ITO-WARD-7(1), Nagpur V. M/S ARVIND SAHAKARI PAT. SANSTHA, KATOL

ITA 121/NAG/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93404 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 13-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE

Judgement Text

1 ITA NOS. 121,123 & 124/NAG/2014 ITA NOS. 109, 110 & 111/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NOS. 121,123&124/NAG/2014 ASSESSMENT YEARS : 2007 - 08,2009 - 10&2010 - 11. THE INCOME - TAX OFFICER, M/S ARVIND SAHAKARI PAT WARD - 7(1), NAGPUR. SANSTHA, NEAR BUS STAND V/S. KATOL, DIST. NAGPUR. PANAAAAA6436F I.T.A. NO. 109/NAG/2014 ASSESSMENT YEAR : 2010 - 11. THE INCOME - TAX OFFICER, M/S GRA HAK KARMACHARI SAHAKARI WARD - 1, BHANDARA. V/S. BHANDAR LTD., VIDARBHA HOUSING BOARD COLONY, Z.P. CHOWK, BHANDARA. PAN AAAAG1605N I.T.A. NO. 110/NAG/2014 ASSESSMENT YEAR : 2010 - 11. THE INCOME - TAX OFFICER, M/S PRATHMIK SHIKSHAK KARMACHARI WARD - 2, CHANDRAPUR. V/S. SAH. PAT SANSTHA, CHAMORSHI, DIST. GADCHIROLI. AAAAP7980P I.T.A. NO. 111/NAG/ 2014 ASSESSMENT YEAR : 201 0 - 11. THE INCOME - TAX OFFICER, M/S NANDGAON INCLINE KAMGAR WARD - 2, CHANDRAPUR. V/S. CREDIT CO - OPERATIVE SOCIETY NANDGAON, DIST. CHANDRAPUR. AAAAN5262A (APPELLANT) RESPONDENT. 2 ITA NOS. 121,123 & 124/NAG/2014 ITA NOS. 109, 110 & 111/NAG/2014 APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : NONE. DATE OF HEARING : 2 5 - 0 6 - 2015 DATE OF PRONOUNCEMENT : 25 TH JUNE, 2015. O R D E R PER BENCH . THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST RESPECTIVE ORDERS OF CIT(APPEALS) IN THE CASE OF SEPARATE ASSESSEES. SINCE THE ISSUES INVOLVED ARE COMMON AND CONNECTED AND APPEALS WERE HEARD TOGETHER, THESE HAVE BEEN CONSOLIDATED AND DISPOSED OF TOGETHER FOR THE SAKE OF CONVENIENCE. 2. A COMMON ISSUE RAISED IS T HAT THE CIT(APPEALS) ERRED IN ALLOWING DEDUCTION UNDER SECTION 80P OF THE I.T. ACT. IT HAS ALSO BEEN URGED THAT THE CIT(APPEALS) ERRED IN IGNORING THE FACTS THAT THE MAIN MOTO OF THE ASSESSEE IS LENDING FOR ITS MEMBERS WHICH IS IN THE NATURE OF BANKING TRANSACTION AND COMES UNDER THE PURVIEW OF SECTION 80P(4) OF THE I.T. ACT, 1961. 3. AT THE OUTSET, WE NOTE THAT NONE HAD APPEARED ON BEHALF OF THE ASSESSEE IN ALL THESE CASES. HOWEVER, LEARNED D.R. BROUGHT TO OUR NOTICE THAT IDENTICAL ISSUES HAVE BEEN DECIDED BY THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE 4. UPON CAREFUL CONSIDERATION, WE NOTE THAT THE ASSESSEE SOCIETIES IN THESE CASES ARE ENGAGED IN PROVIDING CREDIT FACILIT Y TO ITS MEMBERS. THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE I.T. ACT. THIS WAS DENIED BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 80P(4). WE FI ND THAT IN IDENTICAL SITUATION THIS TRIBUNAL IN SEVERAL CASES HAVE DECIDED THE ISSUE IN FAVOUR 3 ITA NOS. 121,123 & 124/NAG/2014 ITA NOS. 109, 110 & 111/NAG/2014 OF THE ASSESSEE. THE HONBLE JURISDICTIONAL HIGH C OURT IN THE CASE OF QUEEN URBAN CO - OPERATIVE CREDIT SOCIETY LTD. V/S. ACIT IN TAX APPEALS NO. 22, 23 & 24 OF 2015 VIDE ORDER DATED 17 TH APRIL, 2015 HAS ALSO CONSIDERED THE ISSUE AND ADJUDICATED AS UNDER : THIS FACT OF ACCEPTING DEPOSITS FROM PEOPLE WH O ARE NOT MEMBERS HAD BEEN SO RECORDED BY THE CIT(A) IN HIS ORDER. BUT IT CANNOT BE CONCLUDED THAT THE APPELLANTS PRINCIPAL BUSINESS WAS OF ACCEPTING DEPOSITS FROM PUBLIC AND THEREFORE IT WAS IN BANKING BUSINESS. IN FACT, THE IMPUGNED ORDER ERRONEOUSLY RELIES UPON BYE - LAW 43 OF THE SOCIETY WHICH ENABLES THE SOCIETY TO RECEIVE DEPOSITS TO CONCLUDE THAT IT CAN RECEIVE DEPOSITS FROM PUBLIC. THUS IN THE PRESENT FACTS THE FINDING THAT THE APPELLANTS PRINCIPAL BUSINESS WAS OF BANKING WAS PERVERSE AS IT WAS NOT SUPPORTED BY THE EVIDENCE ON RECORD. SO FAR AS THE ISSUE OF PRIMARY OBJECT OF THE ASSESSEE WAS CONCERNED THE IMPUGNED ORDER GIVES THE FINDING ON THAT BASIS TO DEPRIVE THE APPELLANT THE BENEFIT OF SECTION 80P. IN FACT AS PER THE BYE - LAWS OF THE APPELLANT SOCIETY THERE WAS NO PROHIBITION TO ADMITTING A SOCIETY TO ITS MEMBERSHIP AND ONE OF THREE CUMULATIVE CONDITIONS PRECEDENT TO BE A PRIMARY COOPERATIVE BANK WAS NOT SATISFIED. THIS WAS A MANDATORY C ONDITION I.E. THE BYE LAWS MUST SPECIFICALLY PROHIBIT ADMISSION OF ANY OTHER COOPERATIVE SOCIETY TO ITS MEMBERSHIP. THE REVENUE HAS NOT BEEN ABLE TO SHOW ANY SUCH PROHIBITION IN THE BYE LAWS OF THE ASSESSEE. THUS EVEN THE AFORESAID QUALIFYING CONDITION (3) FOR BEING CONSIDERED AS A PRIMARY COOPERATIVE BANK WAS NOT SATISFIED. THUS, THE THREE CONDITIONS AS PROVIDED UNDER SECTION 5(CVV) OF THE BANKING REGULATION ACT, 1949, ARE TO BE SATISFIED CUMULATIVELY AND EXCEPT CONDITION (2) THE OTHER TWO QUALIF YING CONDITIONS ARE NOT SATISFIED. ERGO, APPELLANT CANNOT BE CONSIDERED TO BE A CO - OPERATIVE BANK FOR THE PURPOSES OF SECTION 80P(4) OF THE ACT. THUS, THE APPELLANT IS ENTITLED TO THE BENEFIT OF DEDUCTION AVAILABLE UNDER SECTION 80P(2)(A)(I). THE CON TENTION OF THE REVENUE THAT THE APPELLANT IS NOT ENTITLED TO THE BENEFIT OF SECTION 90P(2)(A)(I) IN VIEW OF THE FACT THAT IT DEALS WITH NON - MEMBERS CANNOT BE UPHELD. THIS FOR THE REASON THAT SECTION 80P(1) OF THE ACT RESTRICTS 4 ITA NOS. 121,123 & 124/NAG/2014 ITA NOS. 109, 110 & 111/NAG/2014 THE BENEFITS OF DEDUCTION OF INCOME OF CO - OPERATIVE SOCIETY TO THE EXTENT IT IS EARNED BY PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THEREFORE, TO THE EXTENT THE INCOME EARNED IS ATTRIBUTABLE TO DEALINGS WITH THE NON - MEMBERS ARE CONCERNED THE BENEFIT OF SECTION 80P WOULD NOT BE AVAILABLE. IN THE ABOVE VIEW OF THE MATTER, AT THE TIME WHEN EFFECT HAS BEEN GIVEN TO THE ORDER OF THIS COURT, THE AUTHORITIES UNDER THE ACT WOULD RESTRICT THE BENEFIT OF DEDUCTION UNDER SECTION 80P OF THE ACT ONLY TO THE EXTENT THAT THE SAME WAS EARNE D BY THE APPELLANT IN CARRYING ON ITS BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. 5. WE FIND THAT IN THE PRESENT CASE NO CASE HAS BEEN MADE OUT BY THE REVENUE THAT THE ASSESSEES BUSINESS INCLUDES PROVIDING CREDIT FACILITIES TO NON - MEMBERS. IN THESE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE PRECEDENT AS ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE LEARNED CIT(APPEALS). A CCORDINGLY WE UPHOLD THE SAME. 6. IN THE RESULT, THESE APPEALS FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JUNE, 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) (SHAMIM YAHYA) JUDICIAL MEMBER. ACCOUNTANT MEMBER NAGPUR, DATED: 25 TH JUNE, 2 015. 5 ITA NOS. 121,123 & 124/NAG/2014 ITA NOS. 109, 110 & 111/NAG/2014 COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR