The Singhbhum Dist. Central Co-operative bank Ltd., Chaibasa V. ACIT, Jamshedpur

ITA 150/RAN/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7783 (ITAT-RANCHI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 13-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEEPAK KR SUTARIYA CITA JSR
• Keywords: Depreciation; Opportunity of being heard; Difference of opinion

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.150 /RAN/201 6 ASSESSMENT YEAR : 2011 - 2012 THE SINGHBHUM DIST. CENTRAL CO - OPERATIVE BANK LTD., CHAIBASA, JHARKHAND - 833 201 VS. ACIT, CIRCLE - 3, JAMSHEDPUR PAN/GIR NO. AAAJT 2036 K (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY: NONE REVENUE BY : SHRI DEEPAK KR SUTARIYA, CIT(A), JSR DATE OF HEARING : 22 /05 / 201 8 DATE OF PRONOUNCEMENT : 24 /05/ 2018 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 30.3.2016 OF THE PR. CIT, JAMSHEDPUR U/S.263 OF THE INCOME TAX ACT, 1961. 2. LD A.R. OF THE ASSESSEE HAS FILED AN ADJOURNMENT APPLICATION ON THE GROUND OF MEDICAL EXIGENCY. THE BENCH WAS OF THE VIEW THAT THE MATTER CAN BE DECIDED IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CITIZEN CO - OPERATIVE SOCIETY LTD VS ACIT, IN CIVIL APPEAL NO. 10245 OF 2017(ARISING OUT OF SLP (C) NO. 200 44 OF 2015) ORDER DATED AUGUST 8, 2017 . THEREFORE, THE BENCH PROCEEDED TO HEAR AND DISPOSE OF THE SAME CONSIDERING THE MATERIAL AVAILABLE ON RECORD AND SUBMISSIONS OF LD D.R. 2 ITA NO.150/RAN/2016 ASSESSMENT YEAR: 2011 - 2012 3. GROUND NOS.1 & 6 ARE GENERAL IN NATURE AND, HENCE REQUIRES NO SEPARATE ADJUDICATION BY US. 4. GROUND NOS.2 & 3 ARE AS UNDER: 2. FOR THAT LD PCIT IS HIGHLY UNJUSTIFIED IN PASSING ORDER U/S.263 TREATING THE ASSESSMENT ORDER U/S.143(3) OF THE I.T.ACT, DATED 22.11.2013 PASSED BY THE ASSESSING OFFICER AS ERRONEOUS IN SO FR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE ARBITRARY GROUNDS AND THE ORDER IS LIABLE TO BE SET ASIDE. 3. FOR THAT THE ASSESSING OFFICER HAS RIGHTLY ALLOWED DEDUCTION U/S.80 PURCHASE (2)(A)(IA) OF RS.2,96,68,530/ - AS THE ASSESSEE IS A PRIMARY AG RICULTURAL CREDIT SOCIETY WITHIN THE MEANING OF PART V OF BANKING REGULATION ACT 1949 (10 OF 1949) AND ENTITLED TO GET DEDUCTION U/S.80P(2)(A)(I). THERE MAY BE DIFFERENCE OF OPINION IN INTERPRETING THE PROVISIONS OF THE ACT BUT IT DOES NOT TANTAMOUNT TO TH AT THE ORDER IS ERRONEOUS BY ANY MEANS. 5. WE FIND THAT THE PR. CIT HAS DECIDED THE ISSUE AS UNDER: THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80P)2)(A)(I) AND WAS RIGHTLY ALLOWED BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT US.143(3) ON THE CASE BEING SELECTED BY CASS. THE PROVISIONS OF INCOME TAX ACT HAS DEFINED SECTION 80P(2)(A)(1) AS UNDER: SECTION 80P: 2) THE SUMS REFERRED TO IN SUCH SECTION(1) SHALL BE THE FOLLOWING NAMELY: - A)IN THE CASE OF A CO - OPERATIVE SOCIETY ENGAGED IN - I) CARRYING ON BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS OR II) ..... THE ASSESSEE IS A CO - OPERATIVE SOCIETY OF THE JHARKHAND GOVERNMENT AND CARRYING ON THE BUSINESS OF BANKING AND/OR PROVIDING CREDIT FACILITY TO ITS MEMBERS AND THE SAME IS CLAIMED ON THE BASIS OF THE FOLLOWING CASE LAWS AND THE FACTS IN THE PRESENT CASE: - I) IN THE CASE OF ADDL . CIT VS UP CO - OPERATIVE CANE UNION (1978) REPORTED IN 114 ITR 70(ALL), THE HON'BLE ALLAHABAD HIGH COURT HAS HELD THAT BANKING BUSINESS IS A WIDE TERM AND INCLUDES MANY ACTIVITIES LIKE DISCOUNTING BILLS, HUNDIES, CHEQUE ACCEPTING DEPOSITS AND ADVANCING LOANS ETC. THUS IT INCLUDES PROVIDING OF CREDIT FACILITY. A SOCIETY MAY NOT BE A BANKER IN THE WIDE SENSE 3 ITA NO.150/RAN/2016 ASSESSMENT YEAR: 2011 - 2012 YET HE MAY BE PROVIDING CREDIT FACILITY WHICH IS A PART OF BANKING BUSINESS. THE EXPRESSION PROVIDING CREDIT FACILITY DOES TAKES ITS COLOR FROM THE ACTIVITY OF BANKING. IN ORDER THAT BANKING OR PROVIDING OF CREDIT FACILITY MAY CONSTITUTE A BUSINESS , IT IS NECESSARY THAT THESE ACTIVITIES MUST BE CHIEF SOURCE OF INCOME. THE SIMILAR VIEW HAS GIVEN BY HONBLE MADRAS HIGH COURT IN RODIER MILL EMPLOYEES CO.OP. STORES VS CIT (1982) REPORTED IN 135 ITR 355 (MAD) AND HONB L E KERALA HIGH COURT IN KERALA CO - OPERATIVE CONSUMERS FEDERATION LTD VS CIT (1988) REPO RTED IN 170 ITR 455 (KER) AMONG OTHER RULINGS. THE FACT IS THAT ALL THE CUSTOMERS OF THE ASSESSEE ARE MEMBERS AND CHIEF ACTIVITY IS PROVIDING CREDIT FACILITY TO ITS MEMBERS ONLY AS THE ASSESSEE IS ENGAGED IN MAINLY BELOW ACTIVITIES AS IT ALSO EVIDENT FRO M ITS AUDITED ACCOUNTS. A) LOAN GIVEN TO SOCIETY AND KISAN CREDIT CARD (KCC). B) MT LOAN TO V A RIOUS AGRICULTURAL SOCIETIES SUCH AS LAMPS, PACS ETC. C) MT/CASH CREDIT/NON - AGRICULTURAL LOAN/OVERDUE/DISCOUNT TO THE MEMBER WHO ARE MAINLY AGRO BASED. THE VARIATION IN THE OUTSTANDING AMOUNT IS DUE TO TRANSACTIONS DURING THE YEAR AND IT CANNOT BE STATIC. D) EXPENDITURE SUCH AS SALARY, TRAVELLING ALLOWANCE, RENT AND TAXES, POSTAGE AND TELEGRAM, DEPRECIATION, REPAIRS AND RENEWALS, STATIONARY AND PRINTING, INSURANCE PREMIUM, OTHER EXPENDITURE ARE MAINLY ADMINISTRATIVE IN NATURE AND FOR THE ACTIVITIES OF THE ASSESSEE. INTEREST PAID IS MAINLY ON ACCOUNT OF DEPOSITS FROM THE MEMBERS AND PROVISION FO R RURAL DEVELOPMENT EXPENSES OR FOR AGRICULTURAL PURPOSES ONLY. E) THE BANK HAS BEEN GRANTED A LICENSE U/S.22(1) READ WITH SECTION 56(O) OF THE B.R.ACT, 1949 BY RESERVE BANK OF INDIA AND A COPY OF THE SAME IS ENCLOSED FOR READY REFERENCE. F) THE STATUTORY AUDIT REPORT WAS SUBMITTED TO THE NABARD ON 16.9.2011. THE DELAY IN SUBMITTING THE REPORT BEYOND THE INSPECTION DATE WAS DUE TO ADMINISTRATIVE REASON AND THERE IS NO IRREGULARITY ON THE SAME. G) COPY OF INSPECTION REPORT OF NABARD DATED 31.3.2011 IS SUBMITTED. 4 ITA NO.150/RAN/2016 ASSESSMENT YEAR: 2011 - 2012 H) CO PY OF LICENCE NO RPCD (RAN)/10/2012 - 13 DATED 24.8.2012 IS SUBMITTED HEREWITH GRANTED A L ICENSE TO COMMERCE AND CARRY ON BANKING BUSINESS . FROM THE ABOVE, IT IS APPARENT THAT THE ASSESSEE IS CARRYING ON BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES T O ITS MEMBERS AND IS ELIGIBLE FOR DEDUCTION U/S.80P(2)(A)(I) OF THE I.T.ACT, 1961. T DS HAS BEEN DEDUCTED UNDER TAN RCT 00305E ON THE AMOUNT PAID DURING THE YEAR AND ACCORDINGLY TDS RETURN WAS FILED VIDE RECEIPT NO. GMVXBMBG. COPY OF THE STATUS OF TDS STAT EMENT IS ENCLOSED. 6. I HAVE GONE THROUGH THE SUBMISSION AND RECORD. IT IS OBSERVED THAT THE ASSESSEE IS A BANK AS IT IS NOTICED FROM THE RECORD FROM 3CD AND THE LICENSE GRANTED TO IT. THE COLUMN NO.8(A) OF FORM 3CD CLEARLY ST A TES ABOUT THE NATURE OF BUSINESS AS BANKING. IT IS ALSO OBSERVED TH AT THE BANK IS NOT OPERATIVE AT TALUKA LEVEL AL ONE BUT IN THREE DISTRICTS OF T H E ST A TE OF JHARKHAND NAMELY, (I) EAST SINGHBHUM, (II) WEST SINGHBHUM, (III) SARAIKELA KHARSAWAN. 6.1 THE BANK HAS AROUND 24 BRANCHES IN THE THREE DISTRICTS. IT IS ALSO OBSERVED FROM THE RECORD THAT ADVANCES ARE FOR SHORT TERM & MEDIUM TERM INCLUDING NON - AGRICULTURAL LOAN AS IT IS SHOWN IN ITS BALANCE SHEET. 6.2 APPARENTLY, IT IS OBSERVED FROM THE RECORD THAT THE BUSINESS OF T HE ASSESSEE BANK IS NOT LIMITED TO ITS MEMBERS ALONE I.E. THERE ARE OVERDRAFT ACCOUNTS IN TH E NA MES OF FIRMS AND RECORD DOES NOT SHOW THAT THEY ARE MEMBERS E.G. M/S. BHOJPUR ELECTRICALS & M/S. S BISWAS & CO. ETC. 63. THE CASE LAWS REFERRED TO BY THE ASSES SEE BANK IS ON DIFFERENT FACTS AND PRIOR TO AMENDMENT OF SECTION 80O W.E.F 1.4.200 AND NOT APPLICABLE TO A BANK WHICH IS THE PRESENT CASE. THE CITATION (1982) 135 ITR 355 (MAD) IS IN RESPECT OF RODIER MILL EMPLOYEES COOPERATIVE STORES LTD., WHEREIN THE SU PPLYING OF CONSUMER GOODS TO ITS MEMBERS ON CREDIT WAS HELD TO BE NOT ELIGIBLE FOR 80P(2)(A)(I) DEDUCTION. IN THE CASE OF KERALA CO - OPERATIVE CONSUMERS FEDERATION LTD., (1988) 170 ITR 455(KER), IT WAS HELD THAT SELLING GOODS TO ITS MEMBERS ON CREDIT CAN NOT BE PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND NOT ENTITLED TO EXEMPT I ON U/S. 80P(2)(A)(I) OF THE I.T.ACT, 1961. THE CASE OF UP COOPERATIVE CAN UNION (1978) 114 ITR 60(ALL) IS WITH REFERENCE TO PROVISIONS OF SEC. 81 FOR ASSESSMENT YEAR 1964 - 65 AN D SAYS THAT SELLING GOODS ON CREDIT DOES NOT BECOME BUSINESS OF PROVIDING CREDIT FACILITIES. 5 ITA NO.150/RAN/2016 ASSESSMENT YEAR: 2011 - 2012 6.4 WITH EFFECT FROM 1.4.2007 THE SECTION 80P HAS BEEN AMENDED AND SUB - SECTION (4) IS INSERTED WHEREBY NO COOPERATIVE BANK IS ELIGIBLE TO CLAIM THE DEDUCTION UN DER SECTION 80P OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. 7. AND AS IS OBSERVED, THE ASSESSEE IS A COOPERATIVE BANK, THE EXCLUSION CLAUSE (4) OF SECTION 80P IS OPERATIVE IN THE ASSE SSEES CASE AND HENCE CLAIM U/S. 80P(2)(A)(I) IS INCORRECT AND REQUIRES TO BE WITHDRAWN. 8. IT IS ALSO SEEN THAT AO HAD NEITHER CONSIDERED THE EXCLUSION CLAUSE (4) OF SECTION 80P NOR MADE ANY ENQUIRY AS TO MEMBERS AND NON - MEMBERS & AREA OF OPERATION AND R ELIEF U/S. 80P(2)(A)(I) IS ALLOWED WITHOUT INQUIRING INTO ITS ENTITLEMENT BY THE ASSESSEE BANK. THEREFORE, THE ASSESSMENT ORDER DATED 22.1.2013 PASSED U/S.143(3) OF THE ACT IS CAN C ELLED AND THE AO IS DIRECTED TO PASS A FRES H ASSESSMENT ORDER AFTER GIVIN G REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6 . LD D.R. RELIED ON THE ORDER OF THE PR. CIT(A). 7 . WE FIND THAT THE PR. CIT AFTER APPRECIATING THE ENTIRE FACTS OF THE CASE OF THE ASSESSEE HAS DECIDED THE ISSUE AGAINST THE ASSESSEE. WE FULLY AGREE WITH HIS DECISION AND FINDINGS. FURTHER, HON'BLE SUPREME COURT IN THE CASE OF CITIZEN CO - OPERATIVE SOCIETY L TD (SUPRA) HAS HELD THAT WITH THE INSERTION OF SUB - SECTION (4) BY THE FINANCE ACT, 2006, WHICH IS IN THE NATURE OF A PROVISO TO THE AFORESAID PROVISION, IT IS MADE CLEAR THAT SUCH A DEDUCTION SHALL NOT BE ADMISSIBLE TO A CO - OPERATIVE BANK. HOWEVER, IF IT IS A PRIMARY AGRICULTURE CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURE AND RURAL DEVELOPMENT BANK, THE DEDUCTION WOULD STILL BE PROVIDED. THUS, CO - OPERATIVE BANKS ARE NOW SPECIFICALLY EXCLUDED FROM THE AMBIT OF SECTION 6 ITA NO.150/RAN/2016 ASSESSMENT YEAR: 2011 - 2012 80P OF THE ACT. IT IS NOT IN DI SPUTE THAT THE ASSESSEE IS A CO - OPERATIVE BANK. THEREFORE, THE DECISION OF THE PR. CIT IS INCONSONANCE WITH THE ORDER OF HON'BLE SUPREME COURT IN THE CASE OF CITIZEN CO - OPERATIVE SOCIETY LTD (SUPRA). HENCE, WE CONFIRM THE ORDER OF THE PR. CIT AND DISMISS BOTH THE GROUNDS OF APPEAL OF THE ASSESSEE. 8. GROUND NOS.4 AND 5 READ AS UNDER: 4. FOR THAT THE PR. CIT IS NOT JUSTIFIED IN DIRECTING TO DISALLOW THE PROFESSIONAL FEE OF RS.7,29,188/ - FOR WANT OF TDS U/S.194J AS THE SAME HAS BEEN DISCLOSED AND TAKEN IN TO THE TAXABLE INCOME BY THE PAYEE. HENCE, AS PER PROVISIONS OF SECTION 40(A)(IA) THE AMOUNT IS NOT LIABLE TO BE DISALLOWED. 5. FOR THAT LD PR. CIT IS NOT JUSTIFIED IN DIRECTING TO DISALLOW RS.43,951/ - U/S.36(1)(VA) AS IT IS ALLOWABLE U/S.43B AS PER THE ORDER OF HON'BLE JHARKHAND HIGH COURT. 9. WE FIND THAT THE PR. CIT HAS RESTORED THE ISSUE OF EMPLOYEES CONTRIBUTION TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION AND THEN ALLOW THE DEDUCTION WHERE THE PAYMENT TO PF IS MADE WITHIN THE DUE DAT E OF FILING OF RETURN OF INCOME U/S.139(1) OF THE ACT. IN REGARD TO DISALLOWANCE U/S.40(A)(IA) OF THE ACT, THE PR. CITY HAS RESTORED THE MATTER TO THE ASSESSING OFFICER TO VERIFY IF THE TAX HAS BEEN DEDUCTED BY THE ASSESSEE AT SOURCE OR THE RECIPIENTS HA S PAID TAX ON IT BY INCLUDING THE SAME IN THEIR INCOME TAX RETURN , NO DISALLOWANCE IS CALLED FOR . THUS, THERE CAN BE NO GRIEVANCE TO THE ASSESSEE WITH THE FINDINGS OF THE PR. CIT. HENCE, THESE GROUNDS OF APPEAL OF THE ASSESSEE ARE DISMISSED. 7 ITA NO.150/RAN/2016 ASSESSMENT YEAR: 2011 - 2012 10 . IN THE R ESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 24 /05 /201 8 SD/ - SD/ - (PAVAN KUMAR GADALE) (N.S SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER RANCHI; DATED 24 /05 /201 8 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PS, ITAT, CAMP AT RANCHI 1. THE APPELLANT : THE SINGHBHUM DIST. CENTRAL CO - OPERATIVE BANK LTD., CHAIBASA, JHARKHAND - 833 201 2. THE RES PONDENT: PR. CIT, JAMSHEDPUR 3. THE CIT(A), 4. PR. CIT , 5. DR, ITAT, RANCHI 6. GUARD FILE. //TRUE COPY//