The Madikai Service Co-op Bank Ltd, Kasargode V. ITO, Kasargode

ITA 133/COCH/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8466 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 11-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Keywords: Question of law; Competent authority

Judgement Text

TEN APPEALS 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN (SMC) BEFORE SHRI B P JAIN , ACCOUNTANT MEMBER ITA NO . 325/COCH/2012 (A SST YEAR 2009 - 10 ) THE PAYYANNUR SERVICE COOP BANK LTD MAIN ROAD PAYANNUR KANNUR 670 307 PAN NO. AAABP0133D VS THE INCOME T AX OFFICER WARD 4 KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY SH MATHEW JOSEPH REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 23 RD JUNE 2016 DATE OF PRONOUNCEMENT 23 RD , JUNE 2016 ITA NO . 123/COCH/2013 (A SST YEAR 2009 - 10 ) THE PINARAYI S ERVICE COOP BANK LTD PINARAYI TELLICHERRY KANNUR 670 741 PAN NO. AAJFP7993E VS THE INCOME TAX OFFICER WARD 2 KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY SMT DIVYA RAVINDRAN REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 23 RD JUNE 2016 DATE OF PRONOUNCEMENT 23 RD , JUNE 2016 ITA NO . 133/COCH/2013 (A SST YEAR 2009 - 10 ) THE MADIKAI SERVICE COOP BANK LTD MADIKAI KASAAGOD 671 531 PAN NO. AAAAT7221K VS THE INCOME TAX OFFICER WARD 2 KASARAGOD ( APPELLANT) (RESPONDENT) TEN APPEALS 2 ASSESSEE BY SH MATHEW JO SEPH REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 23 RD JUNE 2016 DATE OF PRONOUNCEMENT 23 RD , JUNE 2016 ITA NO . 738/COCH/2013 (A SST YEAR 2007 - 08 ) PUZHATHI SERVICE COOP BANK LTD PO KAKKAD KANNUR 670 005 PAN NO. AAAAP7672C VS THE INCOME TAX O FFICER WARD 1 KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY SMT DIVYA RAVINDRAN REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 23 RD JUNE 2016 DATE OF PRONOUNCEMENT 23 RD , JUNE 2016 ITA NO . 739 TO 741 /COCH/2013 (A SST YEAR 2007 - 08 TO 200 9 - 10 ) M/S CHERUKUNNU SERVICE COOP BANK LTD PO CHERUKUNNU KANNUR 670 301 PAN NO. AAAAC5016F VS THE INCOME TAX OFFICER WARD 1 KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY SH RUPESH PAI R, CA REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 23 RD JU NE 2016 DATE OF PRONOUNCEMENT 23 RD , JUNE 2016 ITA NO .259/COCH/2014 (A SST YEAR 2007 - 08 ) M/S TELLICHERRY PUBLIC SERVANTS COOP BANK LTD M G ROAD, THALASSERRY 670 101 PAN NO. AABAT2158G VS THE INCOME TAX OFFICER WARD 1 KANNUR ( APPELLANT) (RESPONDE NT) TEN APPEALS 3 ASSESSEE BY SMT DIVYA RAVINDRAN REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 23 RD JUNE 2016 DATE OF PRONOUNCEMENT 23 RD , JUNE 2016 ITA NO .05/COCH/2013 (A SST YEAR 2009 - 10 ) THE PATTUVAM SERVICE COOP BANK LTD PATTUVAM KANNUR 670 143 PAN NO . AADCP6738N VS THE INCOME TAX OFFICER WARD 4 KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY NONE REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 23 RD JUNE 2016 DATE OF PRONOUNCEMENT 23 RD , JUNE 2016 ITA NO .06/COCH/2013 (A SST YEAR 2009 - 10 ) TH E KUTTIYERI SERVICE COOP BANK LTD KUTTIYERI PO KANNUR 670 141 PAN NO. AA ABK0485D VS THE INCOME TAX OFFICER WARD 4 KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY NONE REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 23 RD JUNE 2016 DATE OF PRONOUNCE MENT 23 RD , JUNE 2016 ORDER PER B P JAIN, AM : THESE ARE TEN APPEALS FILED BY DIFFERENT ASSESSEES AGAINST SEPARATE ORDERS OF THE CIT(A) AS PER THE DETAILS GIVEN UNDER: TEN APPEALS 4 SL.NO. ITA NO. NAME OF THE ASSESSEE CIT(A)S ORDER DATE 1 3 25/COCH/2012 THE PA YYANNUR SERVICE COOP BANK LTD 21.09.2012 2 123/COCH/2013 THE PINARAYI SERVICE COOP BANK LTD 18.12.2012 3 133/COCH/2013 THE MADIKAI SERVICE COOP BANK LTD 01.01.2013 4 738/COCH/2013 PUZHATHI SERVICE COOP BANK LTD 30.08.2013 5 - 7 739 TO 741/COCH/2013 M/S CHERUKUNNU SERVICE COOP BANK LTD 30.08.2013 8 259/COCH/2014 M/S TELLICHERRY PUBLIC SERVANTS COOP BANK LTD 05.02.2014 9 05/COCH/2013 THE PATTUVAM SERVICE COOP BANK LTD 09.10.2012 10 06/COCH/2013 THE KUTTIYERI SERVICE COOP BANK LTD 09.10.2012 2 S INCE COMMON ISSUE IS INVOLVED IN ALL THESE APPEALS; THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 2.1 IN THE CASES IN ITA NOS. 05 /COCH/2013 AND 06/COCH/2013, THE RESPECTIVE ASSESSE ES FILED ADJOURNMENT PETITIONS. SINCE THERE WAS NO SUFFICIENT CAUSE MENTIONED IN THE PETITIONS AND ALSO NONE APPEARED AT THE TIME OF HEARING, THE SAME ARE REJECTED. ACCORDINGLY, I PROCEED TO DISPOSE OFF THE SAME EXPARTE AFTER HEARING THE LD DR AND CONSID ERING THE MATERIAL AVAILABLE ON RECORD. 3 THE SOLITARY ISSUE THAT WAS ARGUED IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ACTION OF THE AO IN DENYING THE DEDUCTION U/S 80P(2) OF THE ACT. 4 BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: TEN APPEALS 5 TH E ASSESSEE, IN ALL THESE APPEALS, IS A PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT, 1969. IT IS ENGAGED IN THE BUSINESS OF PROVIDING AGRICULTURAL CREDIT TO ITS MEMBERS. THE CLAIM OF DEDUCTION U/S 80P (2) WAS DE NIED BY THE AO FOR THE REASON THAT THE ASSESSEE IS PRIMARILY ENGAGED IN THE BUSINESS OF BANKING AND IN VIEW OF SECTION 80P(4) OF THE ACT, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80P(2) OF THE ACT. THE VIEW TAKEN BY THE AO WAS CONFIRMED BY THE CIT(A ). 5 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE THIS TRIBUNAL. THE LD COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE RECENT JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE C HIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS IN ITA NO.212 OF 2013 ( JUDGMENT DATED 15 TH FEBRUARY 2016). 5.1 THE LD DR WAS UNABLE TO CONTROVERT THE ABOVE SUBMISSIONS OF THE ASSESSEE. 6 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECO RD.. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE CHIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS (SUPRA) HAS HELD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT, 1969 IS ENTITLED TO THE BENEF IT OF DEDUCTION U/S 80P(2). THE HONBLE HIGH COURT WAS CONSIDERING THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: TEN APPEALS 6 A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION, THE TRIBUNAL IS CORRECT IN LAW IN DECIDING AGAINST THE ASSESSEE , THE ISSUE REGARDING ENTITLEMENT FOR EXEMPTION UNDER SECTION 80P, IGNORING THE FACT THAT THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY? 6.1 IN CONSIDERING THE ABOVE QUESTION OF LAW, THE HONBLE HIGH COURT RENDERED THE FOLLOWING FINDINGS: 15. APP ELLANTS IN THESE DIFFERENT APPEALS ARE INDISPUTABLY SOCIETIES REGISTERED UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969, FOR SORT, KCS ACT AND THE BYE - LAWS OF EACH OF THEM, AS MADE AVAILABLE TO THIS COURT AS PART OF THE PAPER BOOKS, CLEARLY SHOW THAT TH EY HAVE BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE PROVISIONS OF THAT ACT. THE PARLIAMENT, HAVING DEFINED THE TERM 'CO - OPERATI VE SOCIETY' FOR THE PURPOSES OF THE BR ACT WI TH REFERENCE TO, AMONG OTHER THING S, THE REGISTRATION OF A SOCIETY U N DER ANY STATE LAW RELATING TO CO - OPERATIVE SOCIETIES FOR THE TIME BEING; IT CANNOT BUT BE TAKEN THAT THE PURPOSE OF THE SOCIETIES SO REGISTERED UNDER THE STATE LAW AND ITS OBJECTS HAVE TO BE UNDERSTOOD AS THOSE WHICH HAV E BEEN APPROVED BY THE COMPETENT AUTHORITY UNDER SUCH STATE LAW. THIS, WE VISUALISE AS DUE RECIPROCATIVE LEGISLATIVE EXERCISE BY THE PARLIAMENT RECOGN I SING THE PREDOMINANCE OF DECISIONS RENDERED UNDER THE RELEVANT STATE LAW. IN TH I S VIEW OF THE MATTER, ALL THE APPELLANTS HAV I NG BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CRED I T SOC I ET I ES B Y THE COMPETENT AUTHOR I TY UNDE R TH E KCS ACT , I T HAS NECESSAR IL Y TO BE HELD THAT THE PRINCIPAL OBJECT OF SUCH SOCIETIES IS TO UNDERTAKE AGR I CULTURAL CREDIT ACTIVITIES AND TO PROVIDE LOANS AND ADVANCES FOR AGRICULTURAL PURPOSES , THE RATE ' OF INTEREST ON SUCH LOANS AND ADVANCES TO BE AT THE RATE FIXED BY THE REGISTRAR OF CO - OPERATIVE SOCIETIES UNDER THE KCS ACT AND HAV I NG I TS AREA OF OPERATION CONFINED TO A VILLAGE, PANCHAYAT O R A MUNICIPALITY. THIS IS THE CONSEQUENCE OF THE DEFINITION CLAUSE IN SECTION 2(OAA) OF THE KCS ACT. THE AUTHORITIES UNDER THE IT ACT CANNOT PROBE INTO ANY ISSUE OR SUCH MATTER RELATING TO SUCH APPLICANTS. 16. THE POSITION OF 1 AW BEING AS ABOVE WITH REFER ENCE TO THE STATUTORY PROVISIONS, THE APPELLANTS HAD SHOWN TO THE AUTHORITIES AND THE TRIBUNAL THAT THEY ARE PRIMARY AGRICULTURA L CREDIT SOCIETIES IN TERMS OF CLAUSE (CCIV) OF SECTION 5 OF THE BR ACT, HAVING REGARD TO THE PRIMARY OBJECT OR PRINCIPAL BUSINE SS OF EACH OF THE APPELLANTS. IT IS TEN APPEALS 7 ALSO CLEAR FROM THE MATERIALS ON RECORD THAT THE BYE - LAWS OF EACH OF THE APPELLANTS DO . NOT PERMIT ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS MEMBER, EXCEPT MAY BE, IN ACCORDANCE WITH THE PROVISO TO SUB - CLAUSE 2 OF SECTION 5(CCIV) OF THE BR ACT. THE DIFFERENT ORDERS OF THE TRIBUNAL WHICH ARE IMPEACHED IN THESE APPEALS DO NOT CONTAIN ANY FINDING OF FACT TO THE EFFECT THAT THE BYE - 1AWS OF ANY OF THE APPELLANT OR ITS CLASS I FICATION BY THE COMPETENT AUTHORITY UNDER THE KCS ACT LS ANYTHING DIFFERENT FROM WHAT WE HAVE STATED HEREIN ABOVE. FOR THIS REASON, IT CANNOT BUT BE HELD THAT THE APPELLANTS ARE ENTITLED TO EXEMPTION FROM THE PROVISIONS OF SECTION 80P OF THE IT ACT BY VIRTUE OF SUB - SECTION 4 OF THAT SECT; ON. IN TH IS VIEW OF THE MATTER, THE APPEALS SUCCEED. 17. IN THE LIGHT OF THE AFORESAID, WE ANSWER SUBSTANTIA 1 QUESTION 'A' IN FAVOUR OF THE APPELLANTS AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE REGARDING THE ENTITLEMENT OF EXEMPT ION UNDER SECTIO N 80P AGAINST THE APPELLANTS. WE HOLD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETIES, REGISTERED AS SUCH UNDER THE KCS ACT; AND CLASSIFIED SO, UNDER THAT ACT, INCLUDING THE APPELLANTS ARE ENTITLED TO SUCH EXEMPTION. 6.2 IN ALL THESE CASES BEFORE ME , THE CERTIFICATE OF REGISTRATION OF ALL THESE ASSESSEES, UNDER THE KERALA COOPERATIVE SOCIETIES ACT AND THE BYE - LAWS , ARE PLACED ON RECORD. IT IS CLEAR FROM THE PERUSAL OF THE SAME THAT ALL THESE ASSESSEE S ARE PRIMARY AGRICULTURAL CREDIT SOCIET IES AND PROVI DING AGRICULTURAL CREDIT FACILITIES TO ITS MEMBERS. THE HONBLE JURISDICTIONAL HIGH COURT, IN THE ABOVE CITED JUDGMENT HAS HELD THAT SUCH SOCIETIES ARE ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2) OF THE ACT. IN VIEW OF THE ABOVE FINDINGS OF THE HONBL E JURISDICTIONAL HIGH COURT (SUPRA), I ALLOW THE APPEAL S OF ALL THE SE ASSESSEE. IT IS ORDERED ACCORDINGLY. TEN APPEALS 8 7 IN THE RESULT, THE APPEALS FILED BY ALL THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD , DAY OF JUNE 2016 SD/ - ( B P JAIN ) ACCOUNTANT MEMBER COCHIN: DATED 23 RD , JUNE 2016 RAJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT, 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRA R ITAT, COCHIN