ITO 26(2)(5), MUMBAI V. M/S RAMARAJU KSHATRIYA CO-OP CREDIT SOC. LTD., MUMBAI

ITA 1224/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3324 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Appeal Filed On: 20-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANIL TOPIWALA
• Section: 143(3); 80(P); 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 1224/MUM/2020 ASSESSMENT Y EAR: 2016 - 17 INCOME TAX OFFICER - 26(2)(5), ROOM NO . 319, 3 RD FLOOR, KAUTILYA BHAWAN, B.K.C., BANDRA (E), MUMBAI - 400051 VS. M/S RAMARAJA KSHATRIYA CO - OP. CREDIT SOC. LTD., 04, GROUND FLOOR, KAVERI COMPLEX, KURLA PIPELINE ROAD, PRABHAT WADI, SAKINAKA, MUMBAI - 400072 PAN: AAAAR9632A (APPELLANT) (RESPONDENT) REVENUE BY : SHRI BHARAT ANDHALE (D R) ASSESSEE BY : SHRI ANIL TOPIWALA (A R ) DATE OF HEARING : 16 /09 /202 1 DATE OF PRONOUNCEMENT: 27 / 09 /202 1 O R D E R PER SA KTIJIT DEY , JM THIS IS AN APPEAL BY THE REVENUE AGAINST ORDER DATED 30.08.2019 OF LEARNED COMMISS IONER OF INCOME TAX (APPEALS) - 3 8 , MUMBAI FOR THE ASSESSMENT YEAR 2016 - 17 . 2. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO AL LOWANCE OF DEDUCTION CLAIMED UNDER SECTION 80P(2)(A ) OF THE INCOME TAX ACT, 1961 . 3. BRIEFLY THE FACTS ARE , THE ASSESSEE IS A CO - OPERATIVE CREDIT SOCIETY HAVING STA TUS OF ASSOCIATION OF PERSON (AO P) . FOR THE IMPUGNED ASSESSMENT YEAR, A SSESSEE FILED ITS RETURN OF INCOME ON 07.01.2016 DECLARING N IL INCOME AFTER 2 ITA NO. 1224 / MUM/2020 ASSESSMENT YEAR: 2016 - 1 7 CLAIMING DED UCTION UNDER SECTION 80P OF THE ACT . WHI LE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER ( AO ) DISALLOWED ASSESSEES CLAIM OF DEDUCTION BY HOLDING THAT THE ASSESSEE IS BASICALLY CARRY ING ON ACTIVITIES OF BANKING BUSINESS. CHALLENGING THE AFORESAID DECISION OF THE AO, ASSESSEE PREFERRED AN APPEAL BEFORE LEARNE D COMMISSIONER (APPEALS). BEING CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE AND APPLY ING THE LEGAL PRINCIPLES LAID DOWN I N THE DECISION CITED BEFORE HIM, L EARNED COMMISSIONER (APPEALS) ALLOWED ASSESSEES CL AIM OF DEDUCTION UNDER SECTION 80(P) OF THE ACT. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIALS ON RECORD. AT THE OUTSET, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED TH AT IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN ITS OWN CASE IN ASSESSMENT YEAR 2014 - 15 AND 2015 - 16. 5. LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH , RELIED UPON THE OBSERVATIONS OF THE AO , HOWEVER, HE FAIRLY SUBMITTED THAT THE ISSUE IS CO VERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ITS OWN CASE. IT IS OBSERVED , IDENTICAL ISSUE RE LATING TO CLAIM OF DEDUCTION UNDER SECTION 80P AROS E IN ASSESSEES OWN CASE IN ASSESSMENT YEARS 2014 - 15 AND 2015 - 1 6. THOUGH, THE AO DISALLOWE D ASSESSEES CLAIM OF DEDUCTION , HOWEVER, LEARNED COMMISSIONER (APPEALS) ALLOWED ASSESSEES CLAIM. BEING AGGRIEVED WITH THE DECISION OF LEARNED FIRST APPELLATE AUTHORITY, THE REVENUE CAME IN APPEAL BEFORE THE TRIBUNAL. WHILE DECIDING THE ISSUE IN ITA NOS. 4896 - 4897/MUM/2019 DATED 11.03.2021, THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE HOLDING AS UNDER: - 3 ITA NO. 1224 / MUM/2020 ASSESSMENT YEAR: 2016 - 1 7 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISI ON OF HON'BLE SUPREME COURT IN THE CASE OF CITIZEN COOPERATIVE SOCIETY LTD. (CIVIL APPEAL NO. 10245 OF 2017 VIDE ORDER DATED 8.8.2017) AND THE MAVILAYI SERVICE COOPERATIVE BANK LTD. & ORS. VS. CIT, CALICUT & ORS. (CIVIL APPEAL NOS. 7343 - 7350 OF 2019 DATED 12.1.2021. WE FIND THAT THE ASSESSING OFFICER HAS COMPLETELY ERRED IN TREATING THE ASSESSEE AS COOPERATIVE BANK AND INVOKING THE PROVISIONS OF SECTION 80P(4). SECTION 80P(4) PROVIDES THAT : - (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. EXPLANATION. FOR THE PURPOSES OF THIS SUB - SECTION, (A) 'CO - OPERATIVE BANK' AND 'PRIMARY AGRICULTURAL CREDIT SOCIET Y' SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949); (B) 'PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK' MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG - TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. 7. HONOURABLE SUPREME COURT IN THE CASE OF CITIZEN COOPERATIVE SOCIETY LTD. (CIVIL APPEAL NO. 10245 OF 2017 VIDE ORDER DATED 8.8.2017) HAS SE TTLED THE LAW THAT FOR BEING CONSIDERED AS A COOPERATIVE BANK LICENCE FROM RBI IN THIS REGARD IS A SINE QUA NON. IN ABSENCE OF THE RBI LICENCE AS SUCH THE ASSESSEE CANNOT BE TREATED AS COOPERATIVE BANK. HENCE DISALLOWING THE DEDUCTION BY REFERRING TO THE P ROVISIONS OF SECTION 80P(4) IS COMPLETELY UNSUSTAINABLE. MOREOVER SECTION 80P(2)(D) PROVIDES EXEMPTION TO INTEREST EARNED ON FIXED DEPOSIT IN COOPERATIVE SOCIETIES. IT IS NOBODY'S CASE THAT COOPERATIVE BANK ARE NOT COOPERATIVE SOCIETIES. 8. MOREOVER SIMI LAR ISSUE WAS ELABORATELY DEALT BY A LARGER BENCH OF HONOURABLE SUPREME COURT IN THE CASE OF THE MAVILAYI SERVICE COOPERATIVE BANK LTD. & ORS. VS. CIT, CALICUT & ORS. (CIVIL APPEAL NOS. 7343 - 7350 OF 2019 DATED 12.1.2021) AND THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. WE MAY GAINFULLY REFER TO THE HON'BLE APEX COURT OBSERVATION IN PARA 21 AS UNDER, WHEREIN THE HON'BLE APEX COURT REFERRED TO ITS EARLIER DECISION OF CITIZEN COOPERATIVE SOCIETY LTD. (SUPRA) : - 4 ITA NO. 1224 / MUM/2020 ASSESSMENT YEAR: 2016 - 1 7 THE FOLLOWING PROPOSITIONS MAY BE CULLED OU T FROM THE JUDGMENT: (I) THAT SECTION 80P OF THE IT ACT IS A BENEVOLENT PROVISION, WHICH WAS ENACTED BY PARLIAMENT IN ORDER TO ENCOURAGE AND PROMOTE THE GROWTH OF THE CO - OPERATIVE SECTOR GENERALLY IN THE ECONOMIC LIFE OF THE COUNTRY AND MUST, THEREFORE, B E READ LIBERALLY AND IN FAVOUR OF THE ASSESSEE; (II) THAT ONCE THE ASSESSEE IS ENTITLED TO AVAIL OF DEDUCTION, THE ENTIRE AMOUNT OF PROFITS AND GAINS OF BUSINESS THAT ARE ATTRIBUTABLE TO ANY ONE OR MORE ACTIVITIES MENTIONED IN SUBSECTION (2) OF SECTION 80 P MUST BE GIVEN BY WAY OF DEDUCTION; (III) THAT THIS COURT IN KERALA STATE COOPERATIVE MARKETING FEDERATION LTD. AND ORS. (SUPRA) HAS CONSTRUED SECTION 80P WIDELY AND LIBERALLY, HOLDING THAT IF A SOCIETY WERE TO AVAIL OF SEVERAL HEADS OF DEDUCTION, AND IF IT FELL WITHIN ANY ONE HEAD OF DEDUCTION, IT WOULD BE FREE FROM TAX NOTWITHSTANDING THAT THE CONDITIONS OF ANOTHER HEAD OF DEDUCTION ARE NOT SATISFIED; (IV) THIS IS FOR THE REASON THAT WHEN THE LEGISLATURE WANTED TO RESTRICT THE DEDUCTION TO A PARTICULAR TYPE OF CO - OPERATIVE SOCIETY, SUCH AS IS EVIDENT FROM SECTION 80P(2)(B) QUA MILK CO - OPERATIVE SOCIETIES, THE LEGISLATURE EXPRESSLY SAYS SO - WHICH IS NOT THE CASE WITH SECTION 80P(2)(A)(I); (V) THAT SECTION 80P(4) IS IN THE NATURE OF A PROVISO TO THE MAI N PROVISION CONTAINED IN SECTION 80P(1) AND (2). THIS PROVISO SPECIFICALLY EXCLUDES ONLY COOPERATIVE BANKS, WHICH ARE COOPERATIVE SOCIETIES WHO MUST POSSESS A LICENCE FROM THE RBI TO DO BANKING BUSINESS. GIVEN THE FACT THAT THE ASSESSEE IN THAT CASE WAS NO T SO LICENCED, THE ASSESSEE WOULD NOT FALL WITHIN THE MISCHIEF OF SECTION 80P(4). 9. RESPECTFULLY FOLLOWING THE PRECEDENT AS ABOVE, WE UPHOLD THE LEARNED CIT(A)S ORDER. 6. FACTS BEING IDENTICAL, RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE CO - ORDINATE BENCH, WE UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS) , WHILE DISMISSING THE GROUNDS RAISED. 7 . IN THE RESULT, APPEAL IS DISMISSED. 5 ITA NO. 1224 / MUM/2020 ASSESSMENT YEAR: 2016 - 1 7 ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER , 2021 . SD/ - SD/ - ( RAJESH KUMAR ) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER MUMBAI ; DATED: 27 / 09 /202 1 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI