The Income Tax Officer, Ward-1(1), Belagavi., Belagavi V. M/s Dhanashree Co-op. Credit Society, Belagavi

ITA 122/PAN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1237 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 08-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIRAJ Y V
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 1 20 /P A N/201 6 (ASST. YEAR : 20 12 - 1 3 ) ITO, WARD - 2 , GOKAK . VS. GOKAK VIVIDH UDDESHGAL SOUHARD SAHAKARI NIYAMIT, HILL GARDEN, ANNA ROAD, GOKAK, DIST. BELAGAVI. PAN NO. AAAAG 4790 L (APPELLANT) (RESPONDENT) ITA NO S . 122 /P A N/201 6 (ASST. YEAR : 20 12 - 1 3 ) ITO, WARD - 1 (1 ), BELAGAVI . VS. M/S. DHANASHREE MULTIPURPOSE COOPERATIVE CREDIT SOCIETY LTD., VIDYA NAGAR, ANGOL, BELAGAVI. PAN NO. AAAAD 0350 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.B. GADADI - CA . (ITA NO.120/PAN/2016) NONE (ITA NO. 121/PAN/2016) DEPARTMENT BY : SHRI RAVIRAJ Y.V. - D R DATE OF HEARING : 2 1 / 0 9 /201 6 . DATE OF PRONOUNCEMENT : 2 1 / 0 9 /201 6 . O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER TH E S E ARE THE APPEAL S FILED BY THE REVENUE AGAINST THE SEPARATE ORDER S PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) , BELAGAVI IN ITA NO S . 3 13 & 216 / BGM / 20 14 - 15 , E A CH, DATED 01 /0 4 /201 6 FOR THE ASSESSMENT YEAR 2012 - 13. 2 ITA NO S . 1 20 & 12 2 /P A N/201 6 2. THE SOLE ISSUE INVOLVED IN TH E S E APPEAL S IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING DEDUCTION TO THE ASSESSEE UNDER SEC. 80P(2)(A)(I) OF THE INCOME TAX ACT, 1961. 3 . THE FACTS OF THE CASE , IN BRIEF, ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME AFTER CLAIMING DEDUCTI ON UNDER SEC. 80P(2)(A)(I) OF THE ACT AT NIL . IT WAS CLAIMED THAT THE SOCIETY IS ENTITLED TO DEDUCTION UNDER SEC. 80P(2)(A)(I) AS IT WAS A COOPERATIVE SOCIETY CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. HOWEVER, THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SEC. 80P(2)(A)(I) WAS REJECTED BY THE ASSESSING OFFICER IN THE ORDER PASSED UNDER SEC. 143(3) OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS A COOPERATIVE BANK, AND HENCE, NOT ENTITLED TO CLAIM DEDUCTION BY VIRTUE OF SEC. 80P(4). 4. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) AL LOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER: - 7. THE HONBLE JURISDICTIONAL HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS SHRI BILUR GURUBASAVA PATTIN SAHAKARI SANGH NIYAMIT , BAGALKOT - ITA NO.5006/2013 DTD:05/02/2014 AS CLEARLY DISCUSSED THE ISSUE AND HELD THAT: ....... THEREFORE, AS THE ASSESSEE IS NOT A CO - OPERATIVE BANK CARRYING ON EXCLUSIVELY BANKING BUSINESS AND AS IT DOES NOT POSSESS A LICENSE FROM RESERVE BANK OF INDIA TO CARRY ON BUSINESS, IT IS NOT A CO - OPERATIVE BANK. IT IS A CO - OPERATIVE SOCIETY WHICH ALSO CARRIES ON THE BUSINESS OF LENDING MONEY TO ITS MEMBERS WHICH IS COVERED UNDER SECTION 80P(2) (A) (I) I.E. CARRYING ON THE BUSINESS OF BANKING FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE OBJECT OF THE AFORESAID AMENDMENT IS NOT TO EXCLUDE THE BENEFIT EXTENDED UNDER SECTION 80P(1) TO SUCH SOCIETY .... IN THE SIMILAR CASE ON AN EXAMINATION OF THE RELEVANT LEGAL PROVISIONS, IT IS TO BE NOTICED AT THE OUTSET THA T THIS COURT IN THE APPEAL IN ITA 351/2011, CIT V. BANGALORE COMMERCIAL TRANSPORT CREDIT CO - OPERATIVE SOCIETY - LIMITED, DECIDED ON 27. 6.2014, HAD FRAMED THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: (I ) WHETHER THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE PROVISION OF SUB - SECTION (4) OF SECTION 80P OF THE INCOME 3 ITA NO S . 1 20 & 12 2 /P A N/201 6 TAX ACT ARE APPLICABLE ONLY TO COOPERATIVE BA NKS AND NOT TO CREDIT C O - OPERATIVE SOCIETIES, WHICH ARE ENGAGED IN BUSINESS OF BANKING, INCLUDING PROVIDING CREDIT FACILITIES TO THEIR MEMBERS? (II) WHETHER THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE ASSESSEE IS A COOPERATIVE SOCIETY AND NOT A COOPERATIVE BANK IN TERMS OF SUB - SECTION (4) OF SECTION 80P OF THE INCOME TAX ACT WITHOUT CONSIDERING THE M EANING OF COOPERATIVE BANK AS ENVISAGED UNDER PART V OF THE BANKING REGULATION ACT, 1949, WHEREIN IT IS DEFINED THAT CO - OPERATIVE BANK INCLUDES PRIMARY COOPERATIVE BANK, WHICH IS FURTHER DEFINED AS COOPERATIVE SOCIETY WITH THE PRIMARY OBJECT OF TRANSACTION S OF BANKING BUSINESS? THE SAID ISSUES WERE ANSWERED IN FAVOUR OF THE ASSESSEE. THE JURISDICTIONAL ITAT, FOLLOWING THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT OF KARNATAKA ON SIMILAR FACTS AND IDENTICAL ISSUE, HAS BEEN CONSISTENTLY HOLDING THE VI EW THAT CO - OPERATIVE SOCIETY REGISTERED AS CO - OPERATIVE SOCIETY PROVIDING CREDIT FACILITY TO ITS MEMBERS AND NOT REGISTERED WITH THE RBI CANNOT BE DENIED THE DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME - TAX ACT. 9. THE FACT THAT THE APPELLANT IS A COOPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS HAS BEEN CLEARLY MENTIONED BY THE A.O IN THE AFORESAID ASSESSMENT ORDER. THE APPELLANT IN ITS SUBMISSIONS DATED 11/02/2016 AND THROUGH AN AFFIDAVIT DATED 11/02/2016 HAS CLEARLY STATED THAT THE APPELLANT IS A CO - OPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 ENGAGED IN PROVIDING CREDIT FACILITIES ONLY TO ITS MEMBERS AND IT DOES NOT POSSESS ANY BAN KING LICENCE FROM THE RBI. IT IS THEREFORE, CLEAR THAT THE APPELLANTS CASE IS SQUARELY COVERED BY THE AFORESAID DECISIONS OF THE JURISDICTIONAL HIGH COURT OF KARNATAKA AS FACTS ARE SIMILAR AND ISSUE INVOLVED IS IDENTICAL. IT APPEARS SLP FILED BY DEPARTMEN T BEFORE HONBLE SUPREME COURT ON THE SIMILAR ISSUE IS PENDING. UNLESS THE DECISION OF THE JURISDICTIONAL HIGH COURT IS REVERSED BY THE HONBLE SUPREME COURT, THE POSITION OF THE LAW IS CLEAR THAT THE APPELLANTS CASE IS NOT COVERED BY SECTION 80P(4) AS IT IS NOT A CO - OPERATIVE BANK AND IT IS ENTITLED TO THE DEDUCTION U/S 80P(2)(A)(I). HENCE, THE APPEAL FILED BY THE APPELLANT IS ALLOWED. THE APPELLANT GETS THE RELIEF OF RS.76,04,883/ - UNDER SECTION 80P(2)(A)(I) OF THE INCOME - TAX ACT. 5. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER S OF THE ASSESSING OFFICER. HE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ABOVE 4 ITA NO S . 1 20 & 12 2 /P A N/201 6 QUOTED ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED THE CLAIM OF DEDUCTION U NDER SEC. 80P(2)(A)(I) OF THE ACT AFTER FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHRI BILULRU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMIT, BAGALKOT IN ITA NO. 5006/2013 DATED 05/02/2014 . NO CONTRARY DECISION CO ULD BE CITED BY THE DEPARTMENTAL REPRESENTATIVE. WE, THEREFORE, DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS), W HICH ARE HEREBY CONFIRMED AND THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 2 1 ST DAY OF SEPTEMBER , 201 6 AT GOA . S D / - S D / - (N.S.SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 1 ST SEPTEMBER , 201 6 . VR/ - COPY TO: 1 . THE ASSESSEE 1) GOKAK VIVIDH UDDESHGAL SOUHARD SAHAKARI NIYAMIT, HILL GARDEN, ANNA ROAD, GOKAK, DIST. BELAGAVI. 2) M/S. DHANASHREE MULTIPURPOSE COOPERATIVE CREDIT SOCIETY LTD., VIDYA NAGAR, ANGOL, BELAGAVI. 2 . THE REVENUE. A) ITO, WARD - 2, GOKAK. B) ITO, WARD - 1(1), BELAGAVI. 5 ITA NO S . 1 20 & 12 2 /P A N/201 6 3 . THE PR. CIT, BELAGAVI. 4 . THE CIT(A) , BELAGAVI. 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI