The Kollam Dist.Co-op Bank Ltd, Kollam V. DCIT, Kollam

ITA 167/COCH/2010

• Counselvise Citation: 16721914 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 01-03-2010
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANES AN, JM I.T.A NOS. 166 & 167/COCH/2010 ASSESSMENT YEARS: 2004-05 & 2006-07 THE KOLLAM DIST. CO-OPERATIVE BANK LTD., CHINNAKKADA, KOLLAM [PAN: AAAAT 4088L] VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOLLAM. (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY NONE REVENUE BY MS. S. VIJAYAPRABHA, JR. DR DATE OF HEARING 24/10/2011 DATE OF PRONOUNCEMENT 31/10/2011 O R D E R BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST TWO INDEPENDENT ORDERS OF THE CIT(A)-I, TRIVANDRUM AND PERTAIN TO THE ASSESSM ENT YEARS 2004-05 AND 2006-07. SINCE COMMON ISSUES ARE REQUIRED TO BE EXAMINED, TH EY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON, CONSOLIDATED ORDE R. 2. THE ONLY ISSUE ARISING FOR CONSIDERATION IS THE DISALLOWANCE OF INTEREST RECEIVED FROM GOVERNMENT SECURITIES. FOR THE ASSESSMENT YEA R 2004-05, THE ASSESSEE HAS RECEIVED ` 1,38,500/- AS INTEREST FROM THE INVESTMENTS IN GOVE RNMENT SECURITIES. LIKEWISE, FOR ASSESSMENT YEAR 2006-07, THE ASSESSEE HAS RECEIVE D ` 3,18,500/- AS INTEREST FROM THE INVESTMENTS IN GOVERNMENT AND OTHER SECURITIES. TH E QUESTION ARISING FOR CONSIDERATION IS WHETHER THE ASSESSEE IS ENTITLED FOR EXEMPTION U/S . 80P(2) OF THE INCOME TAX ACT IN RESPECT OF THE ABOVE DISALLOWANCE OF INTEREST ON IN VESTMENTS IN GOVERNMENT SECURITIES. I.T.A. NOS.166 & 167 /COCH/2010 2 3. NOTICE WAS ISSUED TO THE ASSESSEE, AND THE SAME WAS RECEIVED BY REGISTERED POST. THE POSTAL ACKNOWLEDGMENT AS PROOF OF SERVICE OF NO TICE IS PLACED ON RECORD. INSPITE OF THE RECEIPT OF NOTICE, THE ASSESSEE HAS NOT CHOSEN TO APPEAR BEFORE THE TRIBUNAL WHEN THE APPEAL WAS TAKEN UP FOR HEARING. THEREFORE, THE LD . DR WAS HEARD ON MERITS AND THE APPEAL IS DISPOSED OF ON MERITS. MS. VIJAYAPRABHA, THE LD. DR SUBMITTED THAT THE APEX COURT IN THE CASE OF CIT VS. KARNATAKA STATE CO-OPERATIVE APEX BANK (2001) 251 ITR 194 HAS CONSIDERED THE SAME ISSUE AND WHILE REVERSING T HE EARLIER JUDGMENT IN THE CASE OF MADHYA PRADESH CO-OPERATIVE BANK LTD. VS. ADDL. CIT (1996) 218 ITR 438 (SC) FOUND THAT IF THE DEPOSIT WAS MADE FOR THE PURPOSE OF CAR RYING ON ITS BANKING BUSINESS, THEN IT MAY BE ENTITLED FOR EXEMPTION U/S. 80P(2). HOWEVER , IT IS FOR THE ASSESSEE TO SHOW THAT THE DEPOSIT WAS MADE AS PER THE REQUIREMENT OF THE STATUTORY RULES FOR THE PURPOSE OF CARRYING ON THE BUSINESS ACTIVITIES. 4. THE ARGUMENT OF THE LD. DR WAS CONSIDERED IN THE LIGHT OF THE MATERIALS AVAILABLE ON RECORD. BOTH THE AUTHORITIES BELOW HAVE MADE TH E OBSERVATIONS ON THE BASIS OF THE JUDGMENT BY THE APEX COURT IN THE CASE OF MADHYA PRADESH CO-OPERATIVE BANK LTD. VS. ADDL. CIT (SUPRA). THIS JUDGMENT OF THE APEX COURT IN THE C ASE OF MADHYA PRADESH CO- OPERATIVE BANK LTD. VS. ADDL. CIT (SUPRA) WAS EXAMINED BY THE APEX COURT IN THE CASE OF CIT VS. KARNATAKA STATE CO-OPERATIVE APEX BANK (SUPRA) AND FOUND THAT THE LAW LAID DOWN IN THE CASE OF MADHYA PRADESH CO-OPERATIVE BANK LTD. VS. ADDL. CIT (SUPRA)DOES NOT SET DOWN THE CORRECT LAW. THE APEX COURT FOUND THAT WH ENEVER FUNDS ARE DEPOSITED FOR THE PURPOSE OF CARRYING ON THE BANKING BUSINESS, THE IN COME DERIVED THEREFROM WOULD BE INCOME FROM THE ASSESSEES BUSINESS. UNFORTUNATELY , BOTH THE AUTHORITIES BELOW HAD NO OCCASION TO CONSIDER THIS JUDGMENT IN THE CASE OF CIT VS. KARNATAKA STATE CO-OPERATIVE APEX BANK (SUPRA). PRESUMABLY, THE ATTENTION BY BOTH THE AUTH ORITIES BELOW MIGHT NOT HAVE BEEN DRAWN TO THE JUDGMENT IN THE CASE OF CIT VS. KARNATAKA STATE CO-OPERATIVE APEX BANK ( SUPRA). THIS TRIBUNAL IS, THEREFORE, OF THE OPINI ON THAT THE MATTER NEEDS TO BE RE- CONSIDERED IN THE LIGHT OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. KARNATAKA STATE CO-OPERATIVE APEX BANK (SUPRA) AND THE ASSESSING OFFICER HAS TO EXAMINE WH ETHER THE DEPOSITS IN GOVERNMENT SECURITIES MADE BY THE A SSESSEE WAS FOR THE PURPOSE OF I.T.A. NOS.166 & 167 /COCH/2010 3 CARRYING ON THE BANKING BUSINESS OR NOT? SINCE THE LOWER AUTHORITIES HAVE NOT EXAMINED THIS ASPECT OF THE MATTER, THE ORDERS OF BOTH THE A UTHORITIES BELOW ARE SET ASIDE AND THE ISSUE OF EXEMPTION UNDER SECTION 80P(2) IN RESPECT OF THE INTEREST ON GOVERNMENT AND OTHER SECURITIES IS REMANDED BACK TO THE FILE OF TH E ASSESSING OFFICER, WHO IS DIRECTED TO RE-CONSIDER THE ISSUE OF EXEMPTION U/S. 80P(2) IN R ESPECT OF THE INTEREST ON GOVERNMENT AND OTHER SECURITIES IN THE LIGHT OF THE JUDGMENT O F THE APEX COURT IN THE CASE OF CIT VS. KARNATAKA STATE CO-OPERATIVE APEX BANK (SUPRA) AND DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSE SSEE. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AR E ALLOWED FOR STATISTICAL PURPOSES. SD/- (N.R.S.GANESAN) JUDICIAL MEMBER PLACE: ERNAKULAM DATED: 31 ST OCTOBER, 2011 GJ COPY TO: 1. THE KOLLAM DIST. CO-OPERATIVE BANK LTD., CHINNAK KADA, KOLLAM 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, KOLLAM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, TRIV ANDRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .