The ITO, S.K. Ward -2, Himatnagar V. The Namaskar Co.Op. Sharafi Mandali Ltd., Sabarkantha

ITA 1805/AHD/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3635 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 20-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANILKUMAR BHARADWAJ

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO.1805/AHD/2013 / ASSTT.YEAR: 2009-2010] THE ITO, S.K. WARD - 2 HIMATNAGAR. VS THE NAMASKAR CO - OP. SHARAFI MANDALI LTD. AT & PO : TALOD, DIST. SABARKANTHA PIN : 383 215. PAN : AAABT 2292 H ( APPLICANT ) (RESPONDENT) REVENUE BY : SHRI ANIL KUMAR BHARADWAJ, SR.DR ASSESSEE BY : NONE (WRITTEN SUBMISSIONS) / DATE OF HEARING : 16/05/2016 / DATE OF PRONOUNCEMENT: 01 /06/2016 *+/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LD.CIT(A)-VIII DATED 21.01.2013 PASSED FOR THE ASST T.YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 23.9.2009 SHOWING TOTAL INCOME AT NIL. T HE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) WAS ISSUED ON 26.8.2010. THE LD.AO HAS NOTI CED THAT THE ASSESSEE IS CARRYING OUT BUSINESS OF BANKING (PROVI DING CREDIT FACILITIES TO ITS MEMBERS) AND CLAIMED DEDUCTION UNDER SECTION 80P OF THE INCOME TAX ACT. ON VERIFICATION OF THE DETAILS, IT REVEAL ED TO THE AO THAT THE ASSESSEE HAS SHOWN GROSS TOTAL INCOME OF RS.42,50,2 55/-, WHICH HAS ITA NO.1805/AHD/2013 2 BEEN CLAIMED AS DEDUCTION UNDER SECTION 80P OF THE ACT. THE LD.AO HAS OBSERVED THAT AS PER SUBSECTION-(4) OF SECTION 80P INSERTED BY THE FINANCE ACT, 2006 FROM THE ASSTT.YEAR 2007-08, THE SCOPE OF DEDUCTION HAS BEEN RESTRICTED TO ONLY PRIMARY AGRICULTURAL CR EDIT SOCIETY AND PRIMARY COOPERATIVE AGRICULTURAL & RURAL DEVELOPMEN T BANK. THE AO, THEREAFTER, HELD THAT THE ASSESSEE IS NEITHER PRIMA RY AGRICULTURAL CREDIT SOCIETY NOR PRIMARY COOPERATIVE AGRICULTURAL & RURA L DEVELOPMENT BANK, HENCE, IN VIEW OF SUB-SECTION 4 OF SECTION 80 P IT IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 80P(2) OF THE INCOME TAX AC T. 3. ON APPEAL, THE LD.CIT(A) HAS ALLOWED THE DEDUCTI ON TO THE ASSESSEE BY FOLLOWING THE ORDER OF THE ITAT PASSED IN THE CASE OF JAFARI MOMIN VIKAS COOPERATIVE CREDIT SOCIETY LTD., ITA NO .1491/AHD/2012 FOR THE ASSTT.YEAR 2009-10. THE LD.CIT(A) HAS HELD THAT ACTIVITY OF THE SOCIETY IS PROVIDING CREDIT FACILITY TO ITS MEMBERS . THEREFORE, IT IS NOT A COOPERATIVE BANK, AND THUS, ENTITLE FOR DEDUCTION U NDER SECTION 80P(2)(A)(I) OF THE ACT. 4. IN RESPONSE TO THE NOTICE OF HEARING NONE HAS CO ME PRESENT ON BEHALF OF THE ASSESSEE. HOWEVER, WRITTEN SUBMISSIO NS HAVE BEEN FILED. THE ASSESSEE HAS PLEADED IN THE WRITTEN SUBMISSIONS THAT THE ORDER OF THE ITAT IN THE CASE OF JAFARI MOMIN VIKAS COOPERAT IVE CREDIT SOCIETY LTD. (SUPRA) HAS BEEN UPHELD BY THE HONBLE GUJARAT HIGH COURT IN TAX APPEAL NO.442 OF 2013 AND OTHERS. COPY OF THE JUDG MENT OF THE HONBLE GUJARAT HIGH COURT DATED 15.1.2014 HAS BEEN PLACED ON RECORD. THE JUDGMENT OF THE HONBLE HIGH COURT ON THIS ISSU E READS AS UNDER: 2. REVENUE HAS CHALLENGED THE JUDGMENT OF THE INCO ME TAX APPELLATE TRIBUNAL (FOR SHORT THE TRIBUNAL) RAISI NG FOLLOWING QUESTION FOR OUR CONSIDERATION:- WHETHER THE HONBLE TRIBUNAL IS CORRECT IN ALLOWI NG DEDUCTION UNDER SECTION 80P(2)(A)(I) TO ASSESSEES SOCIETY EVEN THOUGH SAME IS COVERED UNDER SECTION 80P(4) RW S ITA NO.1805/AHD/2013 3 2(24) (VIIA) BEING INCOME FROM PROVIDING CREDIT FAC ILITIES CARRIED ON BY A CO-OPERATIVE SOCIETY WITH ITS MEMBE R? 3. ISSUE PERTAINS TO INTERPRETATION OF SECTION 80P( 2) AND 80P(4) OF THE INCOME TAX ACT, 1964 (THE ACT FOR SHORT). RES PONDENT ASSESSEE IS A COOPERATIVE CREDIT SOCIETY AND CLAIMS BENEFIT OF DEDUCTION UNDER SECTION 80P(1) OF THE ACT BY VIRTUE OF THE PROVISIONS CONTAINED IN SECTION 80P(2)(A)(I) OF THE ACT. AS IS WELL KNOWN UNDER SUB-SECTION(1) OF SECTION 80P CERTAIN C O-OPERATIVE SOCIETIES ARE GRANTED DEDUCTIONS OF THE SUM SPECIFI ED IN SUB- SECTION(2) IN COMPUTING THE TOTAL INCOME. AS PER SE CTION 80P(2)(A)(I), THE SUMS REFERRED IN SUB-SECTION(1) W OULD BE IN CASE OF A CO-OPERATIVE SOCIETY ENGAGED IN CARRYING ON TH E BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBE RS THE WHOLE OF THE AMOUNT OF PROFITS AND GAINS OF BUSINESS ATTRIBU TABLE TO ANY ONE OR MORE OF SUCH ACTIVITIES. REVENUE, HOWEVER, C ONTENDS THAT BY VIRTUE OF NEWLY AMENDED SUB-SECTION(4) OF SECTIO N 80P INSERTED WITH EFFECT FROM 1.4.2007 BY FINANCE ACT, 2006, SEC TION 80P WOULD NOT APPLY TO THE RESPONDENT ASSESSEE. SECTION 80P(4) IN THE PRESENT FORM REFERS AS UNDER:- (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRIC ULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTUR AL AND RURAL DEVELOPMENT BANK. EXPLANATION-FOR THE PURPOSE S OF THIS SUBSECTION,- (A) CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL C REDIT SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIG NED TO THEM IN PART V OF THE BANKING REGULATION ACT, 1949( 10 OF 1949); (B) PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK MEANS A SOCIETY HAVING ITS AREA O F OPERATION CONFINED TO A TALUK AND THE PRINCIPAL OBJ ECT OF WHICH IS TO PROVIDE FOR LONG-TERM CREDIT FOR AGRICU LTURAL AND RURAL DEVELOPMENT ACTIVITIES. 4. AS PER SECTION 80P(4), THE PROVISIONS OF SECTION 80P WOULD NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER TH AN PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. AS PER THE EXPLANATION, THE TERMS CO- OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDIT SO CIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANKING REGULATION ACT, 1949. ITA NO.1805/AHD/2013 4 5. ASSESSING OFFICER HELD THAT BY VIRTUE OF SECTION 80P(4), THE RESPONDENT ASSESSEE WOULD NOT BE ENTITLED TO BENEFI TS OF DEDUCTION UNDER SECTION 80P. CIT(APPEALS) AS WELL A S THE TRIBUNAL REVERSED THE DECISION OF THE ASSESSING OFFICER ON T HE PREMISE THAT THE RESPONDENT ASSESSEE NOT BEING A BANK, EXCLUSION PROVIDED IN SUB-SECTION(4) OF SECTION 80P WOULD NOT APPLY. THIS , IRRESPECTIVE OF THE FACT THAT THE RESPONDENT WOULD NOT FALL WITH IN THE EXPRESSION PRIMARY AGRICULTURAL CREDIT SOCIETY. 6. HAD THIS BEEN THE PLAIN STATUTORY PROVISIONS UND ER CONSIDERATION IN ISOLATION, IN OUR OPINION, THE QUE STION OF LAW COULD BE STATED TO HAVE ARISEN. WHEN, AS CONTENDED BY THE ASSESSEE, BY VIRTUE OF SUBSECTION(4) ONLY CO-OPERATIVE BANKS OTH ER THAN THOSE MENTIONED THEREIN WERE MEANT TO BE EXCLUDED FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80P, A QUESTION WOULD ARISE WHY THEN LEGISLATURE SPECIFIED PRIMARY AGRICULTURAL CREDIT S OCIETIES ALONG WITH PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEV ELOPMENT BANKS FOR EXCLUSION FROM SUCH EXCLUSION AND IN OTHE R WORDS, CONTINUED TO HOLD SUCH ENTITY AS ELIGIBLE FOR DEDUC TION. HOWEVER, THE ISSUE HAS BEEN CONSIDERABLY SIMPLIFIED BY VIRTU E OF CBDT CIRCULAR NO.133 OF 2007 DATED 9.5.2007. CIRCULAR PR OVIDES AS UNDER:- SUBJECT: CLARIFICATION REGARDING ADMISSIBLY OF DED UCTION UNDER SECTION 80P OF THE INCOME-TAX ACT, 1961. 1. PLEASE REFER TO YOUR LETTER NO.DCUS/30688/2007, DATED 28.03.2007 ADDRESSED TO CHAIRMAN, CENTRAL BOARD OF DIRECT TAXES, ON THE ABOVE GIVEN SUBJECT. 2. IN THIS REGARD, I HAVE BEEN DIRECTED TO STATE TH AT SUB- SECTION(4) OF SECTION 80P PROVIDES THAT DEDUCTION U NDER THE SAID SECTION SHALL NOT BE ALLOWABLE TO ANY CO-OPERA TIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BAN K. FOR THE PURPOSE OF THE SAID SUB-SECTION, CO-OPERATIVE B ANK SHALL HAVE THE MEANING ASSIGNED TO IT IN PART V OF THE BA NKING REGULATION ACT, 1949. 3. IN PART V OF THE BANKING REGULATION ACT, CO-OPE RATIVE BANK MEANS A STATE CO-OPERATIVE BANK, A CENTRAL CO - OPERATIVE BANK AND A PRIMARY CO-OPERATIVE BANK. 4. THUS, IF THE DELHI CO OP URBAN T & C SOCIETY LTD . DOES NOT FALL WITHIN THE MEANING OF CO-OPERATIVE BANK AS DEFINED IN PART V OF THE BANKING REGULATION ACT, 19 49, SUBSECTION(4) OF SECTION 80P WILL NOT APPLY IN THIS CASE. ITA NO.1805/AHD/2013 5 5. THE ISSUES WITH THE APPROVAL OF CHAIRMAN, CENTRA L BOARD OF DIRECT TAXES. 7. FROM THE ABOVE CLARIFICATION, IT CAN BE GATHERED THAT SUB- SECTION(4) OF SECTION 80P WILL NOT APPLY TO AN ASSE SSEE WHICH IS NOT A CO-OPERATIVE BANK. IN THE CASE CLARIFIED BY C BDT, DELHI COOP URBAN THRIFT & CREDIT SOCIETY LTD. WAS UNDER CONSID ERATION. CIRCULAR CLARIFIED THAT THE SAID ENTITY NOT BEING A COOPERATIVE BANK, SECTION 80P(4) OF THE ACT WOULD NOT APPLY TO IT. IN VIEW OF SUCH CLARIFICATION, WE CANNOT ENTERTAIN THE REVENUES CO NTENTION THAT SECTION 80P(4) WOULD EXCLUDE NOT ONLY THE CO-OPERAT IVE BANKS OTHER THAN THOSE FULFILLING THE DESCRIPTION CONTAIN ED THEREIN BUT ALSO CREDIT SOCIETIES, WHICH ARE NOT COOPERATIVE BA NKS. IN THE PRESENT CASE, RESPONDENT ASSESSEE IS ADMITTEDLY NOT A CREDIT CO- OPERATIVE BANK BUT A CREDIT CO-OPERATIVE SOCIETY. E XCLUSION CLAUSE OF SUB-SECTION(4) OF SECTION 80P, THEREFORE, WOULD NOT APPLY. IN THE RESULT, TAX APPEALS ARE DISMISSED. 5. THE LD.CIT(A) HAS FOLLOWED THE ORDER OF THE ITAT IN THE CASE OF JAFARI MOMIN VIKAS CO-OPERATIVE CREDIT SOCIETY LTD. (SUPRA). THIS ORDER HAS BEEN UPHELD BY THE HONBLE GUJARAT HIGH COURT, AND IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) ON THIS ISSUE. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED . 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 1 ST JUNE, 2016 AT AHMEDABAD. SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01 /06/2016