Income Tax Officer, Bangalore V. The Somavamsha Sahasrajuna Kshatriya, Bangalore

ITA 1367/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7164 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-07-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 01-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B S BALACLHANDRAN
• Section: 143(3); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.1367 /BANG/2016 (ASST. YEAR 2012-13) THE INCOME-TAX OFFICER, WARD-2(2)(5), BENGALURU. . APPELLANT VS. THE SOMAVAMSHA SAHASRAJUNA KSHATRIYA CREDIT CO-OPERATIVE SOCIETY, NO.43, G.K TEMPLE STREET, CHICKPET CROSS, BENGALURU. . RESPONDENT PAN AAAAT4652Q. APPELLANT BY : SHRI PRADEEP KUMAR, ADDL. CIT RESPONDENT BY : SHRI B.S BALACLHANDRAN, ADVOCATE DATE OF HEARING : 23-11-2017 DATE OF PRONOUNCEMENT : 27-11-2017 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF THE CIT(A)-2, BANGALORE DATED 26.5.2016 FOR ASSESSMENT YEAR 2012-13. 2. BRIEFLY STATED, THE FACTS RELEVANT FOR DISPOSAL OF THIS APPEAL ARE AS UNDER:- ITA NO.1367/B/16 2 2.1 THE ASSESSEE, ADMITTEDLY A CREDIT CO-OPERATIV E SOCIETY PROVIDING CREDIT/LOAN FACILITIES TO ITS MEMBERS AND ACCEPTING DEPOSITS FROM THEM, FILED ITS RETURN OF INCOME FOR ASST. YEA R 2012-13 ON 25/9/2012 DECLARING TOTAL INCOME OF RS.19,039/- AFT ER CLAIMING DEDUCTION OF RS.2,57,77,021/- U/S 80P(2)(A)(I) OF T HE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). THE RETURN WAS PROCESSE D U/S 143(1) OF THE ACT AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRU TINY. THE ASSESSING OFFICER (AO), ON EXAMINATION OF THE ASS ESSEES CLAIM FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT, WAS OF THE V IEW THAT THE ASSESSEE CREDIT CO-OPERATIVE SOCIETY IS IN FACT A BANK AS PE R SEC. 5 (CCV) OF THE BANKING REGULATION ACT,1949 AND THEREFORE AS PER TH E PROVISIONS OF SEC. 80P(4) OF THE ACT WHICH ARE ATTRACTED, THE ASS ESSEE WAS NOT ENTITLED TO THE DEDUCTION CLAIMED U/S 80P(2)(A)(I) OF THE ACT. THE ASSESSMENT WAS ACCORDINGLY CONCLUDED U/S 143(3) OF THE ACT VIDE ORDER DATED 30/3/2015, WHEREIN THE ASSESSEES INCOM E WAS DETERMINED AT RS.2,57,77,021/-. AGGRIEVED, THE ASSESSEE PREFE RRED ON APPEAL BEFORE THE CIT(A)-2, BANGALORE AND IN SUPPORT OF IT S CLAIM FOR 80P(2)(A)(I) DEDUCTION, THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN ITA NO.187/2015 DAT ED 8/9/2015, IN THE ASSESSEES OWN CASE FOR ASST. YEAR 2009-10 W HEREIN THE HONBLE HIGH COURT HAD DISMISSED THE REVENUES APPEAL ON TH E VERY SAME ISSUE. THE LD CIT(A) OBSERVED THAT THE ISSUE OF WH ETHER A CO- OPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT ETC., TO ITS MEMBERS CAN BE TREATED AS A BANK, HAS ALREADY BEEN DECIDED BY THE HONBLE HIGH COURT OF KARNATAKA IN, INTER ALIA, THE ASSESSEES O WN CASE FOR ASST. YEAR ITA NO.1367/B/16 3 2009-10 IN ITA NO.187/2015 DATED 8/9/2015 HOLDING THAT THE ASSESSEE IS A CREDIT CO-OPERATIVE SOCIETY AND NOT A BANK TO WHOM THE PROVISIONS OF SEC. 80P(4) ARE ATTRACTED. IN THAT V IEW OF THE MATTER, THE LD CIT(A) ALLOWED THE ASSESSEES CLAIM FOR DEDUCTIO N U/S 80P(2)(A)(I) OF THE ACT IN HER ORDER DATED 26/5/2016. 3.1 AGGRIEVED BY THE ORDER OF THE CIT(A)-2, BANGALO RE DATED 26/5/2016 FOR ASST. YEAR 2012-13, REVENUE HAS FIELD THIS APPEAL BEFORE THE TRIBUNAL WHEREIN IT HAS RAISED THE FOLLOWING GR OUNDS:- 1. THE ORDER OF LD. CIT(A) IS CLEARLY OPPOSED TO L AW AS FAR AS THE FINDINGS ARE PERVERSE, CONTRARY TO THE FACTS AN D CIRCUMSTANCES OF THE CASE AND HENCE NOT SUSTAINABLE . 2. THE LD.CIT(A) ERRED IN TREATING THE ASSESSEE AS A CO- OPERATIVE SOCIETY INVOLVED IN EXTENDING CREDIT FACI LITIES TO ITS, MEMBERS WITHOUT APPRECIATING THE FACT THAT THE ASSESSE6 IS A CO-OPERATIVE BANK AND THAT THE MAIN A CTIVITY OF THE CO-OPERATIVE SOCIETY INVOLVED IN EXTENDING C REDIT FACILITIES TO ITS MEMBERS 'IN THE NATURE OF BANKING TRANSACTIONS WHICH COMES UNDER THE PURVIEW OF INSER TED SUB-SECTION (4) TO SECTION 80P W.E.F. 01.04.2007. 3. THE LD.CIT(A) HAS ERRED IN NOT APPRECIATING THE INSERTED PROVISION OF SEC.5(I)(CCII) IN THE PART V OF THE BA NKING REGULATION ACT UNDER SECTION 56 WHEREIN COOPERATIVE CREDIT SOCIETY IS DEFINED. ITA NO.1367/B/16 4 3,2 THE LD DR FOR REVENUE WAS HEARD AND HE PLACED S TRONG RELIANCE ON THE ORDER OF THE AO DENYING THE ASSESSEE THE DED UCTION CLAIMED U/S 80P(2)(A)(I) OF THE ACT. 3.3 PER CONTRA, THE LD AR FOR THE ASSESSEE SUBMITTE D THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESS EE BY THE DECISIONS OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE AS SESSEES OWN CASE FOR ASST. YEAR 2009-10 IN ITA NO.1574/BANG/2012 DAT ED 19/12/2014. IT IS SUBMITTED THAT THIS ORDER OF CO-ORDINATE BENC H HAS BEEN UPHELD BY THE HONBLE KARNATAKA HIGH COURT OF KARNATAKA IN IT S ORDER IN ITA NO.187/2015 DATED 8/9/2015, WHEREIN FOLLOWING ITS O WN DECISION IN THE CASE OF CIT VS. BILURU GURUBASAVA PATTINA SAHAK ARI SANGHA NIYAMITHA IN ITA NO.5006/2013 DATED 5/2/2014, REVE NUES APPEAL AGAINST THE AFORESAID DECISION OF THE CO-ORDINATE B ENCH WAS DISMISSED. IT IS FURTHER SUBMITTED THAT THE CO-ORDINATE BENCH IN ITS ORDER IN THE ASSESSEES OWN CASE FOR ASST. YEAR 2010-11 IN ITA N OS.1010 & 1203/BANG/20114 DATED 18/12/2014 HAS ALSO DECIDED T HIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 3.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JU DICIAL PRONOUNCEMENTS CITED (SUPRA). THE QUESTION FOR CON SIDERATION AND ADJUDICATION BEFORE US IS WHETHER THE ASSESEE, ADMI TTEDLY A CREDIT CO- OPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACIL ITIES, ETC., TO ITS MEMBERS, IS ENTITLED TO BE ALLOWED DEDUCTION CLAIME D U/S 80P(2)(A)(I) OF THE ACT OR WHETHER THE SAID CLAIM IS HIT BY THE PROVISIONS OF SEC. 80P(4) OF THE ACT. WE FIND THAT THIS ISSUE STANDS SQUARELY COVERED IN ITA NO.1367/B/16 5 FAVOUR OF THE ASSESSEE AND AGAINST REVENUE, BY THE DECISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN ITS ORDER IN ITA NO.1574/BANG/2012 DATED 19/12/2014 IN THE ASSESSES OWN CASE FOR ASST. YEAR 2009-10, WHEREIN FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SRI BIL URU GURUBASAVA PATTINA SAHAKARI SANAGHA NIYAMITHA IN ITA NO.5006/2 013 DATED 5/2/2014, IT WAS HELD THAT A CO-OPERATIVE SOCIETY P ROVIDING CREDIT ETC., TO ITS MEMBERS CANNOT BE TREATED AS A CO-OPERATIVE BANK CARRYING ON BANKING ACTIVITIES. SIMILAR VIEW WAS UPHELD BY A CO -ORDINATE BENCH IN THE ASSESSEES OWN CASE FOR ASST. YEAR 2010-11 (SUP RA). 3.4.2 SUBSEQUENT THERETO, THE HONBLE KARNATAKA HIG H COURT IN THE ASSESSEES OWN CASE FOR ASST. YEAR 2009-10, IN ITS ORDER IN ITA NO.187/2015 DATED 8/9/2015, WHILE CONSIDERING THE V ERY SAME ISSUE OF THE ASSESSEES CLAIM FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT HAS DISMISSED REVENUES APPEAL, FOLLOWING ITS OWN DECI SION IN THE CSAE OF CIT VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANG HA NIYAMITHA (SUPRA), AND THEREBY AFFIRMED THE TRIBUNALS ORDER IN THE ASSESSEES OWN CASE FOR ASST. YEAR 2009-10 (SUPRA). RESPECTFU LLY FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE ASSESSEES OWN CASE FOR ASST. YEAR 2009-10 (SUPRA), WE DISMISS THE GROUNDS RAISED BY REVENUE. 4. IN THE RESULT, REVENUES APPEAL FOR ASSESSMENT YEAR 2011-12 IS DISMISSED. ITA NO.1367/B/16 6 ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER, 2017 . SD/- SD/- (SUNIL KUMAR YADAV) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED : 27/11/2017 VMS COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVAT E SECRETARY, ITAT, BANGALORE