IncomeTax Officer, Ward- 2(1), Hubli-Dharwad V. M/s Dharwad Taluk Rural Primary teachers Co- operative Credit society Ltd, Dharwad

ITA 1745/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2322 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 24-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC - C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO. 1745 /BANG/201 8 ASSESSMENT YEAR : 20 1 4 - 1 5 THE INCOME-TAX OFFICER, WARD-2(1), HUBLI, DHARWAD. VS. M/S. DHARWAD TALUK RURAL PRIMARY TEACHERS CO-OPERATIVE CREDIT SOCIETY LTD., NEAR KCC BANK, JAMADAR BUILDING, DHARWAD. PAN : A A B A D 6611 Q APPELLANT RESPONDENT REVENUE BY : SHRI. PRIYADARSHI MISHRA, JCIT, SPECIAL RANGE - III ASSESSEE BY : NONE DATE OF HEARING : 14 . 0 8 .201 8 DATE OF PRONOUNCEMENT : 07 . 0 9 .201 8 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), INTER ALIA , ON FOLLOWING GROUNDS: I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HUBBALLI WAS JUSTIFIED IN LAW IN HOLDING THAT THE ASSESSEE-SOCIETY IS ENTITLED TO DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME-TAX ACT, WHEN THE ASSESSEE-SOCIETY DOES NOT SATISFY EVEN THE BASIC REQUIREMENT OF BEING A 'PRIMARY AGRICULTURAL CREDIT SOCIETY(PACS)' OR 'PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK (PCA & RDB)' WITHIN THE MEANING OF SECTION 80P(4) INTRODUCED W.E.F 1.4.2007, WHICH PUTS AN EMBARGO ON THE CATEGORY OF CO-OPERATIVE SOCIETIES ELIGIBLE TO CLAIM DEDUCTION U/S.80P OF THE ACT. ITA NO. 1745/BANG/2018 PAGE 2 OF 4 II) WHETHER THE LD.CIT (A) IS RIGHT IN NOT ADJUDICATING ON THE POINTS FOR DETERMINATION ARISING OUT OF THE ASSESSMENT ORDER ESPECIALLY WHEN THE ASSESSING OFFICER HAS TAKEN A TOTALLY DIFFERENT VIEW, IN VIEW OF THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHO NIYAMITA (ITA NO.5006/2013), BAGALKOT, AGAINST WHICH THE DEPARTMENT HAS FILED SLP BEFORE THE HON'BLE SUPREME COURT. THE ASSESSING OFFICER DID NOT TREAT THE SOCIETY AS 'CO-OPERATIVE BANK' TO DISALLOW THE DEDUCTION U/S 80P BUT PUT TO TEST WHETHER THE SOCIETY SATISFIES THE BASIC REQUIREMENT OF BEING PRIMARY AGRICULTURAL CREDIT SOCIETY (PACS) AS MENTIONED IN SECTION 80P(4). SINCE THE ASSESSEE SOCIETY IS NOT A PACS, IT IS NOT ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). III) WHETHER THE LD.CIT(A) IS RIGHT IN IGNORING AN IMPORTANT ISSUE MENTIONED IN THE ASSESSMENT ORDER I.E., WHY TWO ENTITIES I.E., PRIMARY AGRICULTURAL CREDIT SOCIETY (PACS) OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK (PCA & RDB) ARE FINDING A PLACE IN SECTION 80P(4) IF THE INTENTION OF THE LEGISLATURE WAS TO DENY THE BENEFIT OF SECTION 80P(2)(A)(I) ONLY TO CO-OPERATIVE BANKS W.E.F. 01-04-2007 ? IV) WHETHER THE LD.CIT(A) IS RIGHT IN IGNORING THE INTENTION OF THE LEGISLATURE WHICH CAN BE CLEARLY UNDERSTOOD FROM THE FOLLOWING WORDINGS CONTAINED IN THE SPEECH OF THE HON'BLE FINANCE MINISTER 'CO-OPERATIVE BANKS, LIKE ANY OTHER BANK, ARE LENDING INSTITUTIONS AND SHOULD PAY TAX ON THEIR PROFITS. PRIMARY AGRICULTURE CREDIT SOCIETIES (PACS) AND PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANKS(PCARDB) STAND ON A SPECIAL FOOTING AND WILL CONTINUE TO BE EXEMPT FROM TAX UNDER SECTION 80P OF THE INCOME-TAX ACT. HOWEVER, I PROPOSE TO EXCLUDE ALL OTHER CO-OPERATIVE BANKS FROM THE SCOPE OF THAT SECTION'. (REFER PART-B XIV. TAX PROPOSAL FINANCE BILL 2006). V) FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING IT IS URGED THAT THE ORDER OF THE CIT(APPEALS) IN AS MUCH AS IT IS PREJUDICIAL TO THE INTEREST OF- REVENUE MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. AT THE OUTSET, IT IS OBSERVED THAT THE TAX EFFECT INVOLVED IN THIS APPEAL IS BELOW RS.20 LAKHS. THE CBDT, WITH A VIEW TO REDUCE UNNECESSARY LITIGATION ON THEIR PART, HAS ISSUED A CIRCULAR NO. 3/2018 DATED 11 TH JULY, 2018, WHEREIN THEY HAVE REVISED THE MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE THE INCOME TAX APPELLATE TRIBUNAL, HIGH COURTS AND SUPREME COURT. INSOFAR AS THE TRIBUNAL IS CONCERNED, THE MONETARY LIMIT SPECIFIED THEREIN IS RS.20 LAKHS AND THE CONCERNED ITA NO. 1745/BANG/2018 PAGE 3 OF 4 AUTHORITY HAS TO WITHDRAW ITS APPEAL OR IT NEED NOT PRESS THE SAME IF TAX EFFECT IN THAT APPEAL IS LESS THAN RS.20 LAKHS. IT IS FURTHER SPECIFIED THAT THE TAX EFFECT INDICATED THEREIN IS APPLICABLE TO ALL PENDING APPEALS, THOUGH THEY ARE FILED BY THE REVENUE PRIOR TO THE ISSUANCE OF THE SAID CIRCULAR. IT WAS ALSO CLARIFIED THAT THE ASSESSING OFFICER HAS TO CALCULATE THE TAX EFFECT SEPARATELY FOR EVERY ASSESSMENT YEAR IN RESPECT OF THE DISPUTED ISSUE/S IN THE CASE OF EVERY ASSESSEE. IF, IN THE CASE OF AN ASSESSEE, THE DISPUTED ISSUE ARISES IN MORE THAN ONE YEAR(S), APPEAL(S) CAN BE FILED IN RESPECT OF SUCH ASSESSMENT YEAR(S) IN WHICH TAX EFFECT IN RESPECT OF THE DISPUTED ISSUE EXCEEDS THE MONETARY LIMIT SPECIFIED. IN OTHER WORDS, IF THERE ARE A NUMBER OF YEARS, IF THE TAX EFFECT IS LESS THAN THE SPECIFIED LIMIT IN ONE YEAR, APPEAL CANNOT BE FILED OR THE SAME HAS TO BE WITHDRAWN FOR THAT YEAR, FOR WANT OF TAX EFFECT. HOWEVER, AN EXCEPTION IS MADE TO THIS DIRECTION WITH REGARD TO A COMBINED ORDER PASSED BY THE FIRST APPELLATE AUTHORITY. IF IN ONE OF THE YEARS THE TAX EFFECT IS MORE THAN RS.20 LAKHS AND THE REVENUE DECIDES TO FILE AN APPEAL, IN RESPECT OF OTHER YEARS COVERED BY THE SAID ORDER ALSO, REVENUE IS ELIGIBLE TO FILE APPEAL, EVEN THOUGH THE TAX EFFECT IN EACH OF THOSE YEARS IS LESS THAN RS.20 LAKHS. IT WAS ALSO CLARIFIED THAT MERELY BECAUSE THE APPEAL IS DISMISSED FOR WANT OF TAX EFFECT, IT DOES NOT COME IN THE WAY OF THE DEPARTMENT IN FILING APPEAL FOR OTHER YEARS(S), AND IT DOES NOT MEAN THAT THE DEPARTMENT HAS ACQUIESCED THE ISSUE. 3. THE ABOVE CIRCULAR WAS SPECIFICALLY MADE APPLICABLE TO ALL PENDING APPEALS. IN THE PRESENT CASE, THE TAX EFFECT ON THE ADDITION IN DISPUTE, WHICH WAS DELETED BY THE CIT(A) BY THE IMPUGNED ORDER IS INDISPUTABLY BELOW 20LAKHS. 4. THE LEGISLATURE IN ITS WISDOM HAS INTRODUCED SECTION 268A OF THE INCOME TAX ACT, 1961, WHEREBY THE BOARD IS EMPOWERED TO ISSUE ORDERS/INSTRUCTIONS/DIRECTIONS TO THE INCOME-TAX AUTHORITIES, FIXING THE MONETARY LIMITS FOR THE PURPOSE OF REGULATING THE FILING OF APPEALS. IN THE LIGHT OF THE CIRCULAR DATED 11.07.2018, ISSUED BY THE CBDT IN EXERCISE OF THE POWERS CONFERRED IN IT BY SUBSECTION (1) OF SECTION 268A, WE ARE OF THE VIEW THAT THE APPEAL FILED HEREIN SHOULD NOT HAVE BEEN PRESSED BY THE REVENUE. THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY ADMITTED THAT THE REVENUE EFFECT IN THIS APPEAL IS LESS THAN THE PRESCRIBED LIMIT IN PARA-3 OF THE ABOVE ITA NO. 1745/BANG/2018 PAGE 4 OF 4 CIRCULAR ISSUED BY THE CBDT. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, WE DISMISS THE APPEALS OF THE REVENUE. 5. HOWEVER, THE REVENUE IS AT LIBERTY TO MOVE APPROPRIATE APPLICATION/PETITION IN CASE IT IS FOUND THAT THE CASE IS COVERED BY ONE OF THE EXCEPTION(S) CARVED OUT IN THE SAID CIRCULAR. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF SEPTEMBER, 2018. SD/- SD/- BANGALORE. DATED: 7 TH SEPTEMBER, 2018. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. 5. CIT GUARD FILE 4. DR BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE. ( A. K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER