ITO, Salem V. S-1293 Tghammampatty Primary Agricultural Co-op Credit Society Ltd, Salem

ITA 1241/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95892 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 22-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M NARAYANAN RET D ACIT
• Assessee Lawyers: DR B NISCHAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , . ' #$ , % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ./ ITA NO.1241/MDS/2015 % $ )$ / ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER, WARD 2(3), SALEM. V. M/S S-1293 THAMMAMPATTY PRIMARY AGRICULTURAL CO-OP. CREDIT SOCIETY LTD., THAMMAMPATTI POST, GANGAVALLI TALUK, SALEM 636 113. PAN : AABAS 5018 G (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI M. NARAYANAN, RETD. ACIT -.+, / 0 / RESPONDENT BY : DR. B. NISCHAL, JCIT ' / 1 / DATE OF HEARING : 11.08.2015 23) / 1 / DATE OF PRONOUNCEMENT: 19.08.2015 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), SALEM, DATED 27.03.2015 RELEVANT TO THE ASSESSMENT YEAR 2010-11. 2 I.T.A. NO.1241/MDS/15 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, A PRIMARY AGRICULTURAL CO-OPERATIVE BANK NAMED AS M/S S-1293 THAMMAMPATTY PRIMARY AGRICULTURAL CO-OP. CREDIT SOC IETY LTD., FILED THE RETURN OF INCOME DECLARING A TOTAL INCOME OF ` 15,78,028/- AND CLAIMED DEDUCTION UNDER SECTION 80P OF THE INCOME-T AX ACT, 1961 (IN SHORT 'THE ACT'). THIS CLAIM OF THE ASSESSEE U NDER SECTION 80P OF THE ACT WAS DENIED BY THE A.O. 3. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MAT TER IN APPEAL BEFORE THE CIT(APPEALS). THE LD. CIT(APPEAL S), BY FOLLOWING THE DECISION OF THIS TRIBUNAL IN ASSESSEE'S OWN CAS E IN I.T.A. NOS.920 & 921/MDS/2013 DATED 23 RD MAY, 2014, ALLOWED THE APPEAL OF THE ASSESSEE. 4. ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEF ORE US. AT THE TIME OF HEARING, THE LD.COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ISSUE INVOLVED IN THE APPEAL IS COVERED BY THE DECISION OF CO- ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE'S OWN C ASE FOR ASSESSMENT YEARS 2007-08 AND 2009-10 IN I.T.A. NOS. 920 & 921/MDS/2013 DATED 23 RD MAY, 2014. 3 I.T.A. NO.1241/MDS/15 5. ON THE CONTRARY, THE LD. DEPARTMENTAL REPRESENTA TIVE RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTE D THAT AGAINST THE ORDER OF THE TRIBUNAL, THE REVENUE HAS ALREADY PREF ERRED AN APPEAL. 6. WE HAVE HEARD BOTH SIDES AND PERUSED THE RECORDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WHETHER THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE ACT OR NOT. THE CO-ORDINATE BENCH OF THIS TRIBUNAL HAS ALREADY CONSIDERED THE I SSUE IN THE ASSESSEE'S OWN CASE AND ALLOWED THE CLAIM OF THE AS SESSEE IN I.T.A. NOS.920 & 921/MDS/2013 DATED 23 RD MAY, 2014. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED BELOW:- 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECI SIONS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL RELIED UPON B Y THE LD.AR OF THE ASSESSEE. IN BOTH THE APPEALS, THE ASS ESSEE HAS IMPUGNED THE FINDINGS OF THE CIT(APPEALS) FOR REJEC TING THE CLAIM OF DEDUCTION U/S.80P(2)(A)(I) TO THE ASSESSEE. T HE CIT(APPEALS) IN HIS ORDER HAS HELD THAT THE ASSESSE E- SOCIETY IS NOT A CO-OPERATIVE BANK, THEREFORE, THE 5 ITA. NOS. 920 & 921/MDS/2013 PROVISIONS OF SECTION 80(P)(4) ARE NOT ATTRACTED. HOWEVER, THE CIT(APPEALS) HAS DENIED THE DEDUCTION ON THE GROUND THAT THE ASSESSEE HAS EXTEND ED CREDIT FACILITIES TO CLASS-B MEMBERS, WHO ARE NOT RE GULAR MEMBERS OF THE SOCIETY AND THUS THE ASSESSEE IS NOT ELIGIBLE FOR CLAIMING DEDUCTION U/S.80P(2)(A)(I) AND ( IV). 6. SECTION 2(16) OF THE SOCIETIES ACT, 1983 DEFINES MEMBER AS UNDER: 4 I.T.A. NO.1241/MDS/15 MEMBER MEANS A PERSON JOINING IN THE APPLICATION F OR THE REGISTRATION OF SOCIETY AND A PERSON ADMITTED T O MEMBERSHIP AFTER REGISTRATION IN ACCORDANCE WITH TH E PROVISIONS OF THIS ACT, THE RULES AND BYLAWS AND INCLUDES AN ASSOCIATE MEMBER. A PERUSAL OF DEFINITION OF THE TERM MEMBER CLEARL Y SHOWS THAT MEMBER INCLUDES ASSOCIATE MEMBER. THE REFE RENCE OF CLASS B MEMBERS BY CIT(APPEALS) IS WITH RESPECT TO ASSOCIATE MEMBERS. THE CIT(APPEALS) HAS DENIED DEDU CTION TO THE ASSESSEE ONLY FOR THE REASON, THAT CREDIT FA CILITIES HAVE BEEN EXTENDED TO A PARTICULAR CLASS OF MEMBERS, WHO ARE NOT NORMAL MEMBERS OF THE SOCIETY. WE DO NOT AG REE WITH THE CIT(APPEALS) ON THE ISSUE. THE AUTHORITIES UNDER THE ACT CANNOT GO BEYOND THEIR JURISDICTION AND MAK E CLASSIFICATION WITHIN A CLASSIFICATION OF MEMBERS T O DENY THE BENEFIT OF DEDUCTION. THE CO-ORDINATE BENCH OF TRIB UNAL IN THE CASE OF M/S.SL(SPL) 151, KARKUDALPATTY PRIMARY AGRICULTURAL CO- 6 ITA. NOS. 920 & 921/MDS/2013 OPERATIVE CREDIT SOCIETY LTD., VS. ITO (SUPRA) HAS DEALT WITH THIS ISSUE. THE FINDINGS OF THE TRIBUNAL ARE AS UNDER: 7. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE CASE FILE. AS STATED IN THE PRECEDING PARAGRAPH S, THE CIT(A) HAS PROCEEDED TO ENHANCE THE ASSESSMENT(SUPRA) ONLY ON THE GROUND THAT THE ASSESSEES CREDIT AND VARIOUS OTHER LOAN FACILITIES HAVE BEEN ALLOWED TO BE AVAILED BY B CLASS NOMINA L MEMBERS WHOSE LIABILITY IS LIMITED, AT THE BEST; TO THE EXTENT OF LOAN REPAYABLE INSTEAD OF A CLASS MEMBERS WHO HAVE VOTING RIGHTS AND DIVIDEND CLAIM, AND ALSO THAT THE LATTER MEMBERS ARE JOINTLY AND SEVERELY LIABLE. IN THIS BACKDROP, WHEN WE PERUSE T HE RELEVANT PROVISIONS OF THE STATE CO-OPERATIVE SOCIETIES ACT, 1983, GOVERNING THE ASSESSEE-SOCIETY, IT IS EVIDENT FROM THE DEFINITION OF MEMBER U/S 2(16) THAT THE SAME INCLUDES AN ASSOCIATE MEMBER U/S 2(6) APPENDED THEREIN. IN OTHER WORDS, THE NOMINAL MEMBERS ALSO ENJOY STATUTORY RECOGNITION AS PER THE ACT. THE NET RESULT IS THAT ONCE THE NOMIN AL 5 I.T.A. NO.1241/MDS/15 MEMBERS OR NON-VOTING MEMBERS ARE THEMSELVES INCLUDED IN THE DEFINITION OF MEMBERS, THEY SATIS FY THE RELEVANT CONDITION IMPOSED BY THE LEGISLATURE U /S 80P(2)(A)(I). WE MAKE IT CLEAR THAT WE ARE DEALING WITH A DEDUCTION PROVISION TO BE INTERPRETED LIBERALLY. IN OUR CONSIDERED OPINION, THE OBJECTION S OF THE REVENUE THAT THE MEMBERS DEFINED IN SUB- CLAUSE(I) OF SECTION 80P(2) SHOULD ONLY INCLUDE VOTIN G MEMBERS WOULD AMOUNT TO A CLASSIFICATION WITHIN CLASSIFICATION WHICH IS BEYOND THE PURVIEW OF TAX STATUTE; UNLESS PROVIDED SPECIFICALLY BY THE LEGISLATURE. MOREOVER, WE FIND THAT THE CASE LAW OF HON'BLE PUNJAB & HARYANA HIGH COURT (SUPRA) ALSO SUPPORTS THE ASSESSEES CASE WHEREIN IT HAS BEEN HELD UNDER THE VERY PROVISION THAT FOR THE PURPOSE OF IMPUGNED DEDUCTION, IT IS IRRELEVANT SO FAR AS CLASSIFICATION OF THE 7 ITA. NOS. 920 & 921/MDS/2013 MEMBERS IN A OR B CATEGORY IS CONCERNED. WE FOLLOW THE SAME AND ACCEPT CONTENTIONS OF THE ASSESSEE. 7. SIMILAR ISSUE HAD COME UP BEFORE THE HONBLE PUN JAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. PUNJAB ST ATE COOPERATIVE BANK LTD., REPORTED AS 300 ITR 24, WHEREIN TH E HONBLE HIGH COURT HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE LD.DR HAS NOT BEEN ABLE TO CONTROVERT THE CONTENTIONS OF THE AR. 8. THE ISSUE IN APPEAL IS SIMILAR TO THE ONE ADJUDIC ATED BY THE CO-ORDINATE BENCH IN THE CASE OF M/S.SL(SPL) 151 , KARKUDALPATTY PRIMARY AGRICULTURAL CO-OPERATIVE CRE DIT SOCIETY LTD., VS. ITO (SUPRA). ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ELIGIBLE TO CLAIM BENEFIT OF DEDUCTION U/S.80P(2)(A)(I) & (IV) OF THE ACT. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE OR DER OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE IN I.T.A. NOS.920 & 921/MDS/ 2013 DATED 23 RD MAY, 2014, WE DISMISS THE APPEAL FILED BY THE REVE NUE. 6 I.T.A. NO.1241/MDS/15 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON 19 TH AUGUST, 2015 AT CHENNAI. SD/- SD/- ( ) ( . ' #$ ) (CHANDRA POOJARI) (V. DURGA RAO) /ACCOUNTANT MEMBER % /JUDICIAL MEMBER /CHENNAI, A /DATED, THE 19 TH AUGUST, 2015. KRI. B / -%1CD ED)1 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. ' F1 () /CIT(A), SALEM 4. ' F1 /CIT, SALEM 5. D G# -%1% /DR 6. #H$ I /GF.