The ITO,Patan Range, Patan V. The Agriculture Development Co.Op.Credit Society Ltd., Sidhpur

ITA 1700/AHD/2012

• Counselvise Citation: 170020514 RSA 2012
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-11-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 02-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K SINGH SR DR
• Assessee Lawyers: H V DOSHI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.1700/AHD/2012 & C.O. NO.160/AHD/2012 (A/O ITA NO.1700/AHD/2012) ASSESSMENT YEAR :2009-10 INCOME TAX OFFICER, WARD-2, PATAN RANGE, PATAN THE AGRICULTURE DEVELOPMENT CO.OP. CREDIT SOCIETY LTD., ZAPALI POLE, SIDDHPUR [ PAN NO.AAAAA 1055C ] V/S . V/S . THE AGRICULTURE DEVELOPMENT CO.OP. CREDIT SOCIETY LTD., ZAPALI POLE, SIDDHPUR INCOME TAX OFFICER, PATAN WARD-2, ABOVE SANTOK BAA HALL, STATION ROAD, PATAN / APPELLANT .. / RESPONDENT) /BY ASSESSEE SHRI H.V. DOSHI, AR /BY RESPONDENT SHRI D.K. SINGH, SR-DR /DATE OF HEARING 07-11-2012 ! /DATE OF PRONOUNCEMENT 30-11-2012 ' ' ' ' / // / O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THE REVENUE AND ASSESSEE HAVE FILED APPEAL AND CRO SS OBJECTION (CO) RESPECTIVELY AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)- GANDHINAGAR, AHMEDABAD (CIT(A) FOR SHORT) DATED 2 2-05-2012 PERTAINING TO ASSESSMENT YEAR (AY) 2009-10. FIRST WE TAKE UP REVENUES APPEAL IN ITA NO.1700/AH D/2012. ITA NO.1700/AHD/2012 & CO 160/AHD/12 A.Y. 09-10 ITO WD-2 PTN V. THE A.D.C.O.C.S. LTD. PAGE 2 2. THE REVENUE HAS RAISED THE SOLITARY GROUND:- 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN DELETING THE ADDITIONS MADE BY THE AO AND ALLOWING DEDUCTION U/S. 80P(2)(A)(I) OF THE IT ACT AMOUNTING TO RS.47,39,092/- 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAD F IELD RETURN OF INCOME ON 22-07-2009 DECLARING TOTAL INCOME AT RS.42,730/- AF TER CLAIMING OF RS.47,39,092/- DEDUCTION U/S.80P(2)(A) OF THE INCOM E-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND ASSESSMENT U/S 143(3) O F THE ACT WAS FRAMED THEREBY THE CLAIME OF THE ASSESSEE FOR DEDUCTION U/ S.80P(2)(A) OF THE ACT WAS DISALLOWED BY THE ASSESSING OFFICER (AO) ON THE GRO UND THAT ASSESSEE IS NOT A PRIMARY AGRICULTURAL CREDIT SOCIETY, HENCE DEDUCTIO N U/S. 80P(2)(A) OF THE ACT IS NOT ALLOWABLE. AGAINST THIS, ASSESSEE FILED AN A PPEAL BEFORE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED TH E APPEAL OF ASSESSEE. 4. NOW THE REVENUE BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) HAS APPROACHED BY WAY OF PRESENT APPEAL BEFORE THIS TRI BUNAL. 5. THE ONLY EFFECTIVE GROUND IS AGAINST THE ALLOWIN G DEDUCTION U/S.80P(2)(A)(I) OF THE ACT AMOUNTING TO RS.47,39,0 92/-. LD. DR OF THE REVENUE SUBMITTED THAT THE ASSESSEE IS NOT AN AGRIC ULTURAL DEVELOPMENT CO- OPERATIVE CREDIT SOCIETY AS IS EVIDENT FROM THE FAC T THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF BANKING. HE SUBMITTED THAT LD. C IT(A) FAILED TO APPRECIATE THE FACT THAT ASSESSEE HAS ALSO DERIVED INCOME FROM THE AUTOMATED TELLER MACHINE (HEREINAFTER REFERRED TO AS ATMS) AND AL SO HAS ACCEPTED DEPOSITS FROM THE NON-MEMBERS. HE HAS DRAWN OUR ATTENTION TO PAGE 30 OF THE PAPER BOOK, WHERE THE ATM RENT IS SHOWN AS RECEIVED BY TH E ASSESSEE. HE SUBMITTED THAT UNDER THE FACTS AND CIRCUMSTANCES, T HE ASSESSEE IS NOT ENTITLED FOR THE DEDUCTION U/S.80P(2)(A) OF THE ACT. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS D ISALLOWED THE CLAIM OF DEDUCTION ON THE GROUND THAT THE ASSESSEE IS NOT A PRIMARY AGRICULTURAL CREDIT ITA NO.1700/AHD/2012 & CO 160/AHD/12 A.Y. 09-10 ITO WD-2 PTN V. THE A.D.C.O.C.S. LTD. PAGE 3 SOCIETY. HE SUBMITTED THAT THE RESERVE BANK OF INDI A (RBI) HAS CLASSIFIED THE ASSESSEE AS A PRIMARY AGRICULTURAL CREDIT SOCIETY A ND ALSO DREW OUR ATTENTION TO PAGE 48 OF THE PB, WHEREIN THE LETTER FROM THE R BI IS ADDRESSED TO THE REGISTRAR, CO-OPERATIVE SOCIETIES IS FILED, STATING THEREIN THAT UTTAR GUJARAT ISMAIL MOMIN CO-OPERATIVE BANK LTD., SIDHPUR MAY PL EASE BE DELETED FROM THE LIST OF PRIMARY CO-OPERATIVE BANKS IN GUJARAT STATE AS IT HAS SINCE BEEN CLASSIFIED AS A PRIMARY AGRICULTURAL CREDIT SOCIET Y. LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT PROVIDING FINANCIAL ACCOMMO DATION FOR AGRICULTURAL PURPOSES TO THE MEMBERS IS A PRINCIPAL BUSINESS OF THE ASSESSEE. HE SUBMITTED THAT THE OBJECT CLAUSE OF ASSESSEE PROVID ES FOR CREDIT FACILITIES ONLY TO THE MEMBERS. HE SUBMITTED EVEN BY THE DEFINITION BANKING REGULATION ACT, THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY. HE SUBMITTED THAT THE CO-OPERATIVE SOCIETY CANNOT BECOME MEMBER OF TH E ASSESSEE. HE FURTHER SUBMITTED THAT ATM RENT IS RECEIVED BY THE ASSESSEE WHICH HAS BEEN DEBITED IN PROFIT AND LOSS ACCOUNT. HE SUBMITTED THAT SUB-S ECTION-4 OF SECTION 80P ENVISAGES THAT SECTION 80P IS NOT APPLICABLE TO THE CO-OPERATIVE BANK OTHER THAN PRIMARY AGRICULTURAL CREDIT SOCIETY. THEREFORE , CLAIM OF DEDUCTION U/S. 80P(2)(A) BY ASSESSEE IS ALLOWABLE. HE PLACED RELIA NCE ON THE DECISION OF HONBLE CO-ORDINATE BENCH OF AHMEDABAD RENDERED IN THE CASE OF ITO V. M/S JAFARI MOMIN VIKAS CO-OP CREDIT SOCIETY LTD. IN ITA NO. 1491/AHD/2012 DATED 31-10-2012. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD AND CASE LAW CITED BY LD. AR OF THE ASSESSEE. WE FIND THAT ONLY DISPUTE IS WITH REGARD TO ALLOWABILITY OF DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT U/S 80P OF THE ACT THE ASSESSEE BEING A CO- OPERATIVE SOCIETY IS ENTITLED FOR DEDUCTION IN ACCORDANCE WITH PROVISIONS OF SUB- SECTION (2) OF 80P OF THE ACT. HOWEVER, SUB-SECTION (4) OF SECTION 80P MANDAT ES THAT THE PROVISIONS OF SECTION 80P SHALL NOT APPLY IN RELATION TO ANY CO-O PERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO -OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THUS, THE DEDUCTION WOULD N OT BE AVAILABLE IF THE ITA NO.1700/AHD/2012 & CO 160/AHD/12 A.Y. 09-10 ITO WD-2 PTN V. THE A.D.C.O.C.S. LTD. PAGE 4 ASSESSEE IS NOT A PRIMARY AGRICULTURAL CREDIT SOCIE TY OR A PRIMARY AGRICULTURAL AND RURAL DEVELOPMENT BANK IN RELATION TO ANY CO-OP ERATIVE BANK. THE CO- OPERATIVE BANK IS DEFINED UNDER BANKING REGULATION ACT, 1949 THE MEANS A STATE CO-OPERATIVE BANK, CENTRAL CO-OPERATIVE BANK AND PRIMARY CO-OPERATIVE BANK. HOWEVER, THE PRIMARY AGRICULTURAL CREDIT SOCI ETY IS DEFINED UNDER THE BANKING REGULATION ACT AS UNDER:- PRIMARY AGRICULTURAL CREDIT SOCIETY: MEANS A CO-O PERATIVE SOCIETY, - (1) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHI CH IS TO PROVIDE FINANCIAL ACCOMMODATION TO ITS MEMBERS FOR AGRICULT URAL PURPOSES OR FOR PURPOSES CONNECTED WITH AGRICULTURA L ACTIVITIES (INCLUDING THE MARKETING OF CROPS) ; AND (2) THE BYE-LAWS OF WHICH DO NOT PERMIT ADMISSION O F ANY OTHER CO-OPERATIVE SOCIETY AS A MEMBER ; PROVIDED THAT THIS SUB-CLAUSE SHALL NOT APPLY TO THE ADMISS ION OF A CO-OPERATIVE BANK AS A MEMBER BY REASON OF SUCH C O- OPERATIVE BANK SUBSCRIBING TO THE SHARE CAPITAL OF SUCH CO- OPERATIVE SOCIETY OUT OF FUNDS PROVIDED BY THE STAT E GOVERNMENT FOR THE PURPOSE ; FROM THE AFORESAID DEFINITION, IT IS EVIDENT THAT F OR ANY CO-OPERATIVE SOCIETY TO BE TERMED AS PRIMARY AGRICULTURAL CREDIT SOCIETY. I T SHOULD BE ENGAGED IN BUSINESS OF BUSINESS OR PROVIDING CREDIT FACILITY T O ITS MEMBERS FOR AGRICULTURAL PURPOSES OR FOR PURPOSES CONNECTED WITH AGRICULTURA L ACTIVITIES AND BYE LAWS WHICH DO NOT PERMIT OF NOMINATION OF ANY OTHER CO-O PERATIVE SOCIETY AS A MEMBER. WE FIND FROM THE ENGLISH VERSION OF BYE LAW S AS SUBMITTED BY LD. AR OF THE ASSESSEE CLAUSE-(3) OF BYE LAWS ENVISAGES FU ND RAISING BY ISSUING SHARES, BY ACCEPTING DEPOSITS, BY TAKING LOAN, BY G IFTS, BY ADMISSION FEES. AS PER CLAUSE-41C OF BY LAWS, UP TO 75% OF FIXED DEPOS IT (FD) CAN BE GIVEN IF MEMBER OR NON-MEMBER HOLDING FD WITH THE SOCIETY AN D RATE OF INTEREST WILL BE DECIDED BY BOARD OF DIRECTORS FOR THE TIME BEING. T HE MANAGER CAN SANCTION SUCH LOAN AND BORROWER HAS TO PROVIDE DOCUMENTS AND AGREEMENT AND SOCIETY DECIDES. FROM THE AFORESAID CLAUSE OF THE BYE LAWS OF THE ASSESSEE, IT IS EVIDENT THAT THE SOCIETY CAN ACCEPTS DEPOSIT FROM A ND CAN GIVE LOAN TO NON- MEMBERS UP TO 75% OF FD. HOWEVER, AS PER CLAUSE-37, IT IS ENVISAGED THAT ITA NO.1700/AHD/2012 & CO 160/AHD/12 A.Y. 09-10 ITO WD-2 PTN V. THE A.D.C.O.C.S. LTD. PAGE 5 ADVANCES WILL NOT BE GIVEN TO ANY NON-MEMBER. SINCE THE LD. CIT(A) HAS NOT CONSIDERED THE CLAUSE-41C OF BYE LAWS, WHEREIN IT H AS BEEN ENVISAGED THAT NON-MEMBER CAN ALSO BE DISBURSED LOAN UP TO 75% OF THE FD AND SOCIETY CAN ALSO ACCEPT DEPOSITS FROM THE NON-MEMBERS. IN OUR V IEW, ACCEPTING DEPOSITS FROM PUBLIC AND GIVING LOAN OF SUCH DEPOSITS IS NEC ESSARILY A BANKING ACTIVITY. FROM THE PROVISIONS OF THE ACT OF THE 80P IT IS EVI DENT THAT THE DEDUCTION IS ALLOWED TO PRIMARY AGRICULTURAL CREDIT SOCIETY WHO IS ENGAGED IN CARRYING ON BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS, SINCE THE ENGLISH VERSION OF BYE LAWS FILED BY THE ASSESSEE, AT ONE PLACE REFERS TO ACCEPTANCE OF DEPOSIT AND ALSO IT IS MENTIONED IN C LAUSE 41C THAT A LOAN UP TO 75% OF FD CAN BE GIVEN TO A NON-MEMBER ALSO WHO IS HOLDING FD WITH THE SOCIETY. PER CONTRA, CLAUSE-37 OF BYE LAWS ENVISAGE S THAT ADVANCES WILL NOT BE GIVEN TO ANY NON-MEMBERS, THESE ASPECTS WERE NOT CO NSIDERED BY LD. CIT(A). THE CONTENTION OF LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IS SQUARELY COVERED BY THE ORDER OF HONBLE CO-ORDINATE BENCH B AHMEDABAD RENDERED IN THE CASE OF M/S JAFARI MOIN VIKAS CO-OP CREDIT SOCIETY LTD. (SUPRA) IS NOT ACCEPTABLE AS IN THAT CASE, THE OBJECT OF THE ASSES SEE WAS TO ACCEPT DEPOSITS FROM MEMBERS BUT IN THE PRESENT CASE, ASSESSEE IS A LSO ACCEPTING DEPOSITS FROM NON-MEMBERS AND GIVING LOAN UP TO 75% OF THE F D TO THE NON-MEMBERS. HOWEVER, ENGLISH VERSION BYE LAWS AS FILED BY THE A SSESSEE IS NOT CERTIFIED TO BE TRUE TRANSLATION OF THE BYE LAWS AND MOREOVER, T HESE BYE LAWS WERE NOT FILED BEFORE THE ASSESSING OFFICER. THEREFORE, CONS IDERING ALL THESE ASPECTS, THE ORDER OF LD. CIT(A) IS SET ASIDE AND REMITTED B ACK TO HIS FILE TO DECIDE THIS ISSUE AFRESH AFTER CONSIDERING ALL THE ASPECTS OF T HE MATTER AND SEEKING REMAND REPORT FROM THE ASSESSING OFFICER ON THE BYE LAWS AND OTHER DOCUMENTS FILED BY THE ASSESSEE. THIS GROUND OF THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. COMING TO ASSESSEES CO NO. 160/AHD/2012. 8. THE ASSESSEE HAS RAISED FOLLOWING GROUND OF ITS CO:- ITA NO.1700/AHD/2012 & CO 160/AHD/12 A.Y. 09-10 ITO WD-2 PTN V. THE A.D.C.O.C.S. LTD. PAGE 6 1. THE LEARNED CIT(A) HAS ERRED IN LAW & FACTS IN DISALLOWING DEDUCTION U/S. 80-P TO THE EXTENT OF RS.6,44,090/- BY TREATIN G THE INCOME FROM INTEREST ON BANK DEPOSITS AS TAXABLE U/S. 56 OF THE I.T. ACT. 9. SINCE WE HAVE SET ASIDE THE ORDER OF LD. CIT(A) IN ITA NO. 1700/AHD/2012 AND REMITTED BACK THE APPEAL FOR FRES H DECISION THEREFORE, THE CO OF ASSESSEE BECOME INFRUCTUOUS AND SAME IS DISMI SSED ACCORDINGLY. 10. IN THE RESULT, ASSESSEES CO IS DISMISSED AS IN FRUCTUOUS. 11. IN COMBINED RESULT, REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES WHEREAS ASSESSEES CO IS DISMISSED AS INFR UCTUOUS. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP #$%-30/11/2012 +,- . ' ' ' ' //0 //0 //0 //0 10 10 10 10 / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. $-$/3 4 / CONCERNED CIT 4. 4- / CIT (A) 5. 0 78 ///3, /3!, +,- / DR, ITAT, AHMEDABAD 6. 8;< => / GUARD FILE. BY ORDER/ ' , /TRUE COPY/ ?/+ $ /3!, +,- . STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 26/11 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 26/11, 27/11 ITA NO.1700/AHD/2012 & CO 160/AHD/12 A.Y. 09-10 ITO WD-2 PTN V. THE A.D.C.O.C.S. LTD. PAGE 7 4) DATE OF CORRECTION 27/11 5) DATE OF FURTHER CORRECTION 27/11 6) DATE OF INITIAL SIGN BY MEMBERS 29/11 7) ORDER UPLOADED ON 30/11 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 30/11