Sri. M.G. Shankar, Bangalore V. Pr.CIT, Bangalore

ITA 1190/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8695 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 27-08-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMARAO, ACCOUNTANT MEMBER ITA NO.1191(BANG) 2015 (ASSESSMENT YEAR : 2012-13) THE INCOME-TAX OFFICER, WARD-3, VIYAYAPUR PAN NO.AAAAB5594K APPELLANT VS M/S BASAWAN BAGEWAI TALUKA PRIMARY TEACHERS CO- OPERATIVE CREDIT SOCIETY, TELAGI ROAD, TAL.B.BAGEWADI, DIST. VIJAYAPUR. RESPONDENT CO.NO.217(BANG)/2015 (IN ITA NO.1191(BANG)/2015) (ASSESSMENT YEAR: 2012-13) (BY ASSESSEE) REVENUE BY : SHRI NARESH SAKA, ADDL.CIT ASSESSEE BY : SHRI G.S.BUDYAL, CA DATE OF HEARING : 03-12-2015 DATE OF PRONOUNCEMENT : 1 1-12-2015 O R D E R PER SHRI INTURI RAMA RAO, AM: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 03-12-2014 OF CIT(A), BELGAVI FOR THE ASSESSMENT YEAR 2012-13. ITA NO.1191(B)/15 & CO NO.217(BANG)15 2 2. THE LEARNED COUNSEL FOR THE ASSESEE SUBMITTED THAT THE ISSUE IN THE REVENUES APPEAL IS COVERED BY THE JURISDICTION AL HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS SRI BILURU GURUBASA VA PATTIN SAHAKARI SANGH NIYAMIT, BAGALKOT IN ITA NO.5006/2013 DATED 0 5-02-2014, WE THEREFORE, PROPOSE TO HEAR AND DISPOSE OF THE APPEA L AND THE CROSS OBJECTION FILED BY THE ASSESSEE. 3. WE HAVE HEARD THE LEARNED DR AND CAREFULLY PERU SED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS A CO-OPERATIV E SOCIETY REGISTERED UNDER THE KARNATAKA STATE CO-OPERATIVE SOCIETIES AC T, 1959. THE ASSESSEE CLAIMED DEDUCTION U/S 80P(2)(A)(I) OF THE IT ACT AN D DECLARED THE TOTAL INCOME AT RS.NIL. THE AO REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY BANK AN D HENCE, NOT ENTITLED TO CLAIM DEDUCTION BY VIRTUE OF SEC.80P(2)(A)(I) OF TH E ACT. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING VARIOUS JUDG MENTS INCLUDING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS SRI BILURU GURUBASAVA PATTIN SAHAKARI SANGH NIYAMIT, BA GALKOT IN ITA NO.5006/2013 DATED 05-02-2014 AS WELL AS IN THE CAS E OF ACIT VS M/S BANGALORE COMMERCIAL TRANSPORT CREDIT CO-OPERATIVE SOCIETY LIMITED. PARA 8.1 & 8.2 OF THE IMPUGNED ORDER OF THE CIT(A) IS REPRODUCED HERE UNDER; 8.1. THE HONBLE HIGH COURT OF KARNATAKA IN THE C ASE OF SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA ITA NO.1191(B)/15 & CO NO.217(BANG)15 3 NIYAMITHA, SUPRA WHICH WAS FOLLOWED IN THE CASES OF GENERAL INSURANCE EMPLOYEES CO-OPERATIVE CREDIT SO CIETY LTD. AND KARNATAKA HIGH COURT DECISION IN THE CASE OF VASAVI MULTIPURPOSE SOUHARDA SAHAKARI NIYAMITHA, IT A NO.505/2013 DATED 27/06/2014, SUPRA, HAS CLEARLY HE LD HAT A CO-OPERATIVE SOCIETY REGISTERED AS CO-OPERATI VE SOCIETY, PROVIDING CREDIT FACILITIES TO MEMBERS AND NOT REGI STERED WITH THE RBI CANNOT BE DENIED THE EXEMPTION UNDER SECTIO N 80P(1)(I) OF THE IT ACT. THE OPERATIVE PART OF THE JUDGMENT READS AS FOLLOWS; THEREFORE, THE INTENTION OF THE LEGISLATURE IS CL EAR, IF A CO-OPERATIVE BANK IS EXCLUSIVELY CARRYING ON BANKIN G BUSINESS, THEN THE INCOME DERIVED FROM THE SAID BUS INESS 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 IN CLUDES THE PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMAR Y CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THE LEGISLATURE DID NOT WANT TO DENY THE SAID BENEFITS TO A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO -OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THEY DID NOT WANT TO EXTEND THE SAID BENEFIT TO A CO-OPERATIVE BANK W HICH IS EXCLUSIVELY CARRYING ON BANKING BUSINESS I.E THE PU RPOSE OF THIS AMENDMENT. THEREFORE, AS THE ASSESSEE IS NOT A CO- OPERATIVE BANK CARRYING ON EXCLUSIVELY BANKING BUSI NESS AND AS IT DOES NO POSSESS A LICENCE FROM RESERVE B ANK OF INDIA TO CARRY ON BUSINESS, IT IS NOT A CO-OPERATIV E BANK. IT IS A CO-OPERATIVE SOCIETY WHICH ALSO CARRIES ON THE BUSINESS OF LENDING MONEY TO ITS MEMBERS WHICH IS COVERED UN DER SECTION 80P(2)(A)(I) I.E CARRYING ON THE BUSINESS O F BANKING FOR ITA NO.1191(B)/15 & CO NO.217(BANG)15 4 PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE OBJ ECT OF THE AFORESAID AMENDMENT IS NOT TO EXCLUDE THE BENEFIT E XTENDED UNDER SECTION 80P(1) TO SUCH SOCIETY .IN THE INSTANT CASE, WHEN THE STATUS OF THE ASSESSEE IS A CO- OPERATIVE SOCIETY AND IS NOT A CO-OPERATIVE BANK, T HE ORDER PASSED BY THE ASSESSING AUTHORITY EXTENDING THE BEN EFIT OF EXEMPTION FROM PAYMENT OF TAX UNDER SECTION 80P(2)( A)(I) OF THE ACT IS CORRECT. 8.2 THE FACT THAT THE APPELLANT IS A CO-OPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA CO-OPERATIVE SOCIETI ES ACT, 1959 ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS HAS BEEN CLEARLY MENTIO0NED BY THE AO IN PARA-3 OF HIS AFORESAID ASSESSMENT ORDER. IT IS ALSO NOT THE CAS E OF THE AO THAT THE ASSESSEE IS REGISTERED WITH THE RBI AS A B ANK. IN ITS AFORESAID SUBMISSIONS DATED 18-11-2014 THE APPE LLANT HAS CLEARLY STATED WITH THE HELP OF NECESSARY EVIDE NCE AND AN AFFIDAVIT DATED 02-9-2014 TO THIS EFFECT THAT TH E APPELLANT IS A CO-OPERATIVE SOCIETY REGISTERED UNDER THE KARN ATAKA CO- OPERATIVE SOCIETIES ACT, 1959 ENGAGED IN PROVIDING CREDIT FACILITIES ONLY TO ITS MEMBERS AND IT DOES NOT POSS ESSES ANY BANKING LICENCE FROM THE RBI. IT IS THEREFORE, C LEAR THAT THE APPELLANTS CASE IS SQUARELY COVERED BY THE AFORESA ID DECISIONS OF THE JURISDICTIONAL HIGH COURT OF KARNA TAKA IN THE CASES OF SRI BILURU GURUBASAVA PATTINA SAHAKARI SAN GHA NIYAMITHA, SUPRA WHICH WAS FOLLOWED IN THE CASE OF GENERAL INSURANCE EMPLOYEES CO-OPERATIVE CREDIT SOCIETY LTD , AND KARNATAKA HIGH COURT DECISION IN THE CASE OF VASAVI MULTIPURPOSE SOUHARDA SAHAKARI NIYAMITHA ITA NO.505/2013 DATED 7-06-2014, SUPRA. THEREFORE, IN V IEW OF ITA NO.1191(B)/15 & CO NO.217(BANG)15 5 THE FOREGOING DISCUSSION AND RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS OF THE JURISDICTIONAL HIGH COUR T OF KARNATAKA. IT IS HELD THAT THE APPELLANT CASE IS NOT COVERED BY SECTION 80P(4) AS IT IS NOT A CO-OPERATIVE BANK AND THEREFORE, IT IS ENTITLED TO THE EXEMPTION U/S 80P( 2)(A)(I) OF THE IT ACT. 4. SINCE THE INCOME EARNED BY THE ASSESSEE IS ONLY FROM PROVIDING CREDIT FACILITY TO ITS MEMBERS THEREFORE, THE ISSUE IS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE HIGH COURT IN THE CASE OF C IT VS BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGAL KOT(SUPRA). WE FURTHER NOTE THAT AN IDENTICAL ISSUE HAS BEEN DECID ED BY THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY: 2009-10 IN FAVOUR OF AS SESSEE, VIDE ORDER DATED 23-02-2015 IN ITA NO.1248/BANG/2013 DATED 23-05-201 5. ACCORDINGLY, FOLLOWING THE DECISION OF THE HONBLE HIGH COURT (S UPRA) AS WELL AS THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESEES OWN CASE, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE IMPUGNED ORDER OF THE CIT(A). 5. IN THE CROSS OBJECTION THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS; 1) THE ORDER OF THE LEARNED CIT(A) BELGAUM ALLOWI NG DEDUCTION U/S 80P(2)(A)(I) IN RESPECT OF NET INCOME FROM INTEREST ON ADVANCES TO MEMBERS MAY KINDLY BE UPHEL D. YOUR KIND ATTENTION IS INVITED TO DECISION OF THE H ONBLE ITAT C BENCH IN ITA NO.1503/BANG/2014 FOR AY: 2011-12 DECIDED IN FAVOUR OF THE ASSESSEE. ITA NO.1191(B)/15 & CO NO.217(BANG)15 6 2. THE LD.CIT(A) DELETING THE ADDITION OF RS.161441 /- FOR DISALLOWANCE U/S 40(A)(IA) MAY KINDLY BE UPHELD. 3) THE LD. CIT(A) BELAGAVI IS NOT JUSTIFIED IN CO NFIRMING THE ADDITION OF RS.702728 BEING INTEREST ON DEPOSIT WIT H BANKS. IN VIEW OF THE DECISION OF HONBLE ITAT C BENCH IN ITA NO.1503/BANG/2014 FOR AY: 2011-12 DECIDED IN FAVOUR OF RESPONDENT MAY KINDLY BE CONSIDERED. 4) THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING TH E ADDITION OF RS.175500/- BEING DIVIDEND ON SHARED OF DCC BANK, VIJAYAPUR. THIS DIVIDEND INCOME BEING ELIGIBLE FOR DEDUCTION U/S 80P(2)(D), WHICH MAY KINDLY BE CONSIDERED. 5) APPELLANT PRAYS LEAVE TO ADD, ALTER, MODIFY OR R AISE ANY GROUND OF APPEAL AT THE TIME OF HEARING. 6. AS IT IS CLEAR FROM THE GROUNDS OF THE CROSS OB JECTION, THE ASSESSEE HAS SUPPORTED THE ORDER OF THE CIT(A) AND NOT RAISE D ANY NEW ISSUE. THEREFORE, IN VIEW OF OUR FINDING ON THE ISSUE RAIS ED IN THE DEPARTMENTS APPEAL, THE CROSS OBJECTION OF THE ASSESSEE BECOMES INFRUCTUOUS. 7. IN THE RESULT, THE REVENUES APPEAL AND THE CRO SS OBJECTION BY THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THE 11 TH DECEMBER, 2015. SD/- (VIJAYPAL RAO) SD/- (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE: D A T E D : 11-12-2015 AM* ITA NO.1191(B)/15 & CO NO.217(BANG)15 7 COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE