Income Tax Officer Ward-7(1), Nagpur V. M/s. K.T.P.S.Employees Credit Co-Op.Society Limited, Nagpur

ITA 133/NAG/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84679 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 20-09-2011
• Court: TRIBUNAL
• Department Lawyers: K K THAKKAR
• Assessee Lawyers: NARENDRA KANE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ./ITA NO.133/NAG/2011 ( AY: 2008 - 2009 ) INCOME TAX OFFICER, WARD - 7(1), MECL BUILDING, 5 TH FLOOR, SEMINARI HILLS, NAGPUR. / VS. M/S. K.T.P.S. EMPLOYEES CREDIT COOPERATIVE SOCIETY, VIDYAVIHAR, KORADI - 441111. ./ PAN: AAAAK2760J ( / APPELLANT) .. ( / RESPONDENT ) C.O. NO.06/NAG/2011 (ARISING OUT OF ITA NO.133/NAG/2011) ( AY: 2008 - 2009 ) M/S. K.T.P.S. EMPLOYEES CREDIT COOPERATIVE SOCIETY, VIDYAVIHAR, KORADI - 441111. / VS. INCOME TAX OFFICER, WARD - 7(1), MECL BUILDING, 5 TH FLOOR, SEMINARI HILLS, NAGPUR. ./ PAN: AAAAK2760J ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI NARENDRA KANE, SR. DR / REVENUEBY : SHRI K.K. THAKKAR / DATE OF HEARING : 04.09.2014 / DATE OF PRONOUNCEMENT : 10 .09.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION. APPEAL ITA NO. 133/NAG/2011 IS FILED BY THE REVENUE AND C.O.NO.6/NAG/2011 IS FILED BY THE ASSESSEE INVOLVING ASSESSMENT YEAR 2008 - 2009. SINCE, THE ISSUES RAISED IN THESE APPEALS ARE CONNECTED, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. 2. FIRSTLY, WE SHALL TAKE UP ITA NO. 133/NAG/2011 , WHICH IS FILED BY THE REVENUE ON 20.9.2011 AGAINST THE ORDER OF THE CIT (A) - II, NAGPUR DATED 27.7.2011. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 2 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, CIT (A) IS COR RECT IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION OF RS. 87,47,715/ - . CLAIMED U /S 80P(2) (A)(I) OF THE IT ACT, 1961. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE CIT(A) IS CORRECT IN HOLDING THAT THE ASSESSEE IS NOT A COOPERATIVE BANK FOR THE PURPOSES OF SECTION 80P(4) OF IT ACT, 1961. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. NIL. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 87,60,187/ - . DURING THE A SSESSMENT AO OBSERVED THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80P OF THE ACT AMOUNTING TO RS.87,47,715/ - . IN THIS REGARD, ASSESSEE WAS ASKED TO SUBSTANTIATE ITS CLAIM. NOT SATISFIED THE EXPLANATION GIVEN BY THE ASSESSEE, AO MADE DISALLOWANCE BY HOLDING TH AT THE DEDUCTION U/S 80P IS AVAILABLE ONLY TO PRIMARY AGRICULTURAL CREDIT SOCIETY (PACS) AND PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANKS. AS PER THE AO, THE ASSESSEE IS NEITHER A PACS AS DEFINED IN SECTION 56(CCIV) IN PART V OF BANKING RE GULATION ACT, 1949 WHICH HAS BEEN REFERRED TO IN CONTEXT OF THE EXPLANATION TO SECTION 80P NOR A PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. AGGRIEVED WITH THE DECISION OF THE AO, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APP ELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) ALLOWED THE APPEAL. PARA 5.5 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD. AGGRIEVED WITH THE DECISION OF TH E CIT (A), REVENUE FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, SHRI NARENDRA KANE, LD DR FOR THE REVENUE DUTIFULLY RELIED ON THE ORDER OF THE AO AND SUPPORTED THE VIEW AND THE DE CISION TAKEN BY THE AO REGARDING THE STATUS OF THE ASSESSEE FOR CLAIMING DEDUCTION U/S 80P. 6. ON THE OTHER HAND, SHRI K.K. THAKKAR , LD COUNSEL FOR THE ASSESSEE HEAVILY RELIED ON THE ORDER OF THE CIT (A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. FURTHER, LD COUNSEL ALSO FILED A COPY OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO.84/NAG/2012 (2009 - 10) , DATED 1.2.2013 AND M ENTIONED THAT THE ITAT HAS AGREED THAT THE ASSESSEE IS A CREDIT 3 COOPERATIVE SOCIETY AND NOT COOPERATIVE BANK AND THEREFORE, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE A UTHORITIES AS WELL AS THE CITED ORDERS OF THE TRIBUNAL AND THE RELEVANT MATERIAL PLACED BEFORE US. ON PERUSAL OF THE CITED ORDER OF THE TRIBUNAL (SUPRA) DATED 1.2.2013 , WE FIND PARA 6 IS RELEVANT IN THIS REGARD AND FOR THE SAKE OF COMPLETENESS OF THIS ORD ER THE SAID PARA 6 IS REPRODUCED HERE WHICH READS AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. WE ARE OF THE OPINION THAT THE ORDERS OF THE FAAS DO NOT SUFFER FROM ANY LEGAL INFIRMITY. AFTER ANALYSI NG THE VARIOUS PROVISIONS OF THE ACTS AND THE CIRCULARS (ISSUED BY THE RBI AND CBDT) THEY HAVE HELD THAT ASSESSEES WERE NOT A COOPERATIVE BANKS AS ENVISAGED BY THE AOS IN THEIR ASSESSMENT ORDER. IN OUR CONSIDERED OPINION, ASSESSEE COOPERATIVE SOCIETIES CAN NOT BE DEPRIVED OF THE BENEFITS OF DEDUCTIONS AVAILABLE AS PER THE PROVISIONS OF SECTION 80P(2)(A) OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 80P(4) OF THE ACT , AS DONE BY THE AOS. WE FULLY AGREE WITH THE FAAS THAT THE APPELLANTS ARE CREDIT COOPERATIVE SOCIETIES AND NOT COOPERATIVE BANKS AND THEREFORE THEY ARE ENTITLED TO CLAIM DEDUCTION AVAILABLE UNDER CHAPTER VIA OF THE ACT . AS POINTED OUT BY THE ARS OF THE ASSESSEES, WE HAVE PASSED SIMILAR ORDER IN THE CASE OF ME DICAL COLLEGE HOSPITAL EMPLOYEES CREDIT COOP. SOCIETY LTD (SUPRA). FOLLOWING OUR OWN SAID ORDER, WE DECIDE ALL THE GROUNDS OF APPEAL AGAINST THE AOS. 8. FROM THE ABOVE, IT IS C LEAR THAT AS PER THE CIRCULARS ISSUED BY THE RBI AND THE CBDT AS WELL AS THE SAID ORDER OF THE TRIBUNAL (SUPRA) , THE ASSESSEE IS A CREDIT COOPERATIVE SOCIETY AND NOT A COOPERATIVE BANK AND THEREFORE, THE DEDUCTION IS AVAILABLE UNDER THE PROVISIONS OF SECTION 80P(2)(A) OF THE ACT. FURTHER, WE HAVE ALSO PERUSED THE ORDER OF THE CIT ( A ) IN GENERAL AND PARA 5.5 IN PARTICULAR WHICH READS AS UNDER: 5.5. AFTER CAREFULLY CONSIDERING THE FACTS OF THE CASE, IT IS CLEAR THAT THE AO HAS FAILED TO APPRECIATE THE DISTINCTION BETWEEN CREDIT COOPERATIVE SOCIETY AND COOPERATIVE BANK . THE CREDIT COOPERATIVE SOCIETY IS IN THE NATURE OF CREDIT RESOURCE SOCIETY WHICH STRIVES TO OBTAIN CREDITS FOR ITS MEMBERS WITH THE OBJECTIVES OF FACILITATING CREDIT TO INDIVIDUALS WHILE COOPERATIVE BANKS ARE FULL - FLEDGED BANKING ORGANIZATION. IT IS ALSO NECESSARY TO NOTE THAT THE ASSES SEE COOPERATIVE CREDIT SOCIETY IS UNDER THE PURVIEW OF MAHARASHTRA COOPERA TIVE SOCIETY ACT AND CANNOT CONDUCT THE BUSINESS OF BANKING AS CLAIMED BY THE AO WITHOUT FULFILLING THE CODITIONS OF THE REGISTRAR OF SOCIETIES AND THE RESERVE BANK OF INDIA. THEREFORE, THE ACTION OF THE AO IS NOT JUSTIFIED. THE PROVISIONS OF SECTION 80P (4) HAVE ONLY SOUGHT TO EXCLUDE THE COOPERATIVE BANKS FROM AVAILING THE BENEFITS OF THIS DEDUCTION . THE AOS ACTION, IS THEREFORE, NOT BASED ON THE CORRECT LEGAL POSITION OF THE CASE. AO IS THEREFORE DIRECTED TO ALLOW THE DEDUCTION U/S 80P(2)(A)(I) OF TH E ACT. 9. C ONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE, WE ARE OF THE OPINION THAT THE CIT (A) HAS RIGHTLY ADJUDICATED THE ISSUE UNDER 4 CONSIDERATION. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) AND IT IS FAIR AND REASONABLE WHICH DO ES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. C.O. NO.06/NAG/2011 (ARISING OUT OF ITA NO.133/NAG/2011) ( AY: 2008 - 2009) 11. THIS CROSS OBJECTION IS RAISED BY THE ASSESSEE ON 1.11.2011. IN THIS CROSS OBJECTION, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. CIT (A) IS PERFECTLY JUSTIFIED AND CORRECT IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80P. 2. CIT (A) IS PERFECTLY JUSTIFIED IN HOLDING THAT THE ASSESSEE IS A CREDIT COOPERATIVE SOCIETY AND NOT A COOPERATIVE BANK . 12. WHILE ADJUDICATING THE REVENUES APPEAL ON THE ISSUE OF THE STATUS OF THE ASSESSEE I.E., WHETHER IT IS CREDIT COOPERATIVE SOCI ETY OR A COOPERATIVE BANK, WE HAVE GIVEN OUR FINDING THAT THE ASSESSEE IS A CREDIT COOPERATIVE SOCIETY AND THEREFORE IT IS ELIGIBLE FOR DEDUCTION U/S 80P(2) OF THE ACT AND CONFIRMED THE DECISION OF THE CIT (A) IN THIS ABOVE PARAGRAPHS OF THIS ORDER. CONSI DERING OUR DECISION ON THAT ISSUE UNDER CONSIDERATION, THE ADJUDICATION OF THE CROSS OBJECTIONS RAISED BY THE ASSESSEE, BEING THE SUPPORTIVE TO THE CIT (A)S DECISION, IS MERELY AN ACADEMIC EXERCISE. ACCORDINGLY, THE CROSS OBJECTIONS RAISED BY THE ASSESSE E ARE DISMISSED AS ACADEMIC . 13. IN THE RESULT, CROSS OBJECTION RAISED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCE D IN THE OPEN COURT ON 10 TH SEPTEMBER, 2014 . SD/ - SD/ - (VIVEK VARMA) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER NAGPUR 10 /09/2014 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 5 3. ( ) / THE CIT(A) - 4. / CIT 5. , / DR, ITAT, NAGPUR. 6. / GUARD FILE . //TRUE COPY// / BY ORDER, ( SR. PRIVATE SECRETARY) / ITAT, NAGPUR