Vasantrao Kakade Gramin Bigar Sheti Sahakari Patsanstha Maryadit, Pune V. Income-tax Officer, Ward - 10(5), Pune

ITA 1516/PUN/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9975 (ITAT-PUNE)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 26-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D.U. KADAM
• Keywords: Co-operative Credit Society; Set aside
• Section: 56; 143(3); 80P

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1516/PUN/2018 / ASSESSMENT YEAR : 2015-16 VASANTRAO KAKADE GRAMIN BIGAR SHETI SAHAKARI PATSANSTHA MARYADIT, 11 PIMPALWANDI, TAL JUNNAR, DIST. PUNE 4124122. PAN :AABAV4783F. . / APPELLANT V/S THE INCOME TAX OFFICER , WARD 10(5), PUNE. . / RESPONDENT ASSESSEE BY : SHRI VILESH DALYA & SHRI D.U. KADAM REVENUE BY : SHRI M.K. VERMA. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE O RDER OF COMMISSIONER OF INCOME TAX (A) - 6, PUNE, DATED 01.06.201 8 FOR THE ASSESSMENT YEAR 2015-16. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A CO-OPERATIVE SOCIETY REGISTERED UNDER MAH ARASHTRA CO-OPERATIVE CREDIT SOCIETIES ACT, 1960 AND IS STATED TO BE ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND ACCEPTS DEPOS ITS FROM ITS / DATE OF HEARING : 12.03.2019 / DATE OF PRONOUNCEMENT: 24.05.2019 2 ITA NO.1516/PUN/2018 MEMBERS. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2015-1 6 ON 29.09.2015 DECLARING TOTAL INCOME AT RS.NIL AFTER CLAIMING DEDUC TION OF RS.26,00,261/- U/S 80P OF THE ACT. THE CASE WAS SELECT ED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE A CT VIDE ORDER DT.29.12.2017 AND THE CLAIM OF DEDUCTION U/S 80P OF THE AC T WAS DENIED TO THE ASSESSEE AND THE TOTAL INCOME WAS THUS DETERMINED AT RS.26,00,261/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE C ARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DT.01.06.2018 (IN APPE AL NO.PN/CIT(A)-6/ITO WD.10(5)/10322/2017-18) DISMISSED THE AP PEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSES SEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE HON . COMM I SSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIR MING THE AC T IO N OF THE HON AO HOLDING THAT THE APPELLANT ASSESSES S OCIETY IS A CO. OP. BAN K A N D DENYING THE DEDUCTION U/S 80P (2)(I) BY APPLYING THE PROVISIONS OF SEC 80P (4 ) IG NORING T H E FACT THAT. A. THE APPELLANT SOCIETY IS REGISTERED UN DER T H E CO-OP SOCIETIES ACT TO PROVIDE CREDIT FACILITIES TO ITS MEMBERS AND NO T A L L OWE D TO ENTER INTO ANY OTHER BUSINESS . B. THE APPELLANT ASSESSES IS NOT ENGAGE D IN THE BU S INESS OF ' B A NK I NG ' BUT IT I S ENGAGED IN THE ACTIVITY OF PROVIDING C RE D IT FACILITIES TO I T S MEMB ERS . HOWEVER IN BANKING ACTIVITIES , MULTIPLE SERVICE S I . E . P R O V I DING FAC I LI T I E S LIKE RTGS , NEFT, MONEY TRANSFER FACILITIES , CHEQ UE S , DDS, B ANK GUA R ANTEE , LETTER OF CREDITS, SOLVENCY CERTIFICATES ETC . ARE P R O V I D E D THE APPELLANT ASSESSES DOES NOT PROVIDE ANY OF SUCH SERVICES. C. THE APPELLANT SOCIETY DOES NOT HAVE TH E R EQ UIRED LI CENSE FROM RBI TO OPERATE AS A BANK. D. AS PER THE DEFINITION OF BANKING AS PER B A NKIN G RE G ULATION ACT 1949 , ' BANKING MEANS THE ACCEPTING FOR THE PURPOSE OF L END ING OR I NVESTMENT OF DEPOSIT OF MONEY FROM THE PUBLIC , REPAYABLE ON D E M A N D OR OTHERW I SE A ND WITHDRAWAL BY CHEQUES, DRAFTS , ORDER OR OTHERWISE B U T THE A P PE LLANT ASS E S SES DOES NOT PROVIDE FACILITIES AND ALSO IS NOT A MEM B E RS OF THE CLEA RI N G HOU SE . THE APPELLANT SOCIETY URGE TO ALLOW DED U C TION U/ S 8 0D(2) ( I) . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E C ASE TH E HON C IT (A) HAS ERRED IN APPLYING THE RATIO OF THE DECISION OF THE HON . S C IN T H E C AS E OF CITIZEN CO . OP SOCIETY IN CIVIL APPEAL NO 10245/2017 TO THE CASE OF 3 ITA NO.1516/PUN/2018 A PPE L LA NT S OCIETY AS THE FACTS I N THAT CASE DIFFER FROM THE FACTS IN APPELLANTS CASE I .E. I. THE CITIZEN CO OP SOCIETY IS A MULTISTATE CO OP SOC IETY REGISTERED UNDER MULTISTATE CO OP SOCIETIES ACT, 2002 AND AS P ER MODULE BYE LAWS THE SOCIETY CAN ENTER IN TO NUMBER OF BUSINESS VERTICALS AT THE SAME POINT OF TIME AND AS SUCH SOCIETIES ARE 'MULTI PURPOSE' SOCIETIES DOING THE BUSINESS OF BANKING BUSINESS, D EPARTMENTAL STORES, RENT CABS ETC. WHEREAS THE APPELLANT SOCIET Y IS REGISTERED UNDER MAHARASHTRA SOCIETIES ACT TO PROVIDE CREDIT F ACILITIES TO ITS MEMBERS AND NOT ALLOWED TO ENTER INTO ANY OTHER BUS INESS ACTIVITY. AS PER MAHARASTRA SOCIETIES ACT THE APPLICANT SOCIE TY HAS TO SPECIFY ITS BUSINESS SUCH 'CREDIT FACILITY' DEPARTM ENTAL STORES, LABOUR SOCIETIES ETC. II. THE CITIZEN CO-OPERATIVE SOCIETY ESTABLISHED UNDER STATE LAW IN 1997 WAS REGISTERED UNDER MULTISTATE LAW IN 2005 AS ITS ACTIVITIES INCREASED MANIFOLD OVER THE PERIOD AS IT AIMED AT M ULTIPLYING ITS BUSINESS BEYOND ITS MEMBERSHIP AND EXPANSION OF BUSI NESS AND NOT ONLY PROVIDING CREDIT FACILITIES TO ITS MEMBERS . WHEREAS THE APPELLANT SOCIETY, AS PER LICENSE ISSUED BY REGISTR AR HAS JURISDICTION OF JUNNAR TALUKA ONLY. IT PROVIDE CRED IT FACILITIES TO ITS MEMBERS OUT OF DEPOSITS RECEIVED FROM MEMBERS AND H AS NOT BEEN DOING ANY OTHER BUSINESS. THE INVESTMENTS BY WAY OF DEPOSITS WITH OTHER CO-OP BANK, ARE BEING MADE OUT OF EXCESS FUNDS LYING IDLE WITH THE SOCIETY. 3. BEFORE US, AT THE OUTSET, LD.A.R. SUBMITTED THAT THOUGH ASSESSEE HAS RAISED VARIOUS GROUNDS BUT THE SOLE CONTROVERSY IS WITH RESPECT TO DENIAL OF CLAIM OF DEDUCTION U/S 80P OF THE ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAD INVESTED SURPLUS FUNDS WITH CO-OPERATIVE SO CIETY AND RECEIVED INTEREST OF SUCH INVESTMENTS AMOUNTING TO RS.43,82,438/ -. AO WAS OF THE VIEW THAT AS PER THE PROVISIONS OF SEC.80P(2)(D), T HE ASSESSEE SOCIETY HAS TO INVEST THE SURPLUS FUNDS WITH CO-OPERATIVE SOCIETY AND NOT WITH CO-OPERATIVE BANK. HE NOTED THAT SINCE THE A SSESSEE HAD INVESTED SURPLUS FUNDS WITH PDDC I.E., CO-OPERATIVE BANK AND NOT W ITH CO-OPERATIVE SOCIETY, THEREFORE ASSESSEE WAS NOT ELIGIBLE FO R DEDUCTION U/S 80P(2)(D) OF THE ACT. HE ACCORDINGLY DENIED THE CLAIM O F DEDUCTION OF RS.26,00,261/- U/S 80P OF THE ACT. AGGRIEVED BY THE OR DER OF AO, 4 ITA NO.1516/PUN/2018 ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO UPHELD T HE ORDER OF AO. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APP EAL BEFORE US. 5. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT THE MAIN REASON FOR DENYING THE CLAIM OF DEDUCTION U/S 80P WAS THAT SINCE THE ASSESS EE HAS DEPOSITED SURPLUS FUNDS WITH CO-OPERATIVE CREDIT SOCIETY, IT IS NOT ELIGIBLE FOR DEDUCTION. HE SUBMITTED THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL ON IDENTICAL ISSUE IN THE CASE OF ITO VS. JANKALYAN NAGRI SAHAKARI PAT SANSHTA LTD., (ITA NO.598/PN/2011 ORDER DT.2 6.06.2012) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. HE PLACE D ON RECORD THE COPY OF THE AFORESAID DECISION. HE THEREFORE SUBMITTED THAT FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF JANKALYAN NAGRI SAHAKARI PAT SANSHTA LTD., (SUPRA), THE ISSUE BE DECIDED IN ASSESSEES FAVOUR. LD. D.R. ON THE OTHER HAND, S UPPORTED THE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DENIAL OF CLAIM OF DEDUCTION U/S 80P OF THE ACT. WE FIND THAT AO WHILE D ENYING THE CLAIM OF ASSESSEE HAD HELD THE ASSESSEE CAN BE TREATED AS A CO- OPERATIVE BANK LOOKING AT THE NATURE OF ACTIVITIES OF THE ASSESSEE AND SINCE CO-OPERATIVE BANKS ARE NOT ELIGIBLE FOR DEDUCTION U/S 80P ON THE AMOUNT INVESTED IN BANKS OTHER THAN THOSE MENTIONED U/ S 80P(2)(D) OF 5 ITA NO.1516/PUN/2018 THE ACT, HE DENIED THE CLAIM OF DEDUCTION. WE FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL WHILE DECIDING THE IDENTICAL ISSUE IN T HE CASE OF JANKALYAN NAGRI SAHAKARI PAT SANSHTA LTD., (SUPRA) HAS D ECIDED THE ISSUE IN ASSESSEES FAVOUR BY NOTING AS UNDER : 8. IT IS PERTINENT TO NOTE HERE THAT THE DEFINITIO N OF THE CO-OPERATIVE CREDIT SOCIETY IS GIVEN IN CLAUSE (CCII) OF SEC. 5 WHICH R EADS AS UNDER : CO- OPERATIVE CREDIT SOCIETY MEANS A CO-OPERATIVE SOCI ETY, THE PRIMARY OBJECT OF WHICH IS TO PROVIDE FINANCIAL ACCOMMODATION TO I TS MEMBERS AND INCLUDES A CO-OPERATIVE LAND MORTGAGE BANK; 9. THE BANKING REGULATION ACT, 1949 DEFINES OF CO-O PERATIVE BANK IN CL.(CCI) OF SEC. 5 (AS INSERTED BY SEC. 56 OF THE S AID ACT) AND CO-OPERATIVE CREDIT SOCIETY IS NOT INCLUDED BUT ITS IDENTITY IS KEPT SEPARATE BY WAY OF INDEPENDENT DEFINITION IN VIEW OF CLAUSE (CCII) OF SEC. 5 OF THE BANKING REGULATION ACT WHICH DEFINES WHAT IS MEANING OF CR EDIT CO-OPERATIVE SOCIETY. ON PLAIN READING OF THE BANKING REGULATIO N ACT, 1949, NOWHERE IT IS SUGGESTED THAT THE TERM CO-OPERATIVE BANK A LSO INCLUDES CO- OPERATIVE CREDIT SOCIETY ALSO. MEANING OF ANY TERM OR EXPRESSION IS TO BE ASCERTAINED IN THE CONTEXT OF PROVISIONS OF REFERRE D ACT. AS PER SUB-SEC. (4) OF SEC. 80P OF THE I. T. ACT, CO-OPERATIVE BANK MEANS STATE CO- OPERATIVE BANK, A CENTRAL CO-OPERATIVE BANK AND A P RIMARY CO-OPERATIVE BANK. IT IS SEEN THAT COOPERATIVE BANK IS DEPRIVED OF THE BENEFIT OF THE DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. AS PER THE INTERPRETATION GIVEN BY THE AO, ASSESSEE CO-OPERATIVE CREDIT SOCIETY PARTAK ES THE CHARACTER OF THE PRIMARY CO-OPERATIVE BANK AND AS THE PRIMARY CO -OPERATIVE BANK IS INCLUDED IN THE DEFINITION OF THE COOPERATIVE BANK AND HENCE, IS NOT ENTITLED TO THE BENEFITS OF SEC. 80P(2)(A)(I) OF I. T. ACT. IN OUR OPINION, THIS IS NOT THE CORRECT INTERPRETATION. IT IS WELL SETTLED PRINCIPLE IN THE INTERPRETATION OF THE TAXING PROVISIONS THAT THE SAME ARE TO BE STRICTLY CONSTRUED AND THERE IS N ROOM FOR ANY INTENDMENT. T HERE IS NO PRESUMPTION AS TO TAX.NOTHING IS TO BE READ OR NOTH ING IS TO BE IMPLIED. ONE HAS TO FAIRLY LOOK INTO LANGUAGE USED BY THE PA RLIAMENT. THE PARLIAMENT HAS ADOPTED THE DEFINITION OF THE CO-OPE RATIVE BANK BY REFERING THE SAME AS GIVEN IN THE BANKING REGULATIO N ACT, 1949. IT IS CALLED LEGISLATION BY REFERENCE AND WE HAVE TO GIVE THE STRICT INTERPRETATION WHILE INTERPRETING THE EFFECT OF SUB -SEC. (4) TO SEC. 80 P. IN OUR OPINION, CO-OPERATIVE CREDIT SOCIETY IS DISTINC T AND SEPARATE FROM THE CO-OPERATIVE BANK NOR IT CAN BE SAID AS A PRIMARY C O-OPERATIVE BANK WITHIN THE MEANING OF BANKING REGULATION ACT, 1949. HENCE, THE ASSESSEEEE BEING A CO-OPERATIVE CREDIT SOCIETY IS E NTITLED FOR DEDUCTION U/S. 80 P(2)(A)(I) OF THE ACT. WE ACCORDINGLY UPHOL D THE ORDER OF THE LD CIT(A). 7. BEFORE US, IT IS ASSESSEES CONTENTION THAT THE FACTS IN THE YEAR UNDER CONSIDERATION ARE SIMILAR TO THE CASE OF JANKALYA N NAGRI SAHAKARI PAT SANSHTA LTD., (SUPRA). THE AFORESAID CONTENTIO N OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY REVENUE. REVE NUE HAS ALSO NOT 6 ITA NO.1516/PUN/2018 PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT NOR HA S PLACED ANY MATERIAL TO DEMONSTRATE THAT THE ORDER PASSED BY THE TRIBUNAL IN THE CASE OF JANKALYAN NAGRI SAHAKARI PAT SANSHTA LTD., (SUPRA ) IN A.Y. 2007-08 HAS BEEN SET ASIDE BY HIGHER JUDICIAL FORUM. WE THEREFORE, FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF JANKALYAN NAGRI SAHAKARI PAT SANSHTA LTD., (SUPRA) AND F OLLOWING THE SAME REASONING HOLD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUC TION OF RS.26,00,261/- U/S 80P(2)(D) OF THE ACT IN RESPECT OF THE AM OUNT INVESTED IN PDCC I.E., CO-OPERATIVE BANK. THUS, THE GROUND OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 24 TH DAY OF MAY, 2019. SD/- SD/ - ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER PUNE; DATED : 24 TH MAY, 2019. YAMINI #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-6, PUNE. PR. CIT 5, PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &' , / ITAT, PUNE.