SSK Pattin Sahakari Sangh Niyamit, Bagalkot V. ITO, Bagalkot

ITA 1446/BANG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95184 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-06-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 21-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: S RAMASUBRAMANIAN
• Keywords: Question of law; Benefit of exemption
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH B, BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JM (SMC) ITA NO.1446(B)/2013 (ASSESSMENT YEAR : 2009-10) SSK PATTIN SAHAKARI SANGH NIYAMIT, BANAKATTI ROAD, ILKAL TALUK, DISTRICT BAGALKOT. PAN NO.AACAS9807J APPELLANT VS THE INCOME-TAX OFFICER, WARD-1, BAGALKOT RESPONDENT ASSESSEE BY : SHRI S. RAMASUBRAMANIAN, CA REVENUE BY : DR. P.K.SRIHARI, ADDL.CIT DATE OF HEARING : 18-08-2015 DATE OF PRONOUNCEMENT : 26-0 8-2015 O R D E R PER SMT ASHA VIJAYARAGHAVAN, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A), BELGAUM DATED 14-08-2013 FOR THE ASSESSMENT YEAR 20 09-10. 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY REGISTERE D UNDER THE KARNATAKA STATE CO-OPERATIVE SOCIETIES ACT. THE ASS ESSEE FILED RETURN OF INCOME ON 28-09-2009, DECLARING GROSS TOTAL INCOME OF RS.14,34,736/- AFTER CLAIMING DEDUCTION U/S 80P(2)(A)(I) UNDER CHA PTER VIA, THE TOTAL INCOME IS DECLARED AT RS NIL. IT WAS THEREFORE, CL AIMED THAT THE SOCIETY IS ITA NO.1446(BANG)2013 2 ENTITLED TO DEDUCTION UNDER SECTION 80P(2)(A)(I) UN DER CHAPTER VIA AS IT IS A CO-OPERATIVE SOCIETY, CARRYING ON THE BUSINESS OF B ANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. HOWEVER, THE CL AIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT, WA S REJECTED BY THE AO VIDE HIS ORDER U/S 143(3) OF THE IT ACT, DATED 23-12-201 1. THE AO DENIED THE DEDUCTION ON THE GROUND THAT THE ASSESSEE IS A CO- OPERATIVE BANK AND HENCE, NOT ENTITLED TO CLAIM DEDUCTION BY VIRTUE OF SECTION 80P(4). 3. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE RELIED ON THE DECISION IN THE CASE OF KERALA CO- OPERATIVE FEDERATION LTD VS CIT (170 ITR 455), ADDL .CIT VS U.P.CO- OPERATIVE CANE UNION (114 ITR 70), CIT VS CO-OPERAT IVE SUPPLY AND COMMISSION SHOP LTD., (204 ITR 713), CIT VS MODERN ENGINEERING CONSTRUCTION CO-OPERATIVE SOCIETY LTD.(2008) 306 IT R 8 (MADRAS HIGH COURT) CIT VS ATTRUR AGRICULTURAL PRODUCERS CO-OPER ATIVE MARKETING SOCIETY LTD. (2008) 306 ITR 151 (MADRAS HIGH COURT), CIT VB S TAMILNADU CO- OPERATIVE SILK PRODUCERS LTD (2009) 311 ITR 224 (MA DRAS HIGH COURT) BIHAR STATE HOUSING CO-OPERATIVE FEDERATION LTD VS CIT (2009) 315 ITR 286 (PATNA HIGH COURT) ELECTRO URBAN CO-OPERATIVE C REDIT SOCIETY LTD., VS ITO (2001) 76 ITD 43 (CALCUTTA ITAT), CO-OPERATIVE INDUSTRIAL ESTATE LTD. VS ITO (1985) 11ITD 84 (HYDERABAD (ITAT) AND ACIT V S M/S BANGALORE COMMERCIAL TRANSPORT CREDIT CO-OPERATIVE SOCIETY L TD. (BANGALORE ITAT), ITA NO.1446(BANG)2013 3 WHEREIN IT WAS HELD THAT INCOME EARNED Y CO-OPERATI VE SOCIETY FROM ITS ACT OF LENDING MONEY TO MEMBERS SHALL BE ELIGIBLE FOR E XEMPTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. 4. THE CIT(A), RELIED ON THE DECISION OF DCIT VS J AYALAXMI MAHILA VIVIDODESHAGALA SOUHARDA SAHAKARI LTD(2012) 23 TAXM ANN.COM 313(PANAJI) WHEREIN IT WAS HELD THAT THE ASSESSEE IS A CO-OPERATIVE BANK WITHIN THE MEANING DEFINED IN PART-V OF THE BANKING REGULATION ACT, 1949 AND THEREFORE, THE PROVISIONS OF SECTION 80P(4) ARE APPLICABLE TO IT AND IT IS NOT ENTITLED TO DEDUCTION U/S 80P(2)(A)(I) OF THE I T ACT, 1961. HENCE, THE CIT(A) DISMISSED THE APPEAL. 5. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE TRIBUNAL. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A). 7. ON THE OTHER HAND, LEARNED DR RELIED ON THE OBSE RVATION MADE BY THE CIT(A) AT PAGE - 17 OF HIS ORDER, AS UNDER; THE AO HAS COME TO THE CONCLUSION THAT THE ASSESS EE CO-OPERATIVE SOCIETY IS DOING BANKING BUSINESS AS PROVIDING CREDIT FACILITIES TO MEMBERS IS AKIN TO BANKING BU SINESS AND SINCE THE MEMBERSHIP IS OPEN TO PUBLIC, IT IS ACCEP TING DEPOSITS FROM PUBLIC WHICH CAN BE WITHDRAWN BY ONE OF THE ITA NO.1446(BANG)2013 4 SPECIFIED MEANS WITHIN THE MEANING OF ABOVE MENTION ED DEFINITION OF BANKING. 8. I FIND THE DECISION OF THE HONBLE KARNATAKA HI GH COURT IN THE CASE OF CIT VS SRI BILURU GURUBASAVA PATTINA SAHAKA RI SANGHA NIYAMITHA BAGALKOT ( 369 ITR 86(KAR.) IT HAS BEEN HELD AS UND ER; IN THE INSTANT CASE, WHEN THE STATUS OF THE AS SESSEE IS A CO-OPERATIVE SOCIETY AND IS NOT A CO-OPERATIVE BANK, THE ORDER PASSED BY THE ASSESSING AUTHORITY EXTENDING T HE BENEFIT OF EXEMPTION FROM PAYMENT OF TAX UNDER SEC TION 80P(2)(A)(I) OF THE ACT IS CORRECT. THERE IS NO ER ROR. WHEN THERE IS NO ERROR, THE QUESTION OF ORDER BEING PREJ UDICIAL; WOULD NOT ARISE. THE TRIBUNAL HAS RIGHTLY ENTERTAI NED THE APPEAL AND SET ASIDE THE ORDER. THEREFORE, THE SAI D ORDER IS IN ACCORDANCE WITH LAW AND CANNOT BE FOUND FAULT WI TH. THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE. 9. SINCE THE FACTS IN THE PRESENT CASE IDENTICAL TO THAT OF THE CASE WHICH IS DECIDED BY THE HONBLE KARNATAKA HIGH COUR T IN THE CASE OF CIT VS SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA N IYAMITHA BAGALKOT (IN ITA NO.5006/2013 DATED 5.2.2014 FOR THE ASSESSM ENT YEAR : 2010-11) OF THE JURISDICTIONAL HIGH COURT, I HOLD THAT THE LEAR NED CIT(A) WAS NOT CORRECT ITA NO.1446(BANG)2013 5 IN DENYING THE ASSESSEES CLAIM OF DEDUCTION U/S 80 P(2)(A)(I) OF THE IT ACT, 1961. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 26 TH AUGUST, 2015. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER D A T E D : PLACE: BANGALORE AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE