ITO, Salem V. S 1235 Udayapatti PACCS Ltd., Salem

ITA 1365/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8874 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 17-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: BALU C A
• Keywords: Opportunity of being heard; Assessment record
• Section: 260A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE , ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I .T.A. NO.1365/MDS/2016 / ASSESSMENT YEAR : 2012-2013. THE INCOME TAX OFFICER, WARD 2(1) SALEM -7 VS. M/S. S 1235 UDAYAPATTI PACCS LTD, UDAYAPATTI (PO) SALEM 636 140. [PAN AAFAS8771G ] ./ I .T.A. NO.1366/MDS/2016 / ASSESSMENT YEAR : 2012-2013. THE INCOME TAX OFFICER, WARD 2(1) SALEM -7 VS. M/S. S KOLLAPATTI PACB LTD, SARKAR KOLLAPATTI, SALEM 636 030. [PAN AADTS5623A] ./ I .T.A. NO.1481/MDS/2016 / ASSESSMENT YEAR : 2012-2013. THE INCOME TAX OFFICER, WARD 2(4) SALEM -7 VS. M/S. K.K. POTTANERI PRIMARY AGRICULTURAL CO-OP. CREDIT SOCITY LTD, POTTANERI POST, METTUR TK, SALEM 636 453. [PAN AABAK0355J] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : SHRI. A.V.SREEKANTH, IRS, JCIT. $% ! ' # /RESPONDENT BY : SHRI. BALU, C.A. & ' '( / DATE OF HEARING : 09-08-2016 )* ' '( / DATE OF PRONOUNCEMENT : 10-08-2016 ITA NO. 1365, 1366 & 1481/16 :- 2 -: ! / O R D E R PER G.PAVAN KUMAR, JUDICIAL MEMBER THESE APPEALS FILED BY THE REVENUE ARE DIRECTED A GAINST DIFFERENT ORDERS OF COMMISSIONER OF INCOME-TAX (APP EALS) SALEM FOR THE ASSESSMENT YEAR 2012-2013 PASSED U/S.143(3) A ND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). SINCE THE ISSUE IN THESE APPEALS IS COMMON IN NATURE, HENCE T HESE APPEALS ARE COMBINED, HEARD TOGETHER, AND DISPOSED OF BY A COMM ON ORDER FOR THE SAKE OF CONVENIENCE. WE CONSIDER THE FACTS AS NARR ATED IN ITA NO.1365/MDS/2016 OF ASSESSMENT YEAR 2012-13 FOR ADJ UDICATION. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE UN DER;- 1. THE CIT(A), SALEM ERRED IN, RELYING ON THE DECISION S OF HON'BLE ITAT IN THE CASE OF M/S S2 (SPL) 151, KARKUDALPATTY PACCS LTD., AND MLS S-1308 AMMAPET PACB LTD., 2. THE CIT (A) OUGHT TO HAVE CONSIDERED THOUGH STATE CO-OPERTATIVE ACT,1983 DEFINES MEMBER INCLUSIVE OF ASSOCIATE MEMBER OR CLASS 'B' MEMBER AND IN VARIOUS SECTION OF THE SAME ACT, THE WORD MEMBER USED TO DENOTE THE PERMANENT MEMBER OR CLASS 'A' MEMBER ONL Y NOT THE OTHER CLASS MEMBERS LIKE CLASS B OR ASSOCIA TE MEMBERS; 3. THE CIT(A) OUGHT TO HAVE CONSIDERED THE HON'BLE APE X COURT IN UNION OF INDIA VS WOOD PAPERS LTD REPORTED AIR 1991 SC 249, THE EXEMPTION PROVISIONS IS LIKE A N EXCEPTION AND OR NORMAL PRINCIPLE OF CONSTRUCTION O R INTERPRETATION OF STATUTES IT IS CONSTRUED STRICTLY EITHER BECAUSE OF THE LEGISLATIVE INTENTION OR ECONOMIC JUSTIFICATION OF INEQUITABLE BURDEN OR PROGRESSIVE APPROACH OF FISCAL PROVISIONS INTENDED TO AUGMENT S TATE REVENUE; ITA NO. 1365, 1366 & 1481/16 :- 3 -: 4. THE CIT (A) OUGHT TO HAVE CONSIDERED THERE IS CLEAR DISTINCTION BETWEEN VOTING AND NON-VOTING MEMBER IN THE STATE CO-OPERATIVE SOCIETIES ACT ITSELF. THE CLASSIFICATION AMONG THE MEMBERS ARE INTEGRAL PART OF THE STATE ACT BASED ON WHICH THE ASSESSMENT ORDER H AS BEEN PASSED; 5. THE CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT T HE ORDER OF HON'BLE PUNJAB & HARYANA HIGH COURT WHICH RELIED UPON BY THE ITAT IS NOT AT ALL RELEVANT TO T HE FACT AND CIRCUMSTANCES OF THE PRESENT CASE; 6. IN VIEW OF THE ABOVE GROUNDS AND OTHER GROUNDS THAT MAY ADDUCED AT THE TIME OF HEARING, THE ORDER PASSE D BY THE CIT(A), SALEM MAY BE CANCELLED AND THE ORDER PASSED BY THE ASSESSING OFFICER MAY BE RESTORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO- OPERATIVE SOCIETY, ENGAGED IN BANKING BUSINESS AND TRADING IN PDS COMMODITIES AND FILED RETURN OF INCOME ON 28.09.201 2 ADMITTING NIL INCOME. THE RETURN OF INCOME WAS PROCESSED U/SEC . 143(1) OF THE ACT AND THE CASE WAS SELECTED FOR SCRUTINY UNDER C ASS. FURTHER, NOTICE U/S.143(2) WAS ISSUED TO THE ASSESSEE. THE L D. ASSESSING OFFICER ON PERUSAL FOUND THAT ASSESSEE HAS CLAIMED DEDUCTIO N UNDER THE PROVISIONS OF SECTION 80P OF D72,354,463/. IN RESPO NSE TO NOTICE, THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE APPEARED FROM TIME TO TIME AND PRODUCED DETAILS. THE LD. ASSESSING OFFICER V ERIFIED BOOKS OF ACCOUNTS AND CONSIDERED THE STATEMENTS FOR CLAIM OF DEDUCTION. THE ASSESSING OFFICER ON FURTHER EXAMINATION FOUND THA T THE ASSESSEE SOCIETY CLAIMED DEDUCTION U/S.80P(2) (A)(I), (C) & (D) OF THE ACT IN RESPECT OF BUSINESS OF BANKING AND PROVIDING CRED IT FACILITIES TO ITS ITA NO. 1365, 1366 & 1481/16 :- 4 -: MEMBERS AND COMPLIED STIPULATED CONDITIONS AND ALS O PROVIDING CREDIT FACILITIES TO MEMBERS AND NON MEMBERS AND RUNNING PUBLIC DISTRIBUTION SHOPS FOR COMMODITIES. THE LD. ASSESSING OFFICER OBSERVED THE ENTIRE BUSINESS ACTIVITIES OF SOCIETY AS PROVIDING CREDIT FACILITIES AND TRADING FOR BOTH MEMBERS AND NONMEMBERS AND REJECTED THE DE DUCTION. THE LD. ASSESSING OFFICER VERIFIED THE CLAIM OF DEDUCT ION U/S.80P(2)(D) OF THE ACT, WERE THE ASSESSEE SOCIETY RECEIVED INTERES T INCOME FROM SALEM DISTRICT CENTRAL CO-OPERATIVE BANKS AND NOT F ROM OTHER CO- OPERATIVE SOCIETY AND PERUSED THE PROVISIONS U/S.8 0P(2) (D) OF THE ACT AND CONCLUDED THAT DEDUCTION U/S.80P(2)(D) OF THE A CT IS NOT ALLOWED AS ASSESSEE SOCIETY HAS RECEIVED INTEREST RECEIPT F ROM THE SALEM DISTRICT CENTRAL CO-OPERATIVE BANK AND RELIED ON J URISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT VS. MADRAS AUTO RICKSHAW DRIVER CO- OPERATIVE SOCIETY 143 ITR 981 COMPLETED THE ASSESSMENT WITH ASSESSED INCOME OF D73,10,630/-. AGGRIEVED, THE AS SESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE REITERATED THE SUBMISSIONS OF ASSE SSMENT PROCEEDINGS. THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) ON PERUSAL OF GROUNDS AND ARGUMENTS, THE ASSESSEE SOC IETY IS WORKING ON THE CONCEPTS OF MUTUALITY, PRINCIPLE BUT THE LD. ASSESSING OFFICER HAS ITA NO. 1365, 1366 & 1481/16 :- 5 -: REJECTED SOCIETY, CLAIM OF DEDUCTION UNDER PROVIS IONS OF SEC. 80P OF THE ACT BECAUSE THE ASSESSEE SOCIETY HAS NOT RESTR ICTED ACTIVITIES TO ITS MEMBERS AND ALSO PROVIDED SERVICES ON PAR WITH COM MERCIAL BANKING. THE COMMISSIONER OF INCOME TAX (APPEALS) ON EXAMINA TION OF THE ASSESSMENT RECORDS AND MATERIAL RELIED ON THE CO-O RDINATE BENCH DECISION OF TRIBUNAL IN THE CASE OF M/S. S-1308, AMMAPET PRIMARY AGRICULTURAL CO-OPERATIVE BANK LTD IN ITA NO.825/MD S/2015, DATED 23.09.2015 ALLOWED THE ASSESSEE APPEAL. AGGRIEVED BY THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE REVEN UE HAS ASSAILED AN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE REI TERATED THE SUBMISSIONS ON THE GROUNDS OF APPEAL AND CONTE STED THE JUDICIAL DECISIONS RELIED BY THE COMMISSIONER OF INCOME TA X (APPEALS) WERE THE DEPARTMENT HAS FILED AN APPEAL IN JURISDICTIONA L HONBLE HIGH COURT AGAINST ITAT ORDER AND PRAYED FOR SET ASIDE OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 6. CONTRA, THE LD. AUTHORISED REPRESENTATIVE RELIED O N THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND VEH EMENTLY OPPOSED TO THE GROUNDS. 7. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIA L ON RECORD AND JUDICIAL DECISIONS CITED. THE LD. DEPART MENTAL ITA NO. 1365, 1366 & 1481/16 :- 6 -: REPRESENTATIVE ARGUED AND SUBMITTED THAT THE DECISI ON OF ITAT RELIED BY THE COMMISSIONER OF INCOME TAX (APPEALS) WAS CHA LLENGED BY THE REVENUE AND FILLED APPEAL U/SEC. 260A OF THE ACT IN MADRAS HIGH COURT AND THE CASE IS PENDING. WE FIND THE FACTS AND CIRC UMSTANCES OF THE PRESENT CASE ARE SIMILAR TO DECISION OF CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF ITO VS. M/S. S-328, KALAPANAICKENPATTI PACCS LTD IN ITA NO.260/MDS/2016, ASSESSMENT YEAR 2012-2013, DATED 2 7.04.2016 WERE IT WAS HELD AT PARA 7 AS UNDER:- 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD AND JUDICIAL DECISIONS. THE LD. DEPARTMENT AL REPRESENTATIVE CONTENTION THAT DECISION RELIED BY THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT REACHED FINALITY AND APPEAL HAS B EEN FILED BEFORE JURISDICTIONAL HIGH COURT AND IS PENDING AND ALSO U RGED THAT ON DEFINITION OF THE MEMBER RELYING ON THE AUDIT REPO RT WERE THE MEMBER MEANS SHARE HOLDER AND DOES NOT INCLUDE ASS OCIATE MEMBER. THE LD. AUTHORISED REPRESENTATIVE ARGUED ON MEMBERSHIP OF SOCIETY AND SUPPORTED WITH APEX COURT DECISION O F M/S. U.P. C- OPERATIVE CANE UNION FEDERATION LTD, LUCKNOW VS. CI T (1999) 237 ITR 574(SC) AND DEFINITION OF MEMBER AS THE PROVISI ON OF T.N. CO- OPERATIVE SOCIETIES ACT 1983 AND FILED WRITTEN SUBM ISSIONS AND EXPLAINED THAT THERE IS NO CHEQUE FACILITY IS AVAIL ABLE TO MEMBERS AND THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND ACTIVITIES OF PRIMARY AGRICULTURE CO-OPERATIVE CRED IT SOCIETY ARE NOT AT PAR WITH CO-OPERATIVE BANKS AND RELIED ON ITO V S. S-1308, AMMAPET PRIMARY AGRICULTURAL CO-OPERATIVE BANK LTD IN ITA 825/MDS/2015. WE CONSIDERING THE APPARENT FACTS AN D FINDINGS OF THE LOWER AUTHORITIES ON THE GROUNDS RAISED BY THE REVENUE AND THE ARGUMENT OF THE LD. AUTHORISED REPRESENTATIVE. PRIM E FACIE THE ASSESSEE IS REGISTERED AS CO-OPERATIVE SOCIETY AND ENGAGED IN BANKING BUSINESS AND TRADING IN CIVIL SUPPLIES GOOD S. THE DEPARTMENT HAS DISPUTED ON THE ACTIVITIES OF THE SO CIETY ON PAR WITH ANY COMMERCIAL BANKING. THEREFORE, WE ARE INCLINED TO SET ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) A ND REMIT THE ENTIRE ISSUE TO THE FILE OF THE ASSESSING OFFICER T O VERIFY THE FOLLOWING:- (I) LOANS ARE GRANTED TO NON-MEMBERS (II) ANY CURRENT ACCOUNTS ARE OPENED FOR TRADERS. (III) WHETHER THE SOCIETY IS A MEMBER OF CLEARING HOUSE. ITA NO. 1365, 1366 & 1481/16 :- 7 -: (IV) WHETHER BANK ISSUED GUARANTEE ON BEHALF OF CUSTOMERS (V) WHETHER DEALT IN FOREIGN EXCHANGE TRANSACTIONS. (VI) VERIFY INSPECTION REPORT OF RBI IF ANY. WITH THESE FINDINGS, THE ASSESSING OFFICER IS DIREC TED TO VERIFY AND PASS THE ORDER ACCORDINGLY AFTER PROVIDING ADEQ UATE OPPORTUNITY OF BEING HEARD. THE GROUNDS OF THE REV ENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. WE RESPECTFULLY FOLLOWING THE DECISION, SETASIDE TH E ORDER OF CIT(A) AND REMIT THE DISPUTED ISSUE TO THE FILE OF THE ASSESS ING OFFICER ON SIMILAR DIRECTIONS. THE APPEAL OF THE DEPARTMENT IS ALLOWED FOR STATISTICAL PURPOSE. 8. SIMILARLY, THE APPEALS OF THE REVENUE IN ITA NOS.1366 & 1481/MDS2016 ARE ALLOWED FOR STATISTICAL PURPOSE. 9. IN THE RESULT, THE APPEALS OF THE DEPA RTMENT IN ITA NOS. 1365, 1366 & 1481/MDS/2016 ALLOWED FOR STATISTICAL PURPOS E. ORDER PRONOUNCED ON WEDNESDAY, THE 10TH DAY OF A UGUST, 2016, AT CHENNAI. SD/- SD/- ( . ) (ABRAHAM P. GEORGE) $ % / ACCOUNTANT MEMBER ( . ) (G. PAVAN KUMAR) & % / JUDICIAL MEMBER +& / CHENNAI , / DATED: AUGUST, 2016 KV - ' $'./ 0/' / COPY TO: 1 . ! / APPELLANT 3. 1' () / CIT(A) 5. /45 $'6 / DR 2. $% ! / RESPONDENT 4. 1' / CIT 6. 57 8& / GF