 A.Y. 2012-1 3 THE JANAKALYAN CO-OP. CREDIT SOCIETY LTD. VS. ITO WD.11(2) KOL. PAGE 3 5. ASSESSING OFFICER HELD THAT BY VIRTUE OF SECTION 80P(4), THE RESPONDENT ASSESSEE WOULD NOT BE ENTITLED TO BENEFITS OF DEDUC TION UNDER SECTION 80P. CIT(APPEALS) AS WELL AS THE TRIBUNAL REVERSED THE D ECISION OF THE ASSESSING OFFICER ON THE PREMISE THAT THE RESPONDENT ASSESSEE NOT BEING A BANK, PROVIDED IN SUB-SECTION (4) OF SECTION 80P WOULD NOT APPLY. THIS IRRESPECTIVE OF THE FACT THAT THE RESPONDENT WOULD NOT FALL WITHIN THE EXPRE SSION 'PRIMARY AGRICULTURAL CREDIT SOCIETY'. 6. HAD THIS BEEN THE PLAIN STATUTORY PROVISIONS UND ER CONSIDERATION IN ISOLATION, IN OUR OPINION, THE QUESTION OF LAW COULD BE STATED TO HAVE ARISEN. WHEN, AS CONTENDED BY THE ASSESSEE, BY VIRTUE OF SUB-SECTION (4) ONLY CO-OPERATIVE BANKS OTHER THAN THOSE MENTIONED THEREIN WERE MEANT TO BE EXCLUDED FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80P, A QUESTION WOULD AR ISE WHY THEN LEGISLATURE SPECIFIED PRIMARY AGRICULTURAL CREDIT SOCIETIES ALO NG WITH PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANKS FOR EXCLUS ION FROM SUCH EXCLUSION AND IN OTHER WORDS, CONTINUED TO HOLD SUCH ENTITY A S ELIGIBLE FOR DEDUCTION. HOWEVER, THE ISSUE HAS BEEN CONSIDERABLY SIMPLIFIED BY VIRTUE OF CBDT CIRCULAR NO.133 OF 2007 DATED 9.5.2007. CIRCULAR PR OVIDES AS UNDER:- 'SUBJECT: CLARIFICATION REGARDING ADMISSIBLY OF DED UCTION UNDER SECTION 80P OF THE INCOME-TAX ACT, 1961. 1. PLEASE REFER TO YOUR LETTER NO. DCUS/30688/2007, DATED 28.03.2007 ADDRESSED TO CHAIRMAN, CENTRAL BOARD OF DIRECT TAXE S, ON THE ABOVE GIVEN SUBJECT. 2. IN THIS REGARD, I HAVE BEEN DIRECTED TO STATE TH AT SUB-SECTION (4) OF SECTION 80P PROVIDES THAT DEDUCTION UNDER THE SAID SECTION SHALL NOT BE ALLOWABLE TO ANY CO-OPERATIVE BANK OTHER THAN A PRI MARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTUR AL AND RURAL DEVELOPMENT BANK. FOR THE PURPOSE OF THE SAID SUB-S ECTION, CO-OPERATIVE BANK SHALL HAVE THE MEANING ASSIGNED TO IT IN PART V OF THE BANKING REGULATION ACT, 1949. 3. IN PART V OF THE BANKING REGULATION ACT, 'CO-OPE RATIVE BANK' MEANS A STATE CO-OPERATIVE BANK, A CENTRAL CO-OPERATIVE B ANK AND A PRIMARY CO-OPERATIVE BANK. 4. THUS, IF THE DELHI CO OP URBAN T & C SOCIETY LTD . DOES NOT FALL WITHIN THE MEANING OF 'CO-OPERATIVE BANK' AS DEFINE D IN PART V OF THE BANKING REGULATION ACT, 1949, SUB- SECTION (4) OF S ECTION B OP WILL NOT APPLY IN THIS CASE. 5. THE ISSUES WITH THE APPROVAL OF CHAIRMAN, CENTRA L BOARD OF DIRECT TAXES.' 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 TH E SAID ENTITY NOT BEING A CO- OPERATIVE BANK, SECTION 80P (4) OF THE ACT WOULD NO T APPLY TO IT. IN VIEW OF SUCH CLARIFICATION, WE CANNOT ENTERTAIN THE REVENUE 'S CONTENTION THAT SECTION ITA NO.1060/KOL/2018 A.Y. 2012-1 3 THE JANAKALYAN CO-OP. CREDIT SOCIETY LTD. VS. ITO WD.11(2) KOL. PAGE 4 80P(4) WOULD EXCLUDE NOT ONLY THE CO-OPERATIVE BANK S OTHER THAN THOSE FULFILLING THE DESCRIPTION CONTAINED THEREIN BUT AL SO CREDIT SOCIETIES, WHICH ARE NOT CO-OPERATIVE BANKS. IN THE PRESENT CASE, RESPON DENT ASSESSEE IS ADMITTEDLY NOT A CREDIT CO-OPERATIVE BANK BUT A CREDIT CO-OPER ATIVE SOCIETY. EXCLUSION CLAUSE OF SUB-SECTION (4) OF SECTION 80P, THEREFORE , WOULD NOT APPLY. IN THE RESULT, TAX APPEALS ARE DISMISSED. I ADOPT THE ABOVE REASONING MUTATIS MUTANDIS TO ACC EPT ASSESSEES SOLE SUBSTANTIVE GROUND RAISED IN THE INSTANT APPEAL. 4. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28/09/2018 SD/- (S.S. GODARA) JUD ICIAL MEMBER *DKP/SR.PS - 28/09/2018 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-THE JANAKALYAN CO-OP. CREDIT SOCIETY LTD ., N GHOSH SARNI, P.O. HRIDA YPUR, BARASAT, 24-PARGANAS (N), 700127 2. /RESPONDENT-ITO WD-11(2), AAYAKAR BHAWAN, 6 TH FLOOR, P-7, CHOWRINIGHEE SQUARE, KOLKATA-69 3. ' % / CONCERNED CIT 4. % - / CIT (A) 5. & ))' , ' / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO ',