The Income Tax Officer, Ward-1, Sirsi., Sirsi V. M/s The Suvarna Co-op. Society Ltd., Sirsi

ITA 137/PAN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1219 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 14-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVIRAJ Y V
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 129 /P A N/201 6 (ASST. YEAR : 20 12 - 1 3 ) IT O , WARD - 1 , SIRSI . VS. M/S. TATTISASR GROUP SEVA SAHAKARI SANGH LTD., MELINONIKERI, SIRSI. PAN NO. AAALT 0018 K ITA NO. 137 / P A N /201 5 (ASST. YEAR : 20 12 - 1 3 ) ITO, WARD - 1, SIRSI. VS. M/S. THE SUVARNA C OOPERATIVE SOCIETY LTD., TSS ROAD, SIRSI . PAN NO. AAALS 0006 N ITA NO. 130 / P A N /201 6 (ASST. YEAR : 20 12 - 13 ) IT O , WARD - 1, SIRSI . VS. M/S. KAKERI ANDALAGI GROUP GRAMAGALA SEVA SAHAKARA BANK LTD., ANDALAGI, MUNDGOOD PAN NO. AAAA K 4259 L C.O.NO.60/PAN/2016 ITA NO. 130 /P A N/201 6 (ASST. YEAR : 20 12 - 13 ) M/S. KAKERI ANDALAGI GROUP GRAMAGALA SEVA SAHAKARA BANK LTD., ANDALAGI, MUNDGOOD VS. ITO, WARD - 1, SIRSI. PAN NO. AAAAK 4259 (APPELLANT) (RESPONDENT) 2 ITA NOS. 129, 130 & 137/PAN/2016 C.O.NO.60/PAN/2016 ASSESSEE BY : SHRI V. SRINIVASAN ADVOCATE (ITA NO.129 & 137 /PAN/2016) NONE (ITA 130/PAN/2016 AND CO 60/PAN/2016) DEPARTMENT BY : SHRI RAVIRAJ Y. V. - D R DATE OF HEARING : 20 / 0 9 /201 6 . DATE OF PRONOUNCEMENT : 20 / 0 9 /201 6 . O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER TH E S E ARE THE APPEAL S FILED BY THE REVENUE AGAINST THE SEPARATE ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS) , HUBLI IN ITA NO. 514 ,501 & 517 /CIT(A) / HBL / 20 14 - 15 , DATED 2 9 /0 2 /201 5 , 28/03/2016 & 22/03/2016 RESPECTIVELY FOR THE ASSESSMENT YEAR 2012 - 13 AND THE CROSS OBJECTION NO. 60/PAN/2015 FILED BY THE ASSESSEE IN REVENUES APPEAL IN ITA NO.130/PAN/2016. 2. THE SOLE ISSUE INVOLVED IN TH E S E APPEAL S IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING DEDUCTION TO THE ASSESSEE UNDER SEC. 80P(2)(A)(I) OF THE INCOME TAX ACT, 1961. 3 . AS ALL THE APPEALS HAVE BEEN IDENTICAL ISSUE, F OR THE SAKE OF CONVENIENCE , FACTS ARE TAKEN FROM ITA NO.129/PAN/20146. T HE ASSESSEE FILED ITS RETURN OF INCOME AT NIL AFTER CLAIMING DEDUCTION UNDER SEC. 80P OF THE ACT . IT WAS CLAIMED THAT THE SOCIETY IS ENTITLED TO DEDUCTION UNDER SEC. 80P AS IT WAS A COOPERATIVE SOCIETY CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. HOWEVER, THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SEC. 80P WAS REJECTED BY THE ASSESSING OFFICER IN THE ORDER PASSED UNDER SEC. 143(3) 3 ITA NOS. 129, 130 & 137/PAN/2016 C.O.NO.60/PAN/2016 OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS A COOPERATIVE BANK, AND HENCE, NOT ENTITLED TO CLAIM DEDUCTION BY VIRTUE OF SEC. 80P(4). 4. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) AL LOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER: - IN HAVE GONE THROUGH THE GROUNDS OF APPEAL OF THE ASSESSEE. THE ASSESSEE HAS RELIED ON SEVERAL DECIDED CASE LAWS. WHEREAS, THE AO A LSO REFERRED TO SECTION 80P(2)(D) ONLY. ACCORDING TO HIM, THIS SECTION APPLIES TO A CO - OPERATIVE SOCIETY ONLY AND NOT TO A CO - OPERATIVE BANK. THERE IS NO EXPLANATION PROVID ED IN THE ACT TO THE EFFECT THAT BENEFIT OF SEC.80P(2)(D) CAN BE EXTENDED TO CO - OPERATIVE BANKS ALSO. CO - OPERATIVE SOCIETIES AND CO - OPERATIVE BANKS ARE NOT ONE AND THE SAME. THE AC TOUCHED UPON THE ISSUE AS TO HOW THE CO - OPERATIVE SOCIETY IS A COOPERATIVE BANK BY TAKING RECOURSE TO SECTION 2(24)(VIIA) OF THE I T ACT 1961, PART V OF BANKING REGULATION ACT 1945 AND DEFINITIONS GIVEN IN THE I T ACT, 1961, ABOUT CO - OPERATIVE BANKS, AND BASED ON THIS HE HAS DISALLOWED THE CLAIM OF THE ASSESSEE THAT THE INTEREST AND DIVIDEND RECEIVED FROM CO - OPERATIVE BANKS IS EXEMPT ULS.80P(2)(D), KEEPING IN VIEW THE PROVISIONS OF SECTION 80P(2)(D). WHILE DOING SO, THE AC ALSO RELIED ON THE SUPREME COURTS DECISION IN THE CASE OF TOTGARS SALE SOCIETY (322 ITR 283)(SC). THE ASSES SEE CLAIMS THAT IT IS ENTITLED T O DEDUCTION U/S.80P(2)(A) INSOFAR AS THE INCOME BY WAY OF INTEREST AND DIVIDEND INCOME EARNED AN DEPOSITS IN CO - OPERATIVE BANKS AND SCHEDULED BANKS IS CONCERNED AS IT IS ALSO AN INCOME ATTRIBUTABLE TO THE ACTIVITY OF PROVIDI NG CREDIT FACILITIES TO ITS MEMBERS. DURING THE SUBJECT ASSESSMENT YEAR, THE ASSESSEE IS IN RECEIPT OF RS.65,08,262/ - AS INTEREST AND DIVIDEND FROM CO - OPERATIVE SOCIETIES AND CO - OPERATIVE BANKS. THIS INCLUDES RS.39,87,988/ - OF INTEREST AND DIVIDEND RECEIVE D FROM KDCC BANK, A CO - OPERATIVE BANK. SECTION 80P(2)(D) PROVIDES THAT INTEREST OR DIVIDEND IN RESPECT OF ANY INCOME, BY WAY OF DEPOSIT WITH ANY CO - OPERATIVE SOCIETY FROM ITS INVESTMENTS WITH ANY OTHER CO - OPERATIVE SOCIETY, THE WHOLE OF SUCH INCOME IS ELI GIBLE FOR DEDUCTION. AS PER SECTION 2(19) OF THE ACT, A CO - OPERATIVE SOCIETY MEANS A CO - OPERATIVE SOCIETY REGISTERED UNDER THE CO - OPERATIVE SOCIETIES ACT, 1912, OR UNDER ANY LAW FOR THE TIME BEING IN FORCE IN ANY STATE FOR THE REGISTRATION OF CO - OPERATIVE SOCIETIES. THE PROVISIONS OF THE I T ACT, 1961, EITHER IN SECTION 2(19) OR U/S.80P, DO NOT 4 ITA NOS. 129, 130 & 137/PAN/2016 C.O.NO.60/PAN/2016 MAKE ANY DISCRIMINATION BETWEEN CO - OPERATIVE SOCIETIES CARRYING ON BANKING BUSINESS AND OTHER CO - OPERATIVE SOCIETIES. CO - OPERATIVE BANKS ARE PRIMARILY CO - OPERATIVE SOCIETIES BY CONSTITUTION AND BANKS BY THE NATURE OF BUSINESS. IN THE CASE OF MENASI SEEMEYA GROUP GRAMAGALA SEVA SAHAKARI SANGHA NIYAMITA, IN ITA NO.609 AND 601(BNG/2014 DATED 06/02/2015) IT WAS HELD THAT THE RESTRICTIVE INTERP RETATION GIVEN TO CO - OPERATIVE SOCIETY U/S.80P(2)(D) WAS NOT WARRANTED. THE ITAT, BANGALORE BENCH, IN THIS CASE, THROUGH A DETAILED REASONING, CAME TO THE CONCLUSION THAT THE INTEREST AND DIVIDEND EARNED BY THE ASSESSEE FROM CO - OPERATIVE BANK WAS ELIGIBLE FOR DEDUCTION U/S 80P(2)(D) OF THE ACT. IN THE LIGHT OF THE ABOVE DISCUSSION AND DULY FOLLOWING THE DECISIONS CITED ABOVE, I HOLD THAT THE INCOME EARNED OF RS.39,87,9881 - , BY WAY OF INTEREST AND DIVIDEND FROM CO - OPERATIVE BANKS, IS ELIGIBLE FOR CLAIM OF DEDUCTION ULS.80P(2)(D) OF THE ACT. SINCE DEDUCTION IS ALLOWED ULS.80P(2)(D), ALLOWABILITY OR OTHERWISE OF THE SAID INCOME ULS.80P(2)(A), BEING ATTRIBUTABLE TO THE ACTIVITY OF THE SOCIETY, IS NOT DEALT. 5. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER S OF THE ASSESSING OFFICER. HE COULD N OT POINT OUT ANY SPECIFIC ERROR IN THE ABOVE QUOTED ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED THE CLAIM OF DEDUCTION UNDER SEC. 80P(2)(A)(I) OF THE ACT AFTER FOLLOWING THE PRINCIPLES LAID DOWN IN THE DECISION OF THE HONBLE BOMBAY HIGH COURT AT PANAJI IN THE CASE OF M/S. THE QUEPEM URBAN COOPERATIVE CREDIT SOCIETY LTD. VS. ACIT IN TAX APPEALS NO. 22 - 24/2015 DATED 17/04/2015 , AS ALSO THE DECISION OF THE HONBLE KARNA TA KA HIGH COURT IN THE CASE O F TUMKUR MERCHANTS SOUHARD A CREDIT COOPERATIVE LTD. IN ITA NO. 307/2014, DATED 28/10/2014 . NO CONTRARY DECISION COULD BE CITED BY THE DEPARTMENTAL REPRESENTATIVE. WE, THEREFORE, DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS), W HICH IS HEREBY CONFIRMED AND THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 6. CROSS OBJECTION IS IN SUPPORT OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). AS WE HAVE DISMISSED THE REVENUES APPEAL AND 5 ITA NOS. 129, 130 & 137/PAN/2016 C.O.NO.60/PAN/2016 UPHELD THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE CROSS OBJECTION FILED BY THE ASSESSEE STANDS DISMISSED. 7 . IN THE RESULT, ALL THE APPEALS FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON TUESDAY , THE 20 TH DAY OF SEPTEMBER , 201 6 AT GOA . S D / - S D / - (N.S.SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH SEPTEMBER, 201 6 . VR/ - COPY TO: 1 . THE ASSESSEE A) M/S. TATTISASR GROUP SEVA SAHAKARI SANGH LTD., MELINONIKERI, SIRSI. B) M/S. THE SUVARNA COOPERATIVE SOCIETY LTD., TSS ROAD, SIRSI. C) M/S. KAKERI ANDALAGI GROUP GRAMAGALA SEVA SAHAKARA BANK LTD., ANDALAGI, MUNDGOOD 2 . THE REVENUE. ITO, WARD - 1, SIRSI. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI .