Income Tax Officer ward-2(1), Hubballi V. M/s Dharwad District Police Co-operative Credit Society Ltd , Dharwad

ITA 1630/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7236 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 01-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKAS SURYAVANSHI ADDITIONAL
• Assessee Lawyers: R R KULKARNI
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.1630/BANG/2017 ASSESSMENT YEAR : 2014-15 INCOME TAX OFFICER, WARD 2(1), HUBBALLI. VS. M/S. DHARWAD DISTRICT POLICE CO- OPERATIVE CREDIT SOCIETY LTD., NEAR NEW BUS STAND, P. B. ROAD, DHARWAD. PAN : AABAD6467C APPELLANT RESPONDENT REVENUE BY : SHRI. VIKAS SURYAVANSHI, ADDITIONAL CIT ASSESSEE BY : SHRI. R. R. KULKARNI, CA DATE OF HEARING : 14.11.2017 DATE OF PRONOUNCEMENT : 17.11.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A), INTERALIA , ON THE FOLLOWING GROUNDS: I) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD.CIT(A), HUBBALLI WAS JUSTIFIED IN LA W IN HOLDING THAT THE ASSESSEE-SOCIETY IS ENTITLED TO DE DUCTION UNDER SECTION 80P(2)(A)(I) OF THE - INCOME TAX ACT EVEN W HEN THE ASSESSEE- SOCIETY IS MAINLY INVOLVED IN EXTENDING C REDIT FACILITIES TO ITS MEMBERS WHICH IS IN THE NATURE OF A BANK TRANSACTION, TREATED ON PAR WITH THE NEW CLAUSE INTRODUCED IN THE DEFINITION OF INCOME IN SECTION 2 (24)(VIIA) OF THE ACT AND COMES UNDER THE PURVIEW OF SECTION 80P( 4) W.E.F. 01/04/2007. II) ANY OTHER GROUND THAT MAY BE MADE DURING THE APPEAL . III) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND DELETE ANY OF THE GROUNDS OF LEAVE. ITA NO. 1630/BANG/2017 PAGE 2 OF 4 2. DURING THE COURSE OF HEARING, THE LEARNED COUN SEL FOR THE ASSESSEE CONTENDED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVER ED BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR DIFFERENT ASSESSMENT YEARS. COPY OF THE ORDER OF THE TRIBUNAL IS PLACED ON RECORD. IT WAS FURTHER CONTENDED THAT CI T(A) HAS DECIDED THE APPEAL OF THE ASSESSEE FOLLOWING THE JUDGMENT OF THE JURISDICTION AL HIGH COURT IN THE CASE OF SHRI. CHANDRAPRABHU URBAN CO-OP SOCIETY LTD., VS. I NCOME TAX OFFICER AND OTHER HIGH COURT JUDGMENTS. 3. THE LEARNED DR PLACED RELIANCE UPON THE ORDER OF THE AO. WE HAVE CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS AND THE ORDER OF THE TRIBUNAL IN THE IMMEDIATELY PRECEDING YEAR IN I TA NO.649/BANG/2017 IN THE REVENUES APPEAL. HAVING RELIED UPON THE JUDGMENTS OF THE VA RIOUS HIGH COURTS, THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND DIS MISSED THE REVENUES APPEAL. THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL IS EX TRACTED HEREUNDER FOR THE SAKE OF REFERENCE: 2. I HAVE CAREFULLY EXAMINED THE ORDERS OF LOWER AU THORITIES AND I FIND THAT THE AO HAS DENIED THE BENEFIT OF DEDUCTION CLA IMED U/S. 80P(2)(A)(I) OF THE ACT AGAINST WHICH THE APPEAL WAS FILED BEFORE THE C IT(APPEALS) AND PLACED RELIANCE UPON THE JUDGMENT OF HON'BLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT, HUBLI V. BHAVASAR KSHATRIYA CO-OP. CREDIT SOCI ETY LTD . IN WHICH THEY HAVE CONFIRMED THE VIEW OF THE TRIBUNAL AND ALLOWED DEDU CTION U/S. 80P OF THE ACT AGAINST THE INCOME EARNED FROM MEMBERS/DEPOSITS. THE CIT(APPEALS) ALLOWED THE APPEAL OF ASSESSEE AGA INST WHICH REVENUE IS IN APPEAL BEFORE ME AND PLACED RELIANCE UPON THE ASSES SMENT ORDER. 3. THOUGH NONE APPEARED FOR THE ASSESSEE, I HAVE EX AMINED THE ORDER OF CIT(APPEALS) AND FIND THAT HE HAS ADJUDICATED THE I SSUE IN THE LIGHT OF THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA AND CI T, HUBLI V. BHAVASAR KSHATRIYA CO-OP. CREDIT SOCIETY LTD. SINCE THE CIT(APPEALS) HAS DECIDED THE FOLLOWING THE JUDGMENTS OF HON'BLE JURI SDICTIONAL HIGH COURT, I FIND NO INFIRMITY IN HIS ORDER. HOWEVER, FOR THE SAKE OF REFERENCE, I EXTRACT THE RELEVANT PORTION OF THE ORDER OF CIT(APPEALS) HEREU NDER:- ITA NO.649/BANG/2017 '6. IN THE CASE OF SHRI. BILUR U GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITA, BAGALKOT, THE HON'BLE HIG H COURT OF KARNATAKA HAS HELD AS UNDER. ITA NO. 1630/BANG/2017 PAGE 3 OF 4 ' IF A CO-OPERATIVE BANK IS EXCLUSIVELY CARRYING BA NKING BUSINESS, THEN THE INCOME DERIVED FROM THE SAID BUSINESS CANNOT BE DED UCTED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. THE SAID INCOME IS LI ABLE FOR TAX. A CO-OPERATIVE BANK AS DEFINED UNDER THE BANKING REGULATION ACT INCLUDES THE PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY O-OPERATIV E AGRICULTURAL RURAL DEVELOPMENT BANK. THE LEGISLATURE DID NOT WANT TO D ENY THE SAID BENEFIT TO THE PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY A- OPERATIVE AGRICULTURAL RURAL DEVELOPMENT BANK. THEY DID NOT WANT TO EXTEND THE S AID BENEFIT TO A CO- OPERATIVE BANK WHICH IS EXCLUSIVELY CARRYING ON BAN KING BUSINESS I.E. THE PURPORT OF THE AMENDMENT. IF THE ASSESSEE IS NOT A COOPERATIVE BANK CARRYING ON EXCLUSIVELY BANKING BUSINESS AND IF IT DOES NOT POSSESS A LICENCE FROM THE RESERVE BANK OF INDIA TO CARRY ON BUSINESS, THEN IT IS NOT A CO-OPERATIVE BANK. IT IS A CO-OPERATIVE SOCIETY WHICH ALSO CARRIES ON THE BUSINESS OF LENDING MONEY TO ITS MEMBERS WHICH IS COVERED U/S. 80P(2)(A )(I) I.E. CARRYING ON THE BUSINESS OF BANKING PROVIDING CREDIT FACILITIES TO ITS MEMBERS THE OBJECT OF THE AFORESAID AMENDMENT IS TO EXCLUDE THE BENEFIT EXTEN DED U/S 80P(I) TO THE SOCIETY.' 7. IN THE CASE OF CIT, HUBLI VS. BHAVASAR KSHATRIYA CO- OPERATIVE CREDIT SOCIETY LTD (ITA NO.100206/2015), THE HON'BLE HIGH COURT OF KARNATAKA, DHARWAD BENCH, AFTER FOLLOWING THE DECISION IN THE CASE OF SHRI. BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITA, HAS DI SMISSED THE APPEAL OF 'THE DEPARTMENT I.E. THE APPEAL IS DECIDED IN FAVOU R OF THE ASSESSEE, WHO HAD CLAIMED DEDUCTION U/S. 80P AGAINST INCOME AS INTERE ST FROM MEMBERS/DEPOSITS. 8. IN THE CASE OF CIT-IV, BANGALORE VS. YESHWANTPUR CREDIT COOPERATIVE SOCIETY LTD (ITA NO.237/2012), THE HON'BLE HIGH COU RT OF KARNATAKA, FOLLOWING THE DECISION IN THE CASE OF SHRI. BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITA, HAS DECIDED THE APPEAL AGAINST THE DEPART MENT. 9. RESPECTFULLY, FOLLOWING THE ABOVE DECISIONS AND IN VIEW OF THE FACT THAT, THE INCOME OF THE APPELLANT SOCIETY HAS BEEN EARNED MAI NLY AS INTEREST FROM MEMBERS AND OTHER CO-OP BANKS AND ITA NO.649/BANG/2 017 SOCIETIES, I DECIDE TO HOLD THAT, THE DEDUCTION CLAIMED U/S. 80P CANNOT BE DENIED. ALL GROUNDS ARE ALLOWED.' 4. SINCE THE CIT(APPEALS) HAS DECIDED THE ISSUE FOL LOWING THE JUDGMENTS OF HON'BLE JURISDICTIONAL HIGH COURT, I FIND NO INFIRM ITY THEREIN AND ACCORDINGLY I CONFIRM HIS ORDER. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. 4. SINCE THE TRIBUNAL HAS TAKEN A PARTICULAR VIEW I N A SIMILAR SET OF FACTS, WE HAVE NO JUSTIFICATION TO TAKE A CONTRARY VIEW IN THIS APPEA L. ACCORDINGLY, FOLLOWING THE SAME, WE CONFIRM THE ORDER OF THE CIT(A) WHO HAS RIGHTLY ADJ UDICATED THE ISSUE. ITA NO. 1630/BANG/2017 PAGE 4 OF 4 5. IN THE RESULT, APPEAL OF THE REVENUE STAND DISMI SSED . PRONOUNCED IN THE OPEN COURT ON NOVEMBER, 201 7. SD/- (SUNIL KUMAR YADAV) JUDICIAL MEMBER PLACE : BANGALORE DATED : 17/11/2017 /NSHYLU/* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE.