Baitu Co-operative Marketing Society Ltd., Barmer V. ITO, Barmer

ITA 122/JODH/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6238 (ITAT-JODHPUR)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 13-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH (SMC), JODHPUR BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 122/JODH/2018 (ASSESSMENT YEAR-2014-15 BAITU CO-OPERATIVE MARKETING SOCIETY LTD., VILL & P.O.-BAITU, DISTT.- BARMER. VS INCOME TAX OFFICER, BARMER. (APPELLANT) (RESPONDENT) PAN: AAAAB 3048 C ASSESSEE BY SHRI GAUTAM CHAND VAID (CA) REVENUE BY SHRI ASHOK KHANNA JCIT DR DATE OF HEARING 23/05/2018 DATE OF PRONOUNCEMENT 25/05/2018 O R D E R PER: R.C. SHARMA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-2, JODHPUR DATED 15/11/2017 FOR THE A.Y. 2014-15 IN THE MATTER OF ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED T O AS THE ACT, FOR SHORT]. 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED FOR DE NIAL OF DEDUCTION CLAIMED U/S 80P(2)(D) OF THE ACT AMOUNTIN G TO RS. 2 ITA 122/JODH/2018 BAITU COOPERATIVE MARKETING SOCIETY VS. ITO 18,24,336/- IN RESPECT OF INTEREST INCOME FROM COOP ERATIVE BANK. THE GROUNDS TAKEN BY THE ASSESSEE IN APPEAL IS AS U NDER: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT (A) ERRED IN SUSTAINING THE DENIAL OF DEDUCTION CLA IMED BY THE ASSESSEE U/S 80P(2)(D) AMOUNTING TO RS. 18,24,336/- UPHOLDING THE ERRONEOUS FACTUAL CONCLUSION DRAWN BY THE LD. AO TH AT 'IN VIEW OF THE ABOVE. IT IS CLEAR THAT BCCB IS A URBAN COMMERC IAL BANK AND DOES NOT FAIL UNDER THE PURVIEW OF A 'CO-OPERATIVE SOCIETY' REFERRED IN SECTION 80P(2)(D) OF THE INCOME TAX ACT . 1961 . IN THE PRESENT CASE THE ASSESSEE HAS EARNED INTEREST INCOME FROM SUCH CO-OPERATIVE BANK OF RS. 15,24,688/- WHERE AS INTER EST AMOUNTING TO RS. 14,80,236/- HAS BEEN CLAIMED AS DEDUCTION U/S 80P(2 )(D) OF THE ACT.' [CONCLUSION OF PARA 5 PAGE, SECOND LAST PAGE OF ASSESSMENT ORDER]. THE DEDUCTION HAS BEEN DISALLOWE D IRRESPECTIVE OF THE FACT THAT ASSESSEE IS NOT A CO OPERATIVE BAN K. DENIAL OF THE LEGITIMATE DEDUCTION ON ILLOGICAL INTERPRETATION OF THE STATUTORY PROVISIONS IS ERRONEOUS AND IT IS RESPECTFULLY REQU ESTED TO ALLOW SUCH DEDUCTION AS CLAIMED BY ASSESSEE. 2. THE APPELLANT CRAVE LIBERTY TO ADD, AMEND, ALTER , MODIFY, OR DELETE ANY OF THE GROUND OF APPEAL ON OR BEFORE ITS HEARIN G BEFORE YOUR HONOR AND ALL THE GROUND ARE WITHOUT PREJUDICE TO E ACH OTHER. 3. THE APPELLANT PRAYED FOR THE JUSTICE. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FROM THE RECORD I FOUND THAT DURING THE COURSE OF A SSESSMENT, THE AO NOTED THAT THE ASSESSEE SOCIETY HAD CLAIMED DEDUCTION U/S 80P(2)(D) IN RESPECT OF INTEREST AND DIVIDEND RECEI VED FROM CO-OPERATIVE BANK. THE AO ISSUED A SHOW-CAUSE NOTICE DATED 24-10 -2016 WHEREIN HE ASKED THE ASSESSEE TO EXPLAIN REASON AS TO WHY INTER EST RECEIVED AT RS. 14,80,236/- FROM CO-OPERATIVE BANK (BARMER CENTRAL CO-OPERATIVE BANK) 3 ITA 122/JODH/2018 BAITU COOPERATIVE MARKETING SOCIETY VS. ITO MAY NOT BE DISALLOWED AND ADDED BACK TO ITS TOTAL I NCOME. THE ASSESSEE STATED BEFORE THE AO THAT BARMER CENTRAL CO-OPERATI VE BANK (BCCB) IS REGISTERED UNDER THE CO-OPERATIVE ACT BEARING REGIS TRATION NO. 208C DATED 04-03-1959. IT FURTHER STATED THAT ALL THE PROVISIO NS OF COOPERATIVE ACT ARE APPLICABLE ON THE BCCB AND BANK HAS TO FOLLOW ALL T HE RULES, HENCE IT IS A COOPERATIVE SOCIETY. THE ASSESSING OFFICER EXAMINED THE ASSESSEES CLAIM WITH REFERENCE TO SECTION 80P(2)(D) OF THE ACT AND H ELD THAT THIS SECTION REFERRED TO INTEREST INCOME FROM INVESTMENT IN ANOT HER CO-OPERATIVE BANK ONLY AND NOT EXTENDED TO THE INTEREST EARNED FROM T HE INVESTMENT IN ANY CO-OPERATIVE BANK. ACCORDINGLY, THE AO DISALLOWED CL AIM OF DEDUCTION U/S. 80P(2)(D) OF RS. 14,80,236/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) HAS CONFIR MED THE ACTION OF THE ASSESSING OFFICER. NOW THE ASSESSEE IS IN FURTHE R APPEAL BEFORE THE ITAT. 5. I HAVE CAREFULLY GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AND FROM PERUSAL OF THE RECORD I FOUND THAT THE ASSESSE E IS A CREDIT SOCIETY DULY REGISTERED WITH THE REGISTRAR OF CO-OPERATIVES SOCIE TIES SUPPLYING COMMODITIES LIKE SEEDS, FERTILIZERS, PESTICIDES, FO OD GRAINS, SUGAR, TEA, STATIONERY ETC. TO FARMERS AND CLAIMED DEDUCTION U/ S 80P OF THE ACT. THE 4 ITA 122/JODH/2018 BAITU COOPERATIVE MARKETING SOCIETY VS. ITO TOTAL INCOME SHOWN WAS RS. 24,42,848/- AND DEDUCTION WAS CLAIMED AT RS. 18,24,336/- AND INCOME WAS SHOWN AT RS. 6,18,510/-. IN RELATION TO DIVIDENDS AND INTEREST RECEIVED FROM OTHER CO-OPERA TIVE SOCIETY THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80P(2)(D) OF THE ACT, WHICH HAD BEEN DENIED BY THE AO. I HAVE DELIBERATED ON THE JUDICIA L PRONOUNCEMENTS REFERRED BY THE LOWER AUTHORITIES IN THEIR RESPECTIV E ORDERS AS WELL AS CITED BY THE LD AR AND LD DR DURING THE COURSE OF HEARING BEFORE THE ITAT IN THE CONTEXT OF FACTUAL MATRIX OF THE CASE. THE ISSUE UN DER CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF HONBLE KARNATA KA HIGH COURT IN THE CASE OF PR.CIT & ANR. VS TOTAGARS CO-OPERATIVE SALE SOCIETY (2017) 392 ITR 74 (KAR) WHEREIN THE HON'BLE HIGH COURT HAS HELD AS UNDER: THE WORD 'CO-OPERATIVE SOCIETY' IS A WORD OF A LAR GE EXTENT, AND DENOTES A GENUS, WHEREAS I.E. WORD 'CO-OPERATIVE BANK' IS A WORD OF LIMITED EXTENT, WHICH MERELY DEMARCATES AND IDENTIFIES A PARTICULAR SPECIES OF T HE GENUS CO-OPERATIVE SOCIETIES. CO-OPERATIVE SOCIETY CAN BE OF DIFFERENT NATURE, AN D CAN BE INVOLVED IN DIFFERENT ACTIVITIES; THE CO-OPERATIVE SOCIETY/ BANK IS MEREL Y A VARIETY OF CO-OPERATIVE SOCIETIES. THUS THE CO-OPERATIVE BANK WHICH IS A SP ECIES OF THE GENUS WOULD NECESSARILY BE COVERED BY THE WORD 'CO-OPERATIVE SO CIETY'. FURTHERMORE, SECTION 56(I)(CCV) OF THE BANKING REGULATIONS ACT, 1949, DE FINES A PRIMARY CO-OPERATIVE SOCIETY/ BANK AS THE MEANING OF CO-OPERATIVE SOCIET Y. THEREFORE, A CO-OPERATIVE SOCIETY/ BANK WOULD BE INCLUDED IN THE WORDS 'CO-OP ERATIVE SOCIETY'. THEREFORE UNDER SECTION 80P(2)(D) OF THE INCOME-TAX ACT, 1961 THE AMOUNT OF INTEREST EARNED FROM A CO-OPERATIVE SOCIETY/ BANK WOULD BE DEDUCTIB LE. 6. IT IS CLEAR FROM THE ORDER OF THE AUTHORITIES BE LOW THAT THEY HAVE DENIED CLAIM OF DEDUCTION AND RECORDED FINDING THAT BCCB (BARMER CENTRAL CO-OPERATIVE BANK) IS A URBAN COMM ERCIAL BANK. THIS 5 ITA 122/JODH/2018 BAITU COOPERATIVE MARKETING SOCIETY VS. ITO FINDING IS GROSSLY ERRONEOUS AS BARMER CENTRAL CO O PERATIVE BANK FROM WHERE ASSESSEE EARNED INTEREST INCOME IS A CO OPERA TIVE SOCIETY HAVING BANKING LICENSE AND NOT A COMMERCIAL BANK. THIS ERR ONEOUS FACTUAL PRESUMPTION CREATE CONFUSION AND LEAD TO UNWARRANTE D ADDITION DESPITE THE FACT THAT AT OTHER PLACE IT HAS BEEN RECOGNIZED THA T ASSESSEE EARNED INTEREST INCOME FROM SUCH CO-OPERATIVE BANK. HAD THERE BEEN NO CONTRADICTION ABOUT THE STATUS OF THE BARMER CENTRAL CO OPERATIVE BANK FROM WHERE ASSESSEE EARNED INTEREST INCOME, IT MIGHT BE POSSIBLE THAT T HIS DISALLOWANCE NOT MADE BY LD. AO AND WOULD NOT GOT SUSTAINED BY LD. CIT(A) . 7. I FOUND THAT THE DECISION RELIED UPON BY THE ASS ESSING OFFICER AND THE LD. CIT(A) ARE DISTINGUISHABLE ON F ACTS IN SO FAR AS IN THE CASE OF CIT VS COMMON EFFLUENT TREATMENT PLANT (THANE BELAPUR) ASSOCIATION (2010) 192 TAXMAN 238 ( BOM) AS RELIED BY THE ASSESSING OFFICER, THE QUESTION OF TA XABILITY OF INTEREST INCOME WAS UNDER CONSIDERATION WHILE IN AS SESSEES CASE DEDUCTION U/S 80P OF THE ACT AFTER INCLUSION O F SUCH INCOME IN GROSS TOTAL INCOME IS UNDER CONSIDERATION AND TH EREFORE, HAS NO RELEVANCY IN THE CASE OF ASSESSEE. 8. IN THE CASE OF STATE BANK OF INDIA VS. CIT (2016 ) 72 TAXMANN.COM 64 (GUJ) AS RELIED BY THE ASSESSING OFF ICER, THE 6 ITA 122/JODH/2018 BAITU COOPERATIVE MARKETING SOCIETY VS. ITO ASSESSEE WAS NOT A COOPERATIVE SOCIETY BUT A BANK, THEREFORE, HAVE NO RELEVANCY TO THE FACTS OF THE INSTANT CASE. 9. FROM THE RECORD, I ALSO FIND THAT IN THE A.Y. 20 13-14, ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE OR DER DATED 17/12/2015 BUT NO DISALLOWANCE WAS MADE IN RESPECT OF SIMILAR INCOME. IN VIEW OF THE ABOVE AND RESPECTFULLY FOLLO WING THE DECISION OF HONBLE KARNATAKA HIGH COURT AS STATED ABOVE, I DO NOT FIND ANY MERIT IN DISALLOWANCE OF DEDUCTION U/S 80P OF THE ACT IN RESPECT OF INTEREST EARNED FROM OTHER COOPER ATIVE SOCIETY. ACCORDINGLY, I DIRECT THE ASSESSING OFFICER TO DELE TE THE SAME. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 25/05/2018. SD/- [R.C. SHARMA] ACCOUNTANT MEMBER DATED : 25/05/2018 *RANJAN COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 6. GUARD FILE (ITA NO. 122/JODH/2018) ASSISTANT REGISTRAR JODHPUR BENCH