District Cooperative Bank Ltd., Bijnor V. DCIT, Najibabad

ITA 158/DEL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8809 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 09-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: P S KASHYAP
• Keywords: Earning of tax free income; Set aside
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.158/DEL./2017 (ASSESSMENT YEAR : 2012-13) ITA NO.159/DEL./2017 (ASSESSMENT YEAR : 2013-14) DISTRICT COOPERATIVE BANK LTD., VS. DCIT, NEAR VIKAS BHAWAN, NAJIBABAD. CIVIL LINES II, BIJNOR. (PAN : AABFD2205R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.S. KASHYAP, FCA REVENUE BY : MS. NIDHI SRIVASTAVA, CIT DR DATE OF HEARING : 09.07.2019 DATE OF ORDER : 11.07.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE AFORESAID APPEALS FILED BY THE ASSESSEE ARE BEI NG DISPOSED OFF BY WAY OF COMPOSITE ORDER TO AVOID REP ETITION OF DISCUSSION. 2. APPELLANT, DISTRICT COOPERATIVE BANK LTD. (HEREI NAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDERS DATED 27.10.2016 & 30 .11.2016 ITA NOS.158 & 159/DEL./2017 2 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), MORADABAD QUA THE ASSESSMENT YEARS 2012-13 & 2013-14 RESPECTI VELY ON THE GROUNDS INTER ALIA THAT :- ITA NO.158/DEL/2017 (AY 2012-13) 1. THAT ON THE FACTS AND IN LAW ADDITION OF RS.206 200/- AND 50000/- MADE ON ACCOUNT OF DIVIDEND RECEIVED FROM C OOPERATIVE SOCIETIES IS TOTALLY WRONG, UNJUSTIFIED AND ILLEGAL , ASSESSEE HAS RECEIVED DIVIDEND FROM COOPERATIVE SOCIETIES NAMELY KRIBHCO AND IFFCO AND SAME HAS BEEN CLAIMED TO BE EXEMPT FR OM TAX ON THE BASIS OF PRINCIPLE OF MUTUALITY AND HENCE LD. C IT IS NOT JUSTIFIED IN CONFIRMING THE SAID ADDITION. 2. THAT ON THE FACTS AND IN LAW ADDITION OF RS. 100 0/- RECEIVED BY THE ASSESSEE AS DIVIDEND FROM INDUSTRIA L FINANCE CORPORATION WHICH IS COMPANY AND DIVIDEND RECEIVED FROM THE SAID COMPANY IS EXEMPT U/S 10(34). 3. THAT ON THE FACTS AND IN LAW ADDITION OF RS.2757 6000/- MADE AN ACCOUNT OF DIVIDEND RECEIVED FROM V.P. COOP ERATIVE BANK LTD. LUCKNOW IS TOTALLY WRONG, UNJUSTIFIED AND ILLEGAL. ASSESSEE HAS RECEIVED DIVIDEND FROM COOPERATIVE SOC IETY WHICH IS DOING THE BANKING BUSINESS AND IS WORKING AS PARENT BODY OF ALL THE COOPERATIVE BANKS OF THE STATE. ITA NO.159/DEL/2017 (AY 2013-14) 1. THAT ON THE FACTS AND IN LAW ADDITION OF RS.2778 20/- MADE ON ACCOUNT OF DIVIDEND RECEIVED FROM COOPERATIVE SO CIETIES IS TOTALLY WRONG, UNJUSTIFIED AND ILLEGAL, ASSESSEE HA S RECEIVED DIVIDEND FROM COOPERATIVE SOCIETIES NAMELY KRIBHCO AND IFFCO AND SAME HAS BEEN CLAIMED TO BE EXEMPT FROM T AX ON THE BASIS OF PRINCIPLE OF MUTUALITY AND HENCE LD. CIT I S NOT JUSTIFIED IN CONFIRMING THE SAID ADDITION. 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND IN BOTH THE APPEALS ARE : ASSES SEE, BEING DISTRICT COOPERATIVE BANK OPERATING IN BIJNAUR, UTT AR PRADESH, FILED RETURN OF INCOME AT RS.88,15,600/- & RS.5,25, 63,310/- AND THE ITA NOS.158 & 159/DEL./2017 3 ASSESSMENT WAS COMPLETED AT THE TOTAL INCOME OF RS. 3,72,88,850/- & RS.7,35,81,100/- FOR AYS 2012-13 & 2013-14 RESPEC TIVELY. ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS REC EIVED DIVIDEND OF RS.2,56,200/- FROM KRIBCO & IFFCO AND RS.2,75,76 ,000/- FROM U.P. COOPERATIVE BANK LTD., LUCKNOW FOR AY 201 2-13. DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE, A O INVOKED THE PROVISIONS CONTAINED U/S 2(24)(II) OF THE INCOME-TA X ACT, 1961 (FOR SHORT THE ACT) AND DISALLOWED THE EXEMPTION CLAIM ED BY THE ASSESSEE ON ACCOUNT OF MUTUALITY IN RESPECT OF TOTA L DIVIDEND AMOUNTING TO RS.2,78,33,200/- RECEIVED FROM KRIBCO, IFFCO, IFCI & UP COOPERATIVE BANK LTD. AND MADE ADDITION T HEREOF. FOR AY 2012-13, AO ALSO MADE ADDITION OF RS.1,000/- ON ACCOUNT OF DIVIDEND RECEIVED FROM IFCI WHICH IS A LISTED COMPA NY BY DISALLOWING THE SAME AS EXEMPT INCOME U/S 10(34) OF THE ACT. 4. IN AY 2013-14, AO MADE ADDITION OF RS.2,77,820/- ON ACCOUNT OF DIVIDEND RECEIVED FROM KRIBCO AND IFFCO BY INVOKING THE PROVISIONS CONTAINED U/S 2(24)(II) OF THE ACT. 5. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS PARTLY ALLOWED THE APPEALS. FE ELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. ITA NOS.158 & 159/DEL./2017 4 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUNDS NO.1 & 3 OF AY 2012-13 GROUND NO.1 OF AY 2013-14 7. AT THE VERY OUTSET, LD. AR FOR THE ASSESSEE FAIR LY CONCEDED THAT THE ISSUE IN CONTROVERSY HAS ALREADY BEEN DECI DED AGAINST THE ASSESSEE BY THE COORDINATE BENCH OF THE TRIBUNAL VI DE ORDER DATED 08.08.2014 IN ITA NOS.2984/DEL/2013 & 2985/DEL/2013 FOR AYS 2009-10 & 2007-08 , HENCE HE HAS NOTHING TO ARGUE FURTHER. FOR READY PERUSAL, OPERATIVE PART OF THE AFORESAID ORDE R PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IS EXTRACTED AS UN DER :- 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. AT THE TIME OF HEARING BEFORE US, LEARNED COUNSEL FAIRLY CONCEDED THAT THE DIVIDEND IS NOT EXEMPT UNDER SECT ION 10(34) READ WITH SECTION 115-O BECAUSE THE COMPANIE S FROM WHOM THE ASSESSEE RECEIVED THE DIVIDEND HAS NO T PAID DIVIDEND DISTRIBUTION TAX. HIS CLAIM IS THAT T HE DIVIDEND RECEIVED BY THE ASSESSEE COMPANY IS EXEMPT ON ACCOUNT OF MUTUALITY BECAUSE THOSE COMPANIES WHICH PAID DIVIDEND TO THE ASSESSEE ARE ALSO EITHER COOPE RATIVE BANKS OR THE COMPANIES WHICH ARE BASICALLY RENDERIN G SERVICES TO THE COOPERATIVE SOCIETIES. WE ARE UNABL E TO ACCEPT THE CONTENTION OF THE ASSESSEE. WHEN THE ASS ESSEE CLAIMS ANY EXEMPTION ON THE GROUND OF MUTUALITY, TH E BURDEN IS UPON THE ASSESSEE TO ESTABLISH SO. IN THI S CASE, THE LEARNED COUNSEL COULD NOT JUSTIFY HOW THE DIVID END ITA NOS.158 & 159/DEL./2017 5 RECEIVED BY THE ASSESSEE FROM THREE DIFFERENT COMPA NIES IS COVERED UNDER THE CONCEPT OF MUTUALITY. THE ASSE SSEE HAS RECEIVED THE DIVIDEND ON ACCOUNT OF ASSESSEES INVESTMENT IN THOSE COMPANIES. THE DIVIDEND IS NOT THE CONTRIBUTION TO THE ASSESSEE BY THOSE COMPANIES AND MOREOVER, THE ASSESSEE IS NOT RENDERING SERVICES TO THEM. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESS EES CONTENTION THAT DIVIDEND RECEIVED FROM THOSE COMPAN IES IS EXEMPT ON ACCOUNT OF MUTUALITY IS UNTENABLE. THE SAME IS REJECTED. 7. THE FACTS ARE SIMILAR IN AY 2009-10 WITH THE ON LY DIFFERENCE IN THE QUANTUM OF DIVIDEND WHICH IS RS.3,06,200/- INSTEAD OF RS.70,56,000/- IN AY 2007- 08. FOR THE DETAILED DISCUSSION IN PARAGRAPH 6 ABOVE, W E HOLD THAT THE DIVIDEND RECEIVED IN AY 2009-10 ALSO CANNOT BE SAID TO BE EXEMPT WITHIN THE CONCEPT OF MUTUALITY. ACCORDINGLY, THE APPEALS OF THE ASSESSEE IN BOTH THE YEARS ARE DISMISSED. 8. FOLLOWING THE AFORESAID DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL, WE ARE OF THE CONSIDERED VIE W THAT DIVIDEND EARNED BY THE ASSESSEE DURING AYS 2012-13 & 2013-14 FROM KRIBCO, IFFCO & UP COOPERATIVE BANK LTD. CANNOT BE TREATED AS EXEMPT ON THE BASIS OF CONCEPT OF MUTUALITY, HEN CE GROUNDS NO.1 & 3 OF AY 2012-13 & GROUND NO.1 OF AY 2013-14 ARE DETERMINED AGAINST THE ASSESSEE. GROUND NO.2 OF AY 2012-13 9. ASSESSEE CLAIMED DIVIDEND OF RS.1,000/- RECEIVED FROM INDUSTRIAL FINANCE CORPORATION OF INDIA LTD. (IFCI) AS EXEMPT U/S 10(345) OF THE ACT. SINCE IFCI IS A LISTED COMPANY AND NOT RENDERING SERVICES TO THE COOPERATIVE SOCIETIES, DI VIDEND RECEIVED ITA NOS.158 & 159/DEL./2017 6 FROM THE SAME IS EXEMPTED U/S 10 (34) OF THE ACT. SO, AO IS DIRECTED TO ALLOW THE SAME AFTER DUE VERIFICATION A ND THIS GROUND IS DETERMINED IN FAVOUR OF THE ASSESSEE. 10. TO SUM UP, ITA NO.158/DEL/2017 FOR AY 2012-13 F ILED BY THE ASSESSEE IS PARTLY ALLOWED AND ITA NO.159/DEL/2 017 FOR AY 2013-14 FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 11 TH DAY OF JULY, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 11 TH DAY OF JULY, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), MORADABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.