Deesa Mercantile Co.Op.So.Ltd., Deesa V. The ACIT.,B.K.Circle, Palanpur

ITA 1108/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94301 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-08-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 15-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: T P HEMANI
• Keywords: Principle of natural justice; Question of law
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARA T, J.M.) I.T. A. NO. 1108/AHD/2011 (ASSESSM ENT YEAR: 2007-08) DEESA MERCANTILE CO.OP. SOC. LTD., RAJIV GANDHI COMPLEX, BASEMENT, DEESA. V/S A.C.I.T., B.K. CIRCLE, PALANPUR (APPELLANT) (RESPONDENT) PAN: AAABT 2083Q APPELLANT BY : SHRI T.P. HEMANI, A.R. RESPONDENT BY : SHRI NARENDRA SINGH, SR. D.R . ( )/ ORDER DATE OF HEARING : 24-08-2015 DATE OF PRONOUNCEMENT : 28 -08-2015 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-XX, AHMEDABAD DATED 09.12.2010 FOR A.Y. 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. ITA NO 1108/ AHD/2011 . A.Y. 2007-08 2 3. ASSESSEE IS STATED TO BE A CO-OPERATIVE SOCIETY ENG AGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. ASSESSE E FILED ITS RETURN OF INCOME FOR A.Y. 2007-08 ON 02.11.2007 DECLARING TOTAL INCO ME AT RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESS MENT WAS FRAMED UNDER SECTION 143(3) VIDE ORDER DATED 24.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS. 5,35,780/-. AGGRIEVED BY THE ORDE R OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO VIDE ORDER DATED 09.12.2010 DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS GROSSLY ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE ID. AO IN TREATING THE APPELLANT AS THE CO- OPERATIVE BANK AND ACCORDINGLY ERRED IN LAW IN APPL YING SUB-SECTION (4) OF S.80P OF THE ACT TO THE APPELLANT. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ACTION OF ID. AO IN NOT ALLOWING DEDUCTION CLAIMED U/S 80P(2)(A)(I) OF THE ACT. 3. BOTH THE LOWER AUTHORITIES HAVE FAILED TO APPRECI ATE THAT AS PER THE BANKING REGULATION ACT, 1949 THE APPELLANT IS NOT A CO-OPER ATIVE BANK AND THEREFORE THE APPELLANT IS ELIGIBLE TO CLAIM DEDUCTION U/S 80 P(2)(A)(I) OF THE ACT. 4. BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN PASSING THE ORDERS WITHOUT PROPERLY APPRECIATING THE FACT AND THAT HE FURTHER ERRED IN GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFO RMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEE N CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF BOTH THE AUTHORITIES IS IN CLEAR BREACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHED. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN LEVYING INTEREST U/S 234B/C OF THE ACT. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN INITIATING PENALTY PROCEEDINGS U/S 271(L)(C) OF THE ACT. ITA NO 1108/ AHD/2011 . A.Y. 2007-08 3 4. BEFORE US, AT THE OUTSET, LD. A.R. SUBMITTED THAT T HOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS BUT THE SOLITARY ISSUE IS WI TH RESPECT TO ALLOWING DEDUCTION U/S. 80P OF THE ACT. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON THE BASIS OF SCRUTINY OF THE ACCOUNTS, A.O CONCLUDED THAT SINCE THE ASSESSEE WAS CARRYING OUT BUSINESS OF BANKING IT WAS NOT ELIGIBLE FOR DEDUCTI ON U/S. 80P(2) OF THE ACT IN VIEW OF THE AMENDMENT MADE TO SUB-SECTION 4 IN SECT ION 80P WITH EFFECT FROM 01.04.2007 AS HE WAS OF THE VIEW THAT AFTER TH E AMENDMENT THE BENEFIT OF SECTION 80P WAS RESTRICTED ONLY TO PRIMARY AGRIC ULTURAL CREDIT SOCIETY AND PRIMARY CO-OP. AGRICULTURAL AND RURAL DEVELOPME NT BANK. ACCORDING TO THE A.O, SINCE THE ASSESSEE WAS CO-OP. BANK, IT WAS NOT ELIGIBLE FOR DEDUCTION U/S. 80P. HE ACCORDINGLY DENIED THE CLAIM OF DEDUCTION U/S. 80P. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE LD. CIT(A) WHO DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER:- 4.3I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE AR CAREFULLY. IT IS SEEN THAT THE CLARIFICATION ON THE SUBJECT ISSUE D BY THE CBDT DOES NOT SAY THAT THE ASSESSEE IN THAT CASE WOULD BE ENTITLED TO DEDUCTIO N U/S,80P, IT IS ONLY SEEN THAT SHRI SOBHAN KAR, UNDER SECRETARY HAS WRITTEN THAT 'IF TH E DELHI CO.OP.URHAN T &, C SOCIETY LTD. DOES NOT FALL WITHIN THE MEANING OF 'COOPERATI VE BANK' AS DEFINED IN PART V OF THE BANKING REGULATION ACT,1949, SUB-SECTION) OF SECTIO N 80P WILL NOT APPLY IN ITS CASE ' THUS THE CBDT WAS NOT GIVEN ANY DIRECTION AS TO THE FACT WHETHER DEDUCTION U/S. 80PSHALL BE AVAILABLE TO THE ASSESSEE. IT IS SEEN T HAT AS PER DEFINITION OF THE CO.OP. BANK MENTION IN CLAUSE (CCI) OF SECTION 56(5) OF PART-V OF THE BANK REGULATION ACT, 1949 READS AS UNDER: (CCI) 'CO-OPERATIVE BANK' MEANS A STALE CO-OPERAT IVE SOCIETY, THE PRIMARY OBJECT OF WHICH IS TO PROVIDE FINANCIAL ACCOMMODATI ON TO US MEMBERS AND INCLUDES A COOPERATIVE LAND MORTGAGE BANK: ITA NO 1108/ AHD/2011 . A.Y. 2007-08 4 (CCII) 'CO-OPERATIVE CREDIT SOCIETY' MEANS A CO-OPE RATIVE SOCIETY, THE PRIMARY OBJECT OF WHICH IS TO PROVIDE FINANCIAL ACCOMMODATI ON TO ITS MEMBERS AND INCLUDES A CO-OPERATIVE LAND MORTGAGE BANK: (CCIIA) 'CO-OPERATIVE SOCIETY MEANS A SOCIETY REGIS TERED OR DEEMED TO HAVE BEEN REGISTERED UNDER ANY CENTRAL ACT FOR THE TIME BEING IN FORCE RELATING TO THE MULTI STATE CO-OPERATIVE SOCIETIES FOR THE TIME BEING IN FORCE,' 4.3(I) IN VIEW OF THE ABOVE DEFINITION, IT IS CLEAR THAT THE APPELLANT COMES UNDER THE DEFINITION OF CO-OPERATIVE BANK. HENCE, SECTION 80P (4) IS CLEARLY APPLICABLE TO THE APPELLANT. IN VIEW OF THE ABOVE, THE ACTION OF THE AO IN DENYING THE DEDUCTION U/S,80P TO THE APPELLANT IS JUSTIFIED. THE SAME IS, HENCE, CONFIRM ED. 6. AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), ASS ESSEE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD. A.R. SUBMITTED THAT ASSESSEE IS A CO -OP. CREDIT SOCIETY AND NOT A BANK AND THE EXCLUSION PROVIDED BY SUB SECTIO N 4 TO 80P WOULD NOT BE APPLICABLE TO IT AND THEREFORE THE ASSESSEE IS ELIG IBLE FOR DEDUCTION U/S. 80P. HE FURTHER PLACED RELIANCE ON THE DECISION OF HONB LE GUJARAT HIGH COURT IN THE CASE OF CIT VS. JAFRI MOMIN VIKAS CO-OP. CREDIT SOCIETY LTD. (2014) 362 ITR 331 (GUJ). HE THEREFORE SUBMITTED THAT ASSE SSEE BE GRANTED DEDUCTION U/S. 80P. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O AND LD. CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO ALLOWA BILITY OF DEDUCTION U/S. 80P. THE ASSESSEE WAS DENIED THE DEDUCTION FOR THE REASO N THAT IT WAS HELD THAT ASSESSEE BEING A CO-OPERATIVE BANK AND BY VIRTUE OF SUB SECTION 4 OF SECTION 80P, ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION. BEFORE US, IT IS ASSESSEES ITA NO 1108/ AHD/2011 . A.Y. 2007-08 5 SUBMISSION THAT IT IS A CO-OPERATIVE SOCIETY AND NO T A CO-OPERATIVE BANK. THE AFORESAID SUBMISSION HAS NOT BEEN CONTROVERTED BY R EVENUE NOR HAS REVENUE PLACED ANY MATERIAL ON RECORD TO DEMONSTRAT E THAT IT POSSESSES A LICENSE FROM RESERVE BANK OF INDIA TO CARRY ON THE BANKING BUSINESS WE FIND THAT AN IDENTICAL ISSUE WAS DECIDED BY THE CO- ORDINATE BENCH OF TRIBUNAL AT AHMEDABAD OF WHICH THE A.M. WAS A MEMBE R, IN THE CASE OF KANODAR CO-OP. CREDIT SOCIETY LTD. (ITA NO. 647/AHD /2011). WE FIND THAT IN THAT CASE ALSO THE LD. CIT(A) FOR EXACTLY SAME R EASONS HAD DENIED THE CLAIM OF DEDUCTION TO ASSESSEE. WE FIND THAT IN THA T CASE THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL H OLDING AS UNDER:- 6.BEFORE US, AT THE OUTSET THE LD. A.R. SUBMITTED THAT THE ISSUE IN THE PRESENT CASE IS DIRECTLY COVERED BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SURAT VANKAR SAHAKARI SANGH LTD. (TAX AP PEAL NO. 1150 OF 2013 ORDER DATED 17.01.2014. SHE ALSO PLACED ON RECORD THE COP Y OF THE AFORESAID DECISION. SHE FURTHER SUBMITTED THAT SINCE ASSESSEE IS NOT A CREDIT CO-OP. BANK BUT A CREDIT CO-OP. SOCIETY, EXCLUSION CLAUSE OF SUB-SECT ION(4) OF SECTION 80P WOULD NOT BE APPLICABLE TO THE ASSESSEE. SHE THEREFORE SU BMITTED THAT FOLLOWING THE AFORESAID DECISION OF HONBLE HIGH COURT, THE ISSUE NEEDS TO BE DECIDED IN FAVOUR OF THE ASSESSEE. THE LD. D.R. ON THE OTHER HAND SUP PORTED THE ORDER OF A.O AND LD. CIT(A). 7.WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) UPHELD THE ORDER OF A.O AFTER CONSIDERING THE DEFINITION OF CO- OP. BANK MENTIONED IN CLAUSE (CCI) OF SECTION 56(5) OF PART-V OF BANKING REGULATION ACT, 1949. WE HOWEVER FIND THAT THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SURAT VANKAR SAHAKARI SANGH LTD. (S UPRA). AFTER CONSIDERING THE CLARIFICATION ISSUED BY CBDT VIDE CIRCULAR NO. 133 OF 2007 DATED 09.05.2007, DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLD ING AS UNDER:- 4. AS PER SECTION 80P(4), THE PROVISIONS OF SECTION 80P WOULD NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER THAN PRIMAR Y AGRICULTURAL CREDIT ITA NO 1108/ AHD/2011 . A.Y. 2007-08 6 SOCIETY OR PRIMARY CO-OPERATIVE AGRICULTURAL AND RU RAL DEVELOPMENT BANK. AS PER THE EXPLANATION, THE TERMS CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDIT SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANKING REGULATION ACT, 19 49. 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 RESPONDEN T ASSESSEE NOT BEING A BANK, EXCLUSION PROVIDED IN SUB-SECTION(4) OF SEC TION 80P WOULD NOT APPLY. THIS, IRRESPECTIVE OF THE FACT THAT THE RESP ONDENT WOULD NOT FALL WITHIN THE EXPRESSION PRIMARY AGRICULTURAL CREDIT S OCIETY. 6. HAD THIS BEEN THE PLAIN STATUTORY PROVISIONS UND ER CONSIDERATION IN ISOLATION, IN OUR OPINION, THE QUESTION OF LAW COUL D BE STATED TO HAVE ARISEN. WHEN, AS CONTENDED BY THE ASSESSEE, BY VIRT UE OF 1 SUB-SECTION(4) ONLY CO-OPERATIVE BANKS OTHER THAN THOSE MENTIONED THEREIN WERE MEANT TO BE EXCLUDED FOR THE PURPOSE OF DEDUCTION UNDER SECT ION 80P, A QUESTION WOULD ARISE WHY THEN LEGISLATURE SPECIFIED PRIMARY AGRICULTURAL CREDIT SOCIETIES ALONG WITH PRIMARY CO-OPERATIVE AGRI CULTURAL AND RURAL DEVELOPMENT BANKS FOR EXCLUSION FROM SUCH EXCLUSION AND IN OTHER WORDS, CONTINUED TO HOLD SUCH ENTITY AS ELIGIBLE FOR DEDU CTION. HOWEVER, THE ISSUE HAS BEEN CONSIDERABLY SIMPLIFIED BY VIRTUE OF CBDT CIRCULAR NO. 133 OF 2007 DATED 9.5.2007. CIRCULAR PROVIDES AS UNDER: SUBJECT: CLARIFICATION REGARDING ADMISSIBLY OF DEDU CTION 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 THAT 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 PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATI VE AGRICULTURAL AND ITA NO 1108/ AHD/2011 . A.Y. 2007-08 7 RURAL DEVELOPMENT BANK. FOR THE PURPOSE OF THE SAID SUB-SECTION, CO-OPERATIVE BANK SHALL HAVE THE MEANING ASSIGNED T O IT IN PART V OF THE BANKING REGULATION ACT, 1949. 3. IN PART V OF THE BANKING REGULATION ACT, CO-OPER ATIVE BANK MEANS A STATE CO-OPERATIVE BANK, A CENTRAL CO-OPERATIVE BAN K 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 DEFINED IN PART V OF THE BANKING REGULATION ACT, 1949, SUB-SECTION(4) OF SEC TION 80P WILL NOT APPLY IN THIS CASE. 5. THE ISSUES WITH THE APPROVAL OF CHAIRMAN, CENT RAL 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 THR IFT & CREDIT SOCIETY LTD. WAS UNDER CONSIDERATION. CIRCULAR CLARIFIED TH AT THE SAID ENTITY NOT BEING A CO-OPERATIVE BANK, SECTION 80P(4) OF THE AC T WOULD NOT APPLY TO IT. IN VIEW OF SUCH CLARIFICATION, WE CANNOT ENTERTAIN THE REVENUES CONTENTION THAT SECTION 80P(4) WOULD EXCLUDE NOT ONLY THE CO-O PERATIVE BANKS OTHER THAN THOSE FULFILLING THE DESCRIPTION CONTAINED THE REIN BUT ALSO CREDIT SOCIETIES, WHICH ARE NOT CO-OPERATIVE BANKS. IN THE PRESENT CASE, RESPONDENT ASSESSEE IS ADMITTEDLY NOT A CREDIT CO-O PERATIVE BANK BUT A CREDIT CO-OPERATIVE SOCIETY. EXCLUSION CLAUSE OF SU B-SECTION(4) OF SECTION 80P, THEREFORE, WOULD NOT APPLY.' IN THE RESULT, TAX APPEALS ARE DISMISSED. 8.IN THE PRESENT CASE, REVENUE HAS NOT PLACED ANY M ATERIAL ON RECORD TO DEMONSTRATE THAT ASSESSEE IS A CO-OPERATIVE BANK AN D NOT A CREDIT CO-OPERATIVE SOCIETY. IN SUCH A SITUATION, WE ARE OF THE VIEW TH E ISSUE IN THE PRESENT CASE IS DIRECTLY COVERED BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SURAT VANKAR SAHAKARI SANGH LTD. (SUPRA). BEFORE US , REVENUE HAS NOT PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT. IN VI EW OF THE AFORESAID FACTS AND ITA NO 1108/ AHD/2011 . A.Y. 2007-08 8 RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF HO NBLE GUJARAT HIGH COURT, WE ARE OF THE VIEW THAT ASSESSEE IS ELIGIBLE FOR DEDUC TION U/S. 80P. WE THEREFORE DIRECT ACCORDINGLY. IN THE RESULT, THE GROUND OF AS SESSEE IS ALLOWED. 9. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON R ECORD TO DEMONSTRATE THAT ASSESSEE IS A CO-OP. BANK AND IS NOT A CREDIT CO-OP. SOCIETY NOR HAS PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT . IN VIEW OF THE AFORESAID FACTS, WE RESPECTFULLY FOLLOWING THE DECISION OF CO -ORDINATE BENCH IN THE CASE OF KANODAR CO-OP. CREDIT SOCIETY LTD. (SUPRA) HOLD THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80P. IN THE RESULT, THE GROUND OF ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 28 - 08 - 201 5. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD