ITO-WARD-3, Chandrapur V. THE GADCHIROLI NAGRI SAHAKARI PAT SANSTHA MARYADIT, Gadchiroli

ITA 164/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1705 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 02-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE

Judgement Text

1 ITA NO. 164/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. NO. 164/NAG/2014 ASSESSMENT YEAR: 2010 - 11. THE INCOME - TAX OFFICER, THE GADCHIROLI NAGRI SAHAKARI WARD - CHANDRAPUR. VS. PAT SANSTHA MARYADIT, SAMARTH BLDG. INDIRA GANDHI CHOWK, CHAMORSHI ROAD, GADCHIROLI - 442605. PAN AAAJT0947K APPELLANT RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : NONE. DATE OF HEARING : 24 - 08 - 2015 DATE OF PRONOUNCEMENT : 28 TH AUGUST, 2015 O R D E R PER SHAMIM YAHYA, A.M. THIS APPEAL FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS OF LEARNED CIT(APPEALS) - II, NAGPUR DATED 06 - 01 - 2014 AND PERTAINS TO ASSESSMENT YEAR 2010 - 11. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) IS CORRECT IN HOLDING THAT THE ASSE SSEE IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE I.T. ACT, 1961? 2. WHETHER THE CIT(A) HAS ERRED IN HOLDING THAT ASSESSEE IS NOT A CO - OPERATIVE BANK FOR THE PURPOSE OF SECTION 80P(4) OF THE I.T. ACT? 2 ITA NO. 164/NAG/2014 3. WHETHER THE CIT(A) HAS NOT ERRED IN FAIL ING TO UPHOLD THE FINDINGS OF THE A.O. THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY WHICH IS ALSO A CO - OP. BANK AS PER PART - V OF BANKING REGULATION ACT? 2. NOBODY APPEARED ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING OF THIS APPEAL. THE LEARNED D.R. BROUGHT TO OUR NOTICE THAT IDENTICAL ISSUES HAVE BEEN DECIDED BY THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE. 3. UPON CAREFUL CONSIDERATION, WE NOTE THAT THE ASSESSEE SOCIET Y IN TH IS CASE IS ENGAGED IN PROVIDING CREDIT FACILITY TO ITS MEMBERS. THE ASSESSE E 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 CASES HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF QUEEN URBAN CO - OPERATIVE CREDIT SOCIETY LTD. V/S. ACIT IN TAX APPEALS 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 IT CANNOT BE CONCLUDED THAT THE APPELLANTS PRINCIPAL BUSINESS WAS OF ACCEPTING 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 ENABLES THE SOCIETY TO RECEIVE DEPOSITS TO CONCLUDE THAT IT CAN RECEIVE DEPOSITS FROM PUBLIC. THUS IN THE PRESENT FACTS THE FINDING THAT THE APPELLANTS PRIN CIPAL BUSINESS WAS OF BANKING WAS PERVERSE AS IT WAS NOT SUPPORTED BY THE 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 O F SECTION 80P. IN FACT AS PER THE BYE - LAWS OF THE APPELLANT SOCIETY THERE WAS NO PROHIBITION TO ADMITTING A SOCIETY TO ITS MEMBERSHIP AND ONE OF THREE CUMULATIVE CONDITIONS PRECEDENT TO BE A PRIMARY COOPERATIVE BANK WAS NOT SATISFIED. THIS WA S A MANDATORY CONDITION I.E. THE BYE LAWS MUST 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 3 ITA NO. 164/NAG/2014 ASSESSEE. THUS EVEN THE AFORESAID QUALI FYING CONDITION (3) FOR BEING CONSIDERED AS A PRIMARY COOPERATIVE BANK WAS NOT SATISFIED. THUS, THE THREE CONDITIONS AS PROVIDED UNDER SECTION 5(CVV) OF THE BANKING REGULATION ACT, 1949, ARE TO BE SATISFIED CUMULATIVELY AND EXCEPT CONDITION (2) THE O THER TWO QUALIFYING CONDITIONS ARE NOT SATISFIED. ERGO, APPELLANT CANNOT BE CONSIDERED TO BE A CO - OPERATIVE BANK FOR THE PURPOSES OF SECTION 80P(4) OF THE ACT. THUS, THE APPELLANT IS ENTITLED TO THE BENEFIT OF DEDUCTION AVAILABLE UNDER SECTION 80P(2)(A )(I). THE CONTENTION OF THE REVENUE THAT THE APPELLANT IS NOT ENTITLED TO THE BENEFIT OF SECTION 90P(2)(A)(I) IN VIEW OF THE FACT THAT IT DEALS WITH NON - MEMBERS CANNOT BE UPHELD. THIS FOR THE REASON THAT SECTION 80P(1) OF THE ACT RESTRICTS THE BENEFITS OF DEDUCTION OF INCOME OF CO - OPERATIVE SOCIETY TO THE EXTENT IT IS EARNED BY PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THEREFORE, TO THE EXTENT THE INCOME EARNED IS ATTRIBUTABLE TO DEALINGS WITH THE NON - MEMBERS ARE CONCERNED THE BENEFIT OF SECTION 80 P WOULD NOT BE AVAILABLE. IN THE ABOVE VIEW OF THE MATTER, AT THE TIME WHEN EFFECT HAS BEEN GIVEN TO THE ORDER OF THIS COURT, THE AUTHORITIES UNDER THE ACT WOULD RESTRICT THE BENEFIT OF DEDUCTION UNDER SECTION 80P OF THE ACT ONLY TO THE EXTENT THAT THE SAME WAS EARNED BY THE APPELLANT IN CARRYING ON ITS BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. 4. WE FIND THAT IN THE PRESENT CASE NO CASE HAS BEEN MADE OUT BY THE REVENUE THAT THE ASSESSEES BUSINESS INCLUDES PROVIDIN G CREDIT FACILITIES TO NON - MEMBERS. IN THESE CIRCUMSTANCES, RESPECTFULLY FOLLOWING THE PRECEDENT AS ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE LEARNED CIT(APPEALS). ACCORDINGLY WE UPHOLD THE SAME. 5. IN THE RESULT, THE APPEALS FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED ON THIS 28 TH DAY OF AUGUST , 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 28 TH AUGUST , 2015. 4 ITA NO. 164/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. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE