ITO-WARD-7(2), Nagpur V. M/S MAHARASHTRA RAJYA VIJ MANDAL KARMACHARI SAHAKARI PAT SANSTHA, Nagpur

ITA 143/NAG/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93420 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 28-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: SUDHIR DABIR

Judgement Text

1 ITA NOS. 143&144/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 143 & 144/NAG/2014 ASSESSMENT YEARS: 2009-10 & 2010-11. THE INCOME-TAX OFFICER, M/S MAHARASHTRA RAJYA VIJ MANDAL WARD-7(2), NAGPUR. V/S. KARMACHARI SAHAKARI PAT SANSTHA, AT KATOL, TA. KATOL, DIST. NAGPUR. PAN AAAAM9205E (APPELLANT) RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI SUDHIR DABIR.. DATE OF HEARING : 01-07-2015 DATE OF PRONOUNCEMENT : 01-07-2015. O R D E R PER SHRI SHAMIN YAHYA, A.M . THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS OF LEARNED CIT(APPEALS)-II, NAGPUR DATED 06-01-2014 AND PERTAI N TO ASSESSMENT YEAS 2009- 10 AND 2010-11. THE GROUNDS RAISED BY THE REVENUE R EAD AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION U/S 80P OF THE I. T. ACT, 1961 OF ` .18,36,002/- & ` .14,23,611/- FOR AYS.2009-10&2010-11 RESPECTIVELY. 2 ITA NOS. 143&144/NAG/2014 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(A) HAS ERRED IN IGNORING THE FACTS THAT THE MAIN MOTTO OF THE ASSESSEE IS LENDING TO ITS MEMBERS, WHICH IS IN THE NATURE OF BANKING TRA NSACTION AND COMES UNDER THE PURVIEW OF SECTION 80P(4) OF THE I.T. ACT, 196 1. 2. AT THE OUTSET, LEARNED COUNSEL OF THE ASSESSEE BROUGHT TO OUR NOTICE THAT IDENTICAL ISSUES HAVE BEEN DECIDED BY THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE. 3. UPON CAREFUL CONSIDERATION, WE NOTE THAT THE ASS ESSEE SOCIETY IN THIS CASE IS ENGAGED IN PROVIDING CREDIT FACILITY TO ITS MEMBE RS. THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE I.T. AC T. THIS WAS DENIED BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SEC TION 80P(4). WE FIND THAT IN IDENTICAL SITUATION THIS TRIBUNAL IN SEVERAL CASES HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE HONBLE JURISDICTIONAL HIGH CO URT IN THE CASE OF QUEEN URBAN CO-OPERATIVE CREDIT SOCIETY LTD. V/S. ACIT IN TAX A PPEALS NO. 22, 23 & 24 OF 2015 VIDE ORDER DATED 17 TH APRIL, 2015 HAS ALSO CONSIDERED THE ISSUE AND ADJUDICATED AS UNDER : THIS FACT OF ACCEPTING DEPOSITS FROM PEOPLE WHO ARE NOT MEMBERS HAD BEEN SO RECORDED BY THE CIT(A) IN HIS ORDER. BUT I T CANNOT BE CONCLUDED THAT THE APPELLANTS PRINCIPAL BUSINESS WAS OF ACCEPTIN G DEPOSITS FROM PUBLIC AND THEREFORE IT WAS IN BANKING BUSINESS. IN FACT, THE IMPUGNED ORDER ERRONEOUSLY RELIES UPON BYE-LAW 43 OF THE SOCIETY WHICH ENABLE S THE SOCIETY TO RECEIVE DEPOSITS TO CONCLUDE THAT IT CAN RECEIVE DEPOSITS FROM PUBLIC. THUS IN THE PRESENT FACTS THE FINDING THAT THE APPELLANTS PRI NCIPAL BUSINESS WAS OF BANKING WAS PERVERSE AS IT WAS NOT SUPPORTED BY T HE EVIDENCE ON RECORD. SO FAR AS THE ISSUE OF PRIMARY OBJECT OF THE ASSESSEE WAS CONCERNED THE IMPUGNED ORDER GIVES THE FINDING ON THAT BASIS TO DEPRIVE THE APPELLANT THE BENEFIT OF SECTION 80P. 3 ITA NOS. 143&144/NAG/2014 IN FACT AS PER THE BYE-LAWS OF THE APPEL LANT SOCIETY THERE WAS NO PROHIBITION TO ADMITTING A SOCIETY TO ITS MEMBERSHIP AND ONE O F THREE CUMULATIVE CONDITIONS PRECEDENT TO BE A PRIMARY COOPERATIVE B ANK WAS NOT SATISFIED. THIS WAS A MANDATORY CONDITION I.E. THE BYE LAWS M UST SPECIFICALLY PROHIBIT ADMISSION OF ANY OTHER COOPERATIVE SOCIETY TO ITS MEMBERSHIP. THE REVENUE HAS NOT BEEN ABLE TO SHOW ANY SUCH PROHIBITION IN THE BYE LAWS OF THE ASSESSEE. THUS EVEN THE AFORESAID QUALIFYING COND ITION (3) FOR BEING CONSIDERED AS A PRIMARY COOPERATIVE BANK WAS NOT S ATISFIED. THUS, THE THREE CONDITIONS AS PROVIDED UNDER SECTION 5(CVV) OF TH E BANKING REGULATION ACT, 1949, ARE TO BE SATISFIED CUMULATIVELY AND E XCEPT CONDITION (2) THE OTHER TWO QUALIFYING CONDITIONS ARE NOT SATISFIED . ERGO, APPELLANT CANNOT BE CONSIDERED TO BE A CO-OPERATIVE BANK FOR THE PURPO SES OF SECTION 80P(4) OF THE ACT. THUS, THE APPELLANT IS ENTITLED TO THE BE NEFIT OF DEDUCTION AVAILABLE UNDER SECTION 80P(2)(A)(I). THE CONTENTION OF THE REVENUE THAT THE APPELLANT I S NOT ENTITLED TO THE BENEFIT OF SECTION 90P(2)(A)(I) IN VIEW OF THE FACT THAT I T DEALS WITH NON-MEMBERS CANNOT BE UPHELD. THIS FOR THE REASON THAT SECTION 80P(1) OF THE ACT RESTRICTS THE BENEFITS OF DEDUCTION OF INCOME OF CO-OPERATIV E SOCIETY TO THE EXTENT IT IS EARNED BY PROVIDING CREDIT FACILITIES TO ITS MEMBE RS. THEREFORE, TO THE EXTENT THE INCOME EARNED IS ATTRIBUTABLE TO DEALINGS WITH THE NON-MEMBERS ARE CONCERNED THE BENEFIT OF SECTION 80P WOULD NOT BE AVAILABLE. IN THE ABOVE VIEW OF THE MATTER, AT THE TIME WHEN EFFECT HAS BE EN GIVEN TO THE ORDER OF THIS COURT, THE AUTHORITIES UNDER THE ACT WOULD RESTRIC T THE BENEFIT OF DEDUCTION UNDER SECTION 80P OF THE ACT ONLY TO THE EXTENT TH AT THE SAME WAS EARNED BY THE APPELLANT IN CARRYING ON ITS BUSINESS OF PROVI DING CREDIT FACILITIES TO ITS MEMBERS. 4. WE FIND THAT IN THE PRESENT CASE NO CASE HAS BEE N MADE OUT BY THE REVENUE THAT THE ASSESSEES BUSINESS INCLUDES PROVIDING CR EDIT FACILITIES TO NON-MEMBERS. IN THESE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE PRE CEDENT AS ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE LEARNED CIT(APPE ALS). ACCORDINGLY WE UPHOLD THE SAME. 4 ITA NOS. 143&144/NAG/2014 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED ON THIS 1 ST DAY OF JULY, 2015. SD/- SD/- (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER A CCOUNTANT MEMBER. NAGPUR, DATED: 1 ST JULY, 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. T RUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT , NAGPUR WAKODE