The Bhandara Urban Co-op Bank Ltd.,Bandara, Nagpur V. The Assistant Commissioner of Income Tax,Circle-7, Nagpur

ITA 159/NAG/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1906 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 23-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR MILLIAND BHUSARI
• Assessee Lawyers: V V SARANJAME
• Section: 143(3); 12A; 12AA; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) . . , . / , . . BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER /AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO.158/NAG/2011 / ASSESSMENT YEAR 2007-08 . / ITA NO.159/NAG/2011 / ASSESSMENT YEAR 2008-09 THE BHANDAR A URBAN CO - OP. BANK LTD., NEAR POLICE STATION, GANDHI CHOWK, BHANDARA-441 904 PAN: AAAFT 7398 G VS. A.C.I.T. CIRCLE-7, NAGPUR. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI V.V. SARANJAME ! / RESPONDENT BY : DR. MILLIAND BHUSARI, CIT-DR ' ! #$% / DATE OF HEARING : 22-01-2013 &' ! #$% / DATE OF PRONOUNCEMENT : 22-01-2013 () / O R D E R PER RAJENDRA, AM THE ABOVE TWO APPEALS WERE FILED BY THE ASSESSEE, A GAINST THE ORDER DT. 09-08-2011 OF THE CIT(A)-II, NAGPUR. THE FOLLO WING ARE THE GROUNDS OF APPEAL: ITA NO.158/NAG/2011 AY.2007-08 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED C.I.T. APPEALS WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.1,57,50, 000/- AND THIS HONOURABLE COURT BE PLEASED TO DELETE THE SAME AS ONE MADE WITHOUT CONS IDERING THE FACTS IN THEIR PROPER PERSPECTIVE. WITHOUT PREJUDICE TO THE FOREGOING GROUND AND ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DISALLOWING THE DEDUCTION U/S ITA NO.158/NAG/2011 ITA NO.159/NAG/2011 THE BHANDARA URBAN CO-OP. BANK LTD., 2 36(1)(VIIA) OF THE I.T.ACT 1961 AND THIS HONOURABLE COURT BE PLEASED TO GRANT THE SAME. WITHOUT PREJUDICE TO THE FOREGOING GROUNDS AND ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) WAS NOT JUSTIFIED IN NOT RECOGNIZING THE APPELLANT AS A PRIMARY CREDIT SOCIETY IN VIEW OF THE FACT THAT IT HAS NOT GIVEN MEMBERSHIP TO ANY OTHER CO-OPERATIVE BANK; ALTHOUGH PROVIDED IN ITS B YELAWS WHICH WERE PREPARED BY COPYING THE DRAFT BYELAWS AND WITHOUT ACTING UPON T HE PROVISION FOR ADMISSION OF OTHER CO-OPERATIVE BANKS TO THE MEMBERSHIP OF THE A PPELLANT. ITA NO.159/NAG/2011 AY.2008-09 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED C.I.T. APPEALS WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.1 ,63,02 ,000/- AND THIS HONOURABLE COURT BE PLEASED TO DELETE THE SAME AS ONE MADE WITHOUT CONS IDERING THE FACTS IN THEIR PROPER PERSPECTIVE. WITHOUT PREJUDICE TO THE FOREGOING GROUND AND ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DISALLOWING THE DEDUCTION U/S 36(1)(VIIA) OF THE I.T.ACT 1961 AND THIS HONOURABLE COURT BE PLEASED TO GRANT THE SAME. WITHOUT PREJUDICE TO THE FOREGOING GROUNDS AND ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) WAS NOT JUSTIFIED IN NOT RECOGNIZING THE APPELLANT AS A PRIMARY CREDIT SOCIETY IN VIEW OF THE FACT THAT IT HAS NOT GIVEN MEMBERSHIP TO ANY OTHER CO-OPERATIVE BANK; ALTHOUGH PROVIDED IN ITS B YELAWS WHICH WERE PREPARED BY COPYING THE DRAFT BYELAWS AND WITHOUT ACTING UPON T HE PROVISION FOR ADMISSION OF OTHER CO-OPERATIVE BANKS TO THE MEMBERSHIP OF THE A PPELLANT. THE GROUNDS OF APPEAL FOR BOTH THE AYS ARE COMMON, EXCEPT FOR THE AMOUNT IN DISPUTE DIFFERS. AS THE ISSUES ARE COMMON , FOR THE SAKE OF CONVENIENCE, WE ARE ISSUING A COMMON ORDER. 2. ASSESSEE, A CO-OPERATIVE SOCIETY DEALING IN BANK ING BUSINESS FILED ITS RETURN OF INCOME ON 02-11-2007. LATER ON RETURN WAS REVISED ON 25-03-2008 DECLARING TOTAL INCOME OF RS.13.33 LAKHS. INITIALLY, THE RETURN WA S PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (ACT).LATER ON IT WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS FINALISED BY THE ASSESSING OFFICER (AO) U/S. 143(3) OF THE ACT ON 29-12-2009 DETERMINING TOTAL INCOME AT RS. 1.70 CRORES. 3. DURING THE ASSESSMENT PROCEEDINGS, AO FOUND THAT A SSESSEE HAD CLAIMED A DEDUCTION OF RS. 1.57 CRORES U/S. 36(1)(VIIA) OF TH E ACT. AO DIRECTED THE ASSESSEE TO JUSTIFY THE CLAIM. AFTER REFERRING TO THE PROVISIO NS OF SECTION 36(1)(VIIA), AO HELD THAT ASSESSEE WAS NOT A SCHEDULED BANK. AS PER THE AO, THE TERMS SCHEDULED BANK/NON- SCHEDULED BANK/CO-OPERATIVE BANK HAVE BEEN DEFINED IN THE EXPLANATION TO THE ABOVE REFERRED SECTION. HE FURTHER HELD THAT FOR CLAIMING THE DEDUCTION, ASSESSEE HAD TO FIT IN THE DEFINITION OF A CO-OPERATIVE BANK. REFERRING T O THE CLAUSE (CCV) OF SECTION 56 OF THE BANKING REGULATION ACT 1949,HE HELD THAT IF THE BYE-LAWS OF BANK PERMITTED ADMISSION OF ANY CO-OPERATIVE SOCIETY AS A MEMBER, THE BANK WOULD NOT QUALIFY FOR THE TERM PRIMARY CO-OPERATIVE BANK. HE WAS ALSO OF THE OPINION THAT IT WAS IMMATERIAL WHETHER ANY CO-OPERATIVE SOCIETIES WERE ACTUALLY MEMBERS OR NOT. IN THIS ITA NO.158/NAG/2011 ITA NO.159/NAG/2011 THE BHANDARA URBAN CO-OP. BANK LTD., 3 BACKGROUND, HE EXAMINED THE BYE-LAWS OF THE ASSESSE E-BANK. AS PER THE AO, CLAUSE- 5 OF CHAPTER II OF THE BYE-LAWS OF THE ASSESSEE-BA NK READ AS UNDER NO CO-OPERATIVE SOCIETY OTHER THAN THE MAHARASHTRA STATE CO-OPERATIVE BANK LTD., BOMBAY OR THE DISTRICT CENTRAL CO-OPERATIVE BANK LT D., REGISTERED OR DEEMED TO BE REGISTERED SHALL BE ADMITTED TO THE MEMBERSHIP OF T HE BANK. AO HELD THAT THE BYE-LAWS OF THE ASSESSEE-BANK HAD PERMITTED ADMISSION OF TWO OTHER CO-OPERATIVE SOCIETIES AS ITS MEMBERS. SO, THE ASS ESSEE WAS NOT QUALIFIED TO BE TREATED AS PRIMARY CO-OPERATIVE BANK. HE FURTHER H ELD THAT WHILE DECIDING THE ISSUE OF A BANK FUNCTIONING AS PRIMARY CO-OPERATIVE BANK THE RELEVANT QUESTION WAS WHETHER THE BYE-LAWS OF THE SOCIETY PERMITTED ADMIS SION OF OTHER CO-OPERATIVE SOCIETIES OR NOT? FINALLY, HE HELD THAT ASSESSEE W AS NOT A PRIMARY CO-OPERATIVE BANK AND HENCE NOT A CO-OPERATIVE BANK FOR THE PURPOSE O F SECTION 36(1)(VIIA). HE FURTHER HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTI ON U/S. 36(1)(VIIA) OF THE ACT AND THEREFORE THE CLAIM OF THE ASSESSEE FOR DEDUCTION U NDER THE SECTION COULD NOT BE ALLOWED. 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY (FAA). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER, HE HELD THAT BYE-LAWS OF THE ASSESSEE-BANK PERMITTED ADMISSION O F TWO OTHER CO-OPERATIVE SOCIETIES AS MEMBERS, THAT THE PROVISION IN THE BYE -LAWS OF THE ASSESSEE DIS-QUALIFIED IT TO BE TERMED AS PRIMARY CO-OPERATIVE BANK, THAT THERE WAS VIOLATION OF SUB-CLAUSE 3 OF THE CLAUSE (CCV) OF SECTION 56 OF THE BANKING REGULATION ACT, THAT THE APPELLANT WAS NOT A SCHEDULED BANK AS PROVIDED BY SECTION 36( 1)(VIIA) OF THE ACT, THAT ASSESSEE WAS NOT ALSO A SCHEDULED BANK, THAT IT DID NOT FULF ILL THE CONDITIONS MANDATORY TO QUALIFY FOR THE DEDUCTION CLAIMED. UPHOLDING THE OR DER OF THE AO, HE HELD THAT ASSESSEE WAS NOT ENTITLED TO CLAIM DEDUCTION U/S. 3 6(1) OF THE ACT. 5. BEFORE US, AUTHORISED REPRESENTATIVE (AR) SUBMITTED THAT THE BYE-LAWS WERE ADOPTED FROM MODEL BYE-LAWS APPLICABLE TO CO-OPERAT IVE BANKS, THERE WAS NO INTENTION TO ADMIT OTHER CO-OPERATIVE SOCIETIES AS MEMBERS, AFTER THE ASSESSMENT PROCEEDINGS, THE BYE-LAWS WERE AMENDED. HE RELIED U PON THE ORDER OF THE B BENCH OF ITAT CHANDIGARH IN THE CASE OF BABA AMARNATH EDU CATIONAL SOCIETY (REGD) [69 DTR (CHD)] DT. 29-12-2011 IN HIS SUPPORT. DEP ARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE BYE-LAWS OF THE BANK CLEARLY MEN TIONED THAT TWO CO-OPERATIVE BANKS WERE MEMBERS OF THE ASSESSEE-BANK, THAT PROVI SIONS OF THE ACT AND THE BANKING REGULATION ACT DID NOT ALLOW THE ASSESSEE T O CLAIM DEDUCTION U/S. 36(1)(VIIA) OF THE ACT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL BEFORE US. WE FIND THAT CLAUSE-5 OF CHAPTER-II OF THE BYE-LAWS (P B-41) MENTIONS THAT NO CO- OPERATIVE SOCIETY OTHER THAN THE MAHARASHTRA STATE CO-OPERATIVE BANK LTD., BOMBAY OR THE DISTRICT CENTRAL CO-OPERATIVE BANK LTD., REGISTERED OR DEEMED TO BE REGISTERED SHALL BE ADMITTED TO THE MEMBERSHIP OF THE BANK. BY ADMITTING THESE TWO CO-OPERATIVE BANKS AS A MEMBER, ASSESSEE HAS VIOLATED PROVISIONS OF BANKI NG REGULATION ACT, AS HELD BY THE AO AND CONFIRMED BY THE FAA. DEDUCTIONS UNDER CHAP TER-IV OF THE ACT ARE AVAILABLE AFTER CERTAIN CONDITIONS ARE FULFILLED BY ASSESSEE. FOR CLAIMING ANY DEDUCTION, THE PRIMARY ONUS IS ON THE ASSESSEE TO P ROVE THAT ALL THE PRE-CONDITIONS FOR CLAIMING A DEDUCTION ARE EXISTING. AMENDMENT OF BYE -LAWS PROVE THAT ASSESSEE WAS NOT ENTITLED TO DEDUCTIONS TILL A PARTICULAR PROVIS ION WAS A PART OF THE BYE-LAWS. IN OUR ITA NO.158/NAG/2011 ITA NO.159/NAG/2011 THE BHANDARA URBAN CO-OP. BANK LTD., 4 OPINION, ASSESSEE HAS NOT DISCHARGED HIS ONUS TO PR OVE THAT ASSESSEE WAS ENTITLED FOR DEDUCTION AVAILABLE U/S. 36(1)(VIIA) OF THE ACT. I N THESE CIRCUMSTANCES, WE DO NOT SEE ANY LEGAL INFIRMITY IN THE ORDER OF THE FAA. AS FA R AS THE CASE OF BABA AMARNATH EDUCATIONAL SOCIETY (SUPRA) IS CONCERNED, WE WANT T O MENTION THAT THE FACTS ARE TOTALLY DIFFERENT AS THE CASE WAS ABOUT REGISTRATION OF CHA RITABLE TRUST U/S. 12AA R.W.S.2(15) AND 12A OF THE ACT. IN THESE CIRCUMSTANCES, CONFIRM ING THE ORDER OF THE FAA, WE DECIDE THE GROUNDS OF APPEAL, FOR BOTH AYS, AGAINST THE ASSESSEE. AS A RESULT, APPEALS FILED BY THE ASSESSEE FOR THE AYS 2007-08 & 2008-09 STAND DISMISSED. ORDER PRONOUNCED BY E-BENCH AT MUMBAI ON THIS 22 ND DAY OF JANUARY, 2013 *+' ,-# ' - +./ 0 22 $ 2013 ' () &'1# 2 . SD/- SD/- ( . . / R.K. GUPTA ) ( / RAJENDRA ) (- / JUDICIAL MEMBER % (- / ACCOUNTANT MEMBER *+' MUMBAI, 2( DATE: 22 ND JANUARY, 2013 TNMM COPY TO: 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR, ITAT, NAGPUR 6. GUARD FILE 1# # //TRUE COPY// BY ORDER, ASST. REGISTRAR, ITAT