Dy,CIT,Cir. 3(1), Dhule, Dhule V. Shri Agrasen Sah.Patsanstha maryadit, Dhule

ITA 1459/PUN/2005

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49909 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 26-05-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 01-07-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V RANGARAJAN
• Assessee Lawyers: SUNIL PATHAK

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI G.S. PANNU (AM) ITA NO.1459/PN/2005 (ASSTT. YEAR : 1999-2000) DY. COMMISSIONER OF INCOME TAX ... APPELL ANT CIRCLE-3(1), DHULE V. S HRI. AGRASEN SAH. PATSANSTHA MARYADIT, RESPONDENT AGRA ROAD, DHULEPAN : NOT AVAILABLE ITA NO.1460/PN/2005 (ASSTT. YEAR : 2000-01) DY. COMMISSIONER OF INCOME T AX ... APPELLANT CIRCLE-3(1), DHULE V. SHRI. AGRASEN SAH. PATSANSTHA MARYADIT, RESPONDENT AGRA ROAD, DHULEPAN : NOT AVAILABLE APPELLANT BY : SHRI V. RANGARAJAN, CIT DR RESPONDENT BY : SHRI SUNIL PATHAK ORDER PER I.C. SUDHIR, JM IN THESE APPEALS THE REVENUE HAS QUESTIONED FIRST A PPELLATE ORDER QUESTIONING THE VALIDITY OF THE ACTION OF THE LD CI T(A) IN DELETING THE ADDITION OF (RS.2,01,60,000/- IN A.Y. 1999-2000 AN D RS.1,06,02,000/- IN A.Y. 2000-01) U/S. 68 OF THE ACT HOLDING THAT THE ADDITION MADE BY THE A.O AS ASSESSEES INCOME FROM REGULAR BANKING BUSIN ESS IS ENTITLED FOR DEDUCTION U/S. 80 P OF THE ACT. 2. IN SUPPORT OF THE GROUND, THE LD. D.R. SUBMITTE D THAT THE LD CIT(A) HAS FOLLOWED DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF SHREE MAHAVEER NAGRI SAHAKARI PAT SANSHTHA LTD. V/S. DCIT , ITA (SS) NO. 2/PN/97 (BLOCK A.Y. 1989-90 TO 1996-97), ORDER DATE D 18 TH FEBRUARY 2000 WITHOUT APPRECIATING THAT IN THE CASE OF ASSES SEE, FACTS ARE DISTINGUISHABLE. THE LD CIT(A) HAS ALSO FAILED TO APPRECIATE THAT PROVISION ITA . NO1459 & 1460/PN/2005 SHRI AGRASEN SAH. PAT SANSTHA MARYADIT. A.Y 1999-2000 ETC. PAGE OF 4 2 LAID DOWN U/S. 80P(2)(AI) OF THE ACT ARE NOT APPLIC ABLE IN THE CASE OF ASSESSEE SINCE LENDING IN SUCH SOCIETY IS ALLOWED TO MEMBERS ONLY. HE SUBMITTED THAT A.O IN THE PRESENT CASE HAS MADE ADD ITION U/S. 68 OF THE ACT ON ACCOUNT OF FIXED DEPOSITS FOUND CREDITED IN ASSESSEES BOOKS, FOR WHICH ASSESSEE FAILED TO FURNISH EXPLANATION ABOUT THE NATURE AND SOURCES THEREOF SATISFACTORILY. 3. THE LD. A.R., ON THE OTHER HAND, SUBMITTED THAT THE ISSUE RAISED IN THE GROUND IS FULLY COVERED BY THE DECISION OF PUNE BEN CH OF THE TRIBUNAL IN THE CASE OF SHREE MAHAVEER NAGRI SAHAKARI PAT SANSHTHA LTD V/S. DCIT (SUPRA) AND IN THE CASES OF ITO V/S. MAHESH NAGARI SAHAKARI PAT SANSHTHA & O THERS, ITA NO. 1170/PN/2001 AND OTHERS, ORDER DATED 28 TH OCTOBER 2005. THE LD. A.R. ALSO DREW OUR ATTENTI ON TO THE CONTENTS OF PARA NO. 15 OF THE ORDER OF THE TRI BUNAL IN THE CASE OF SHREE MAHAVEER NAGRI SAHAKARI PAT S ANSHTHA LTD. (SUPRA) WHEREIN IT HAS BEEN SUBMITTED BY THE ASSESSEE THAT IF AT ALL A DDITION IS TO BE MADE ON ACCOUNT OF CASH CREDITS IN THE FORMS OF ALLEGED BOGUS DEPOS IT, IT WILL ONLY UNDER THEHEAD INCOME FROM BUSINESS. DURING THE COURSE OF SEARC H ALSO, NO EVIDENCE WAS FOUND TO INDICATE THAT THE ASSESSEE IN THAT CASE WAS HAV ING ANY OTHER ACTIVITY THAN THAT OF PROVIDING LOANS TO ITS MEMBER. THE DEPOSITS WERE ALSO CREDITED TO THE BOOKS OF ACCOUNTS MAINTAINED FOR THE PURPOSES OF ASSESSEES BUSINESS. CONSIDERING SUCH SUBMISSION AND EVEN THAT THE SOCIETY HAD ACCEPTED D EPOSITS FROM NON-MEMBERS IN BOGUS NAMES, THE TRIBUNAL HELD THAT THE ASSESSEE SO CIETY WILL CONTINUE TO ENJOY THE STATUS OF A CO-OPERATIVE SOCIETY AND THEREFORE DEDU CTION U/S. 80P WILL BE AVAILABLE TO THE ASSESSEE. 4. CONSIDERING THE ABOVE SUBMISSIONS, WE FIND THAT UNDER ALMOST SIMILAR FACTS AND CIRCUMSTANCES, THE PUNE BENCH OF THE TRIBUNAL I N THE CASE OF SHREE MAHAVEER NAGRI SAHAKARI PAT SANSHTHA LTD. V/S. DCIT (SUPRA) HAS HELD THE SOCIETY IS ELIGIBLE FOR CLAIMING DEDUCTION U/S. 80P OF THE I.T. ACT. F OR A READY REFERENCE, PARA NO. 36 AND 37 OF THE SAID ORDER ARE BEING REPRODUCED HEREU NDER : ITA . NO1459 & 1460/PN/2005 SHRI AGRASEN SAH. PAT SANSTHA MARYADIT. A.Y 1999-2000 ETC. PAGE OF 4 3 36. AS REGARDS THE APPLICABILITY OF SECTION 80P(2)( A)(I), WE FIND THAT THE ASSESSEE HAS GIVEN LOAN ONLY TO ITS MEMBERS. SHRI PATANKAR, MANAGER, IN HIS STATEMENT U/S. 132(4) AT THE TIME OF SEARCH ITSELF AND STATED THAT FOR DRAWING A LOAN, THE PERSON CONCERNED MUST BE A MEMBER OF TH E SOCIETY (PAGE 66 OF THE PAPER BOOK). FURTHER THE CONFIRMATION FROM THE CHAIRMAN PLACED AT PAGE 132 OF THE PAPER BOOK REVEALS THAT THE LOANS WERE P ROVIDED ONLY TO MEMBERS. THE HONBLE SUPREME COURT IN THE CASE OF U.P. CO-O P. CANE UNION FEDERATION LTD. V. CIT (SUPRA) HAS HELD THAT THE DE FINITION OF A MEMBER OF A CO-OPERATIVE SOCIETY SHOULD BE TAKEN FROM THE RELE VANT LAWS OF THE CONCERNED STATE. AS THE SOCIETY IS INCORPORATED UNDER THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, THE DEFINITION OF A MEMBER AND NOM INAL MEMBER HAS TO BE ADOPTED FROM THE SAID ACT. AS PER THESE DEFINITION S (PAGE 90 OF THE PAPER BOOK). MEMBERS INCLUDE NOMINAL MEMBERS ALSO WHO AR E ADMITTED AS PER THE BYE-LAWS AND THE BYE-LAWS 74 TO 88 OF THE SOCIETY C LEARLY STATE THAT THE SOCIETY CAN ADMIT NOMINAL MEMBERS. IN VIEW OF THE ABOVE FACTS, THE ASSESSEE SATISFIES THE CONDITIONS LAID DOWN U/S 8 0P(2)(A)(1) OF THE ACT AND HENCE, IT IS ENTITLED TO DEDUCTION U/S. 80P OF THE ACT. THE INTEREST EARNED BY THE ASSESSEE ACCORDINGLY WILL BE EXEMPT UNDER THIS SECTION. THE CASH CREDITS, EVEN IF TAXED, WILL BE CONSIDERED AS INCOM E FROM THE SAME BUSINESS, I.E. PROVIDING CREDIT FACILITIES TO THE MEMBERS AND , ACCORDINGLY, THEY WILL ALSO BE ENTITLED TO DEDUCTION U/S 80P AND THUS, THE ENTI RE INCOME OF THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80P AND, ACCORDINGLY, NO ADDITION IS SUSTAINABLE IN THE HANDS OF THE ASSESSEE SOCIETY. 37. COMING TO THE CHARGE OF THE A.O. AND THE LEARNE D D.R. THAT THE ASSESSEE HAD VIOLATED THE BYE-LAWS AND HENCE, IT CE ASED TO BE CO-OPERATIVE SOCIETY AND ACCORDINGLY, DEDUCTION U/S. 80P IS NOT ALLOWABLE, WE HOLD THAT THE BYE-LAWS DO NOT TAKE CHARACTER OF THE STATUTE A S HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CO-OPERATIVE CENTRAL B ANK (1970) AIR SC 25. VIOLATION OF BYE-LAWS BY THE ASSESSEE CANNOT LEAD T O THE AUTOMATIC CONCLUSION THAT THE ASSESSEE IS NOT A CO-OPERATIVE SOCIETY. THE SOCIETY WAS GRANTED REGISTRATION BY THE REGISTRAR OF CO-OP. SOC IETIES WHICH SHOWS THAT DESPITE THE FACT THAT IN THE COURSE OF ACTION BY TH E INCOME-TAX DEPARTMENT WHERE IT WAS HELD THAT THE SOCIETY HAD ACCEPTED DEP OSITS FROM NON-MEMBERS IN BOGUS NAMES, THE GOVERNMENT AUDITOR OR THE REG ISTRAR AFTER THE SEARCH HAS NOT HELD THAT THE ASSESSEE CEASES TO BE A CO-OP ERATIVE SOCIETY, NOR HAVE THEY CANCELLED THE REGISTRATION OF THE ASSESSEE AS A CO-OPERATIVE SOCIETY UNDER THE MAHARASHTRA CO-OP. SOCIETIES ACT. HENCE , WE DO NOT AGREE WITH THE ARGUMENTS OF THE A.O AND THE LEARNED D.R. THAT THE SOCIETY IS NOT A CO- ITA . NO1459 & 1460/PN/2005 SHRI AGRASEN SAH. PAT SANSTHA MARYADIT. A.Y 1999-2000 ETC. PAGE OF 4 4 OPERATIVE SOCIETY. IN THIS, WE ARE SUPPORTED BY TH E ORDER OF NAVDEEP CO-OP BANK LTD. ( 43 ITD 697), MERELY BECAUSE THE ASSESS EE SOCIETY CONTRAVENED THE RULES, REGULATIONS, DIRECTIONS OF THE RESERVE B ANK OF INDIA, SO LONG AS THE REGISTRATION WAS ENJOYED BY IT, THE A.O., WAS NOT J USTIFIED IN HOLDING THAT THE ASSESSEE IS NOT A CO-OPERATIVE SOCIETY. ACCORDINGL Y, WE HOLD THAT THE ASSESSEE SOCIETY WILL CONTINUE TO ENJOY THE STATUS OF A CO-OPEATIVE SOCIETY AND, THEREFORE, DEDUCTION U/S 80P WILL BE AVAILABLE TO THE ASSESSEE. FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, WE FI ND THAT THE LD CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. WE THUS DO NO T FIND INFIRMITY IN THE FIRST APPELLATE ORDER IN THIS REGARD. THE SAME IS UPHELD . THE SAME IS UPHELD. THE GROUNDS ARE ACCORDINGLY REJECTED. 5. CONSEQUENTLY, THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH JUNE, 2 011. SD/- SD/- ( G.S. PANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 30TH JUNE, 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-I, NASHIK 4. THE CIT(A)- I, NASHIK 5. THE D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE