The ITO, Wd-3, Palakkad V. M/s.Thirumittacode Service Co-op Bank Ltd, Palakkad

ITA 11/COCH/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6899 (ITAT-COCHIN)
• Duration Of Justice: 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 02-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Keywords: Competent authority
• Section: 80P; 201; 2; 11

Judgement Text

1 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 S . 11 - 13 / COCH/ 201 9 ASSESSMENT YEAR S : 2 0 1 3 - 14 TO 2015 - 16 THE INCOME TAX OFFICER, WARD - 3, PALAKKAD. VS. THE THIRUMITTACODE SERVICE CO - OPERATIVE BANK LTD., CHATHANNUR P.O., PERINGODE, PALAKKAD - 679 537. [P AN: AA B A T 7088D] (REVENUE - APPELLA NT) (ASSESSEE - RESPONDENT) REVENUE BY SMT. A.S. BINDHU, SR. DR ASSESSEE BY S MT. DIVYA RAVINDRAN, ADV. D ATE OF HEARING 2 7 / 0 2/ 201 9 DATE OF PRONOUNCEMENT 01 / 0 3 /201 9 O R D E R PER CHANDRA POOJARI, AM: ALL THESE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF THE CIT(A), THRISSUR DATED 1 5 / 1 0/2018. THE RELEVANT ASSESSMENT YEARS ARE 20 13 - 14 TO 2015 - 16. 2. COMMON ISSUE S ARE RAISED IN T HESE APPEALS . HENCE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. THE ONLY ISSUE RAISED IN THESE APPEALS IS WITH REGARD TO GRANTING OF DEDUCTION U/S 8 OP (2) OF THE INCOME - TAX ACT, 1961. I.T.A. NO S . 11 - 13 /COCH/ 2 01 9 2 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY (PACS) UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969 AND REGISTERED WITH ASSISTANT REGISTRAR OF CO - OPERATIVE SOCIETIES (GENERAL), OTTAPALAM, PALAKKAD. THE ASSESSEE FILED ITS RETURN OF INCOME A ND CLAIMED DEDUCTION U/S. 80P (2) OF THE I.T. ACT. IT FILED ITS RETURNS OF INCOME AS PER THE FOLLOWING DETAILS: ASST. YEAR DATE OF FILING OF RETURN INCOME RETURNED DEDUCTION CLAIMED U/S. 80P 20 1 3 - 14 31.3.2015 NIL RS.2,37,27,630/ - 20 1 4 - 15 20.1.2016 NIL R S.3,24,70,531/ - 201 5 - 16 22.1.2016 NIL RS.3,05,85,895/ - T HE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS FUNCTIONING AS A CO - OPERATIVE BANK AND DISBURSED ONLY A SMALL PORTION OF LOAN FOR AGRICULTURAL PURPOSES AND THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S. 80P OF THE ACT IN VIEW OF PROVISIONS CONTAINED IN SECTION 80P(4) OF THE I.T. ACT. FURTHER, FOR ASSESSMENT YEAR 2015 - 16, THE ASSESSING OFFICER RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF CITIZEN CO - OPERATIVE SOCIETY LTD. VS. ACIT, CIR.9(1), HYDERABAD IN CIVIL APPEAL NO.10245 OF 2017. THEREAFTER, THE ASSESSING OFFICER DISALLOWED DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80P(2) OF THE ACT. 5. ON APPEAL, THE CIT(A) ALLOWED THE DEDUCTION U/S 8 0 P (2) OF THE ACT BY PLACING RELIAN CE ON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO - OPERATIVE BANK LTD. AND OTHERS VS. CIT ( 384 ITR 490 ). 6 . AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. I.T.A. NO S . 11 - 13 /COCH/ 2 01 9 3 7. WE HAVE HEARD THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, SIMILAR ISSUE WAS CONSIDERED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO - OPERATIVE BANK LTD. (2016) VS. C IT ( 384 ITR 490 ) WHEREIN IT WAS HELD AS UNDER : 15. APPELLANTS IN THESE D IFFERENT 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 THIS COURT AS PART OF THE PAPER BOOKS, CLEARLY SHOW THAT THEY HAVE BEEN CLAS SIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE PROVISIONS OF THAT ACT. THE PARLIAMENT, HAVING DEFINED THE TERM 'CO - OPERATI VE SOCIETY' FOR THE PURPOSES OF THE BR ACT WI TH REFERENCE TO, AMONG OTHER THINGS, THE REGISTRATI ON OF A SOCIETY U N DER ANY STATE LAW RELA TING 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 AND 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 HA V 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 IS 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 L AW BEING AS ABOVE WITH REFERENCE TO THE STATUT ORY 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, HAVING REGARD TO THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF EACH OF THE APPELLANTS. IT IS ALSO CLEAR FROM THE MATERIALS ON 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 T HE BR ACT. THE DIFFERENT ORDERS OF THE TRIBUNAL WHICH ARE IMPEACHED IN THESE APPEALS DO NOT CONTAIN ANY FINDING I.T.A. NO S . 11 - 13 /COCH/ 2 01 9 4 OF FACT TO THE EFFECT THAT THE BYE - L AWS OF ANY OF THE APPELLANT OR ITS CLASS I FICATION BY THE COMPETENT AUTHORITY UNDER THE KCS ACT IS ANYTHING D IFFERENT 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 SECTION. IN THIS VIEW OF THE MATTER, T HE APPEALS SUCCEED. 17. . IN THE LIGHT OF THE AFORESAID, WE ANSWER SUBSTANTIA 1 QUESTION 'A' IN FAVOUR OF THE APPELLANTS AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE REGARDING THE ENTITLEMENT OF EXEMPTION UNDER SECTION 80P AGAINST THE APPEL LANTS. 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 EXEMPTION. 8. IN OUR OPINION, THE ISSUE IS SQUARELY COVERED IN FAVOU R OF THE ASSESSEE BY THE ABOVE JUDGMENT OF THE JURISDICTIONAL HIGH COURT CITED SUPRA . ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND CONFIRM THE SAME. THIS GROUND OF APPEAL OF THE REVENUE FOR ALL THE ASSESSMENT YEARS IS DISMISSE D. 9. IN THE RESULT, ALL THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 01 ST MARCH, 2019 SD/ - SD/ - (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 01 ST MARCH , 2019 GJ COPY TO: 1 . THE THIRUMITTACODE SERVICE CO - OPERATIVE BANK LTD., CHATHANNUR P.O., PERINGODE, PALAKKAD - 679 537. 2 . THE INCOME T AX OFFICER , WARD - 3, PALAKKAD. 3 . THE COMMISSIONER OF INCOME - TAX (AP P EALS) , THRISSUR. 4 . THE PR. COMMISSIONER OF INCOME - TAX, THRISSUR I.T.A. NO S . 11 - 13 /COCH/ 2 01 9 5 5. D.R. I.T.A.T., COCHIN BENCH, COCHIN. 6 . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) ITAT, COCHIN BENCH