ITO-WARD-3, Chandrapur V. SHASKIYA ARDHASASKIYA SEVKANCHI SAHAKARI PAT SANSTHA MARYADIT, Chandrapur

ITA 156/NAG/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1003 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 02-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE

Judgement Text

1 ITA NOS.156,157,160&161/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. NOS. 156 & 157/NAG/2014 ASSESSMENT YEARS: 2009-10 & 2010-11. THE INCOME-TAX OFFICER, SHASKIYA ARDHASASKIYA SEVKANCHI WARD-3, CHANDRAPUR V/S. SAHAKARI PAT SANSTHA MARYADIT, SANE GURUJI SABHAGRUH, PRABH AVATI NAGAR, POST/TAH. RAJURA, DIST. CHANDRAPUR. PAN AABAS3752P APPELLANT RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : NONE. I.T.A. NO. 160/NAG/2014 ASSESSMENT YEAR: 2010-11. THE INCOME-TAX OFFICER, M/S PRIMARY TEACHER CREDIT CO-OP. WARD-2, CHANDRAPUR. V/S. SOCIETY LTD. MAIN ROAD, SINDEWAHI, DIST. CHANDRAPUR. PAN AAAAP1700P APPELLANT RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI MOHAN RATHI. I.T.A. NO. 161/NAG/2014 ASSESSMENT YEAR: 2009-10. THE INCOME-TAX OFFICER, M/S PRIMARY TEACHER CREDIT CO-OP. WARD-2, CHANDRAPUR. V/S. SOCIETY, GUJARI CHOWK, SAOLI, DIST. CHANDRAP UR PANAAAJP0545 R APPELLANT. RESPONDENT APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : NONE. 2 ITA NOS.156,157,160&161/NAG/2014 DATE OF HEARING : 02-07-2015 DATE OF PRONOUNCEMENT : 02-07-2015. O R D E R PER BENCH: THESE FOUR APPEALS FILED BY THE REVENUE ARE DIRE CTED AGAINST THE ORDERS OF LEARNED CIT(APPEALS)-II, NAGPUR DATED 10-01-2014 AN D 07-01-2014 AND PERTAIN TO ASSESSMENT YEAS 2009-10 AND 2010-11. THE COMMON GROUNDS RAISED BY THE REVENUE READ AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(A) IS CORRECT IN HOLDING THAT THE ASSESSEE IS ELIGIBLE F OR DEDUCTION U/S 80P(2)(A)(I) OF THE I.T. ACT, 1961? 2. WHETHER THE CIT(A) HAS ERRED IN HOLDING THAT AS SESSEE IS NOT A CO- OPERATIVE BANK FOR THE PURPOSE OF SECTION 80P(4) O F THE I.T. ACT? 3. WHETHER THE CIT(A) HAS NOT ERRED IN FAILING TO UPHOLD THE FINDINGS OF THE A.O. THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY W HICH IS ALSO A CO-OP. BANK AS PER PART-V OF BANKING REGULATION ACT? 2. AT THE OUTSET, LEARNED COUNSEL OF THE ASSESSEE ( APPEARED IN ITA NO 160/NAG/2014) BROUGHT TO OUR NOTICE THAT IDENTICA L ISSUES HAVE BEEN DECIDED BY THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE. 3. UPON CAREFUL CONSIDERATION, WE NOTE THAT THE ASS ESSEE SOCIETIES IN THESE CASES ARE ENGAGED IN PROVIDING CREDIT FACILITY TO ITS MEMBERS. THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE I.T. ACT. THIS WAS DENIED BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 80P(4). WE FIND THAT IN IDENTICAL SITUATION THIS TRIBUNAL IN SEVERAL CA SES HAVE DECIDED THE ISSUE IN FAVOUR 3 ITA NOS.156,157,160&161/NAG/2014 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. 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 4 ITA NOS.156,157,160&161/NAG/2014 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. 5. IN THE RESULT, THE APPEALS FILED BY THE REVENU E STAND DISMISSED. ORDER PRONOUNCED ON THIS 2 ND DAY OF JULY, 2015. SD/- SD/- (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 2 ND JULY, 2015. 5 ITA NOS.156,157,160&161/NAG/2014 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