ITO 20(2)(1), MUMBAI V. MUMBAI LOHMARG POLICE KARMACHARI SAHAKARI PATPEDHI MARYADIT, MUMBAI

ITA 1819/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9092 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 25-07-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 15-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 1819/MUM/2017 : A.Y : 2013 - 14 ITO - 20(2)(1), MUMBAI (APPELLANT) VS. M/S. MUMBAI LOHMARG POLICE KARMACHARI SAHAKARI PATPEDHI MARYADIT, D - 20, RAILWAY POLICE VASAHAT, SIR BHALCHANDRA ROAD, DADAR (E), MUMBAI 400 014 (RESPONDENT) PAN : AAABM0207B APPELLANT BY : MS. N. HEMALATHA RESPONDENT BY : NONE DATE OF HEARING : 25/07/2017 DATE OF PRONOUNCEMENT : 17 /10/2017 O R D E R THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 32 , MUMBAI DATED 22.12.2016 , PERTAINING TO THE ASSESSMENT YEAR 2013 - 14 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 24.02.2016 UNDER SECTION 1 43(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN ITS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 2 ITA NO. 1819/MUM/2017 MUMBAI LOHMARG POLICE KARMACHARI SAHAKARI PATPEDHI MARYADIT 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN ALLOWING DEDUCTION U/S 80P TO T HE ASSESSEE EVEN THOUGH ASSESSEE CARRIES ON THE BANKING BUSINESS AND OTHER BUSINESS IN THE NAME OF A CREDIT COOPERATIVE SOCIETY? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS JUSTIFIED IN ALLOWING DEDUCTION U/S 80P(2)( A)(I) WITHOUT CONSIDERING INSERTED SECTION 80P(4) AND SUB - CLAUSE (VIIA) TO SECTION 2(24) VIDE FINANCE ACT 2006 W.E.F. 01.04.2007? 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RES TORED. 3. AT THE TIME OF HEARING, IT WAS NOTICED THAT NONE APPEARED ON BEHALF OF THE RESPONDENT - ASSESSEE INSPITE OF SERVICE OF NOTICE BY RPAD. ON THE OTHER HAND, THE LD. DR APPEARED ON BEHALF OF THE REVENUE. 4. ACCORDINGLY, IN VIEW OF RULE 25 OF THE IN COME TAX (APPELLATE TRIBUNAL) RULES, 1963, THE APPEAL OF THE REVENUE IS BEING DISPOSED OFF EX - PARTE THE RESPONDENT - ASSESSEE AFTER HEARING THE APPELLANT - REVENUE ON MERITS. 5. IN ORDER TO APPRECIATE THE CONTROVERSY IN THIS APPEAL, THE FOLLOWING DISCUSSION IS RELEVANT. THE RESPONDENT - ASSESSEE IS A CO - OPERATIVE SOCIETY WHICH IS, INTER - ALIA , ENGAGED IN THE ACTIVITY OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. IN THE COURSE OF A SSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ASSESSEE WAS COLLECTING DEPOSITS FROM ITS MEMBERS AND, IN TURN, PROVIDING CREDIT FACILITIES TO ITS MEMBERS. IT WAS ALSO NOTED BY THE ASSESSING OFFICER THAT ASSESSEE HAD KEPT FIXED DEPOSITS WITH OTHER CO - OPERATIVE BANKS. THE ASSESSING 3 ITA NO. 1819/MUM/2017 MUMBAI LOHMARG POLICE KARMACHARI SAHAKARI PATPEDHI MARYADIT OFFICER WAS OF THE VIEW THAT THE RESTRICTION CONTAINED IN SEC. 80P(4) OF THE ACT WAS APPLICABLE TO THE ASSESSEE INASMUCH AS THE ASSESSEE WAS FUNCTIONING AS A CO - OPERATIVE BANK. THEREFORE, THE ASSESSING OFFICER HELD THAT SINCE SEC. 80P(4) OF THE ACT WAS ATTRACTED, ASSESSEE WAS NOT ELIGIBLE FOR THE CLAIM OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. THUS, THE INCOME OF RS.38,37,040/ - , WHICH HAS BEEN CLAIMED BY THE ASSESSEE AS EXEMPT U/S 80P OF THE ACT, WAS TREATED AS TAXABLE BY THE ASSESSING OFFICER AND ACCORDINGLY, HE ASSESSED THE TOTAL INCOME AT RS.38,37,040/ - . THE CIT(A) DISAGREED WITH THE ASSESSING OFFICER AND NOTED THAT ASSESSEE WAS NOT PROVIDING ANY BANKING FACILITIES EITHER TO THE GENERAL PUBLIC AT LARGE OR EVEN TO ITS MEMBERS SO AS TO ATTRACT THE RESTRICTION IMPOSED U/S 80P(4) OF THE ACT. THE CIT(A) ALSO REFERRED TO AN OPINION FROM RESERVE BANK OF INDIA (RBI) DATED 01.02.2012 WHEREBY THE RBI STATED THAT WHERE A BANKING LICENCE HAS NOT BEEN ISSUED TO A CO - OPERATIVE CRE DIT SOCIETY, SUCH AN ENTITY COULD NOT BE CONSIDERED AS AN URBAN CO - OPERATIVE BANK AS PER THE BANKING REGULATION ACT, 1949. THUS, ON FACTS, THE CIT(A) CONCLUDED THAT THE ASSESSING OFFICER HAS NOT DEMONSTRATED AS TO HOW THE ASSESSEE QUALIFIED TO BE A CO - OPE RATIVE BANK. CONSEQUENTLY, HE SET - ASIDE THE ACTION OF THE ASSESSING OFFICER AND RESTORED THE EXEMPTION CLAIMED BY THE ASSESSEE U/S 80P(2)(A)(I) OF THE ACT. IN THIS BACKGROUND, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. BEFORE ME, THERE IS NO MATERIAL OR COGENT REASONING TO PROVE AS TO HOW THE ASSESSEE CAN QUALIF Y TO BE A CO - OPERATIVE BANK, ESPECIALLY IN THE FACE OF THE FACT THAT ASSESSEE DOES NOT HAVE A LICENCE FROM THE RBI TO ACT AS A BANK. IN THIS CASE, IT IS ALSO NOT DISPUTED BY THE ASSESSING OFFIC ER THAT THE ACTIVITIES OF THE ASSESSEE ARE LIMITED TO ACCEPTANCE OF 4 ITA NO. 1819/MUM/2017 MUMBAI LOHMARG POLICE KARMACHARI SAHAKARI PATPEDHI MARYADIT DEPOSITS FROM THE MEMBERS AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS ONLY. CLEARLY, SUCH AN ACTIVITY FALLS WITHIN THE SCOPE OF EXEMPTION PRESCRIBED U/S 80P(2)(A)(I) OF THE ACT WHICH, INTER - ALIA , DEALS WITH THE INCOME OF A CO - OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. QUITE CLEARLY, THE RESTRICTION PRESCRIBED IN SEC. 80P(4) OF THE ACT, WHICH HAS BEEN INVOKED BY THE ASSESSING OFFICER, IS IN RELATION TO A CO - OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THE ASSESSEE IS NOT HAVING LICENCE FROM THE RBI TO CARRY OUT ANY BUSINESS OF A CO - OPERATIVE BANK AND, THE REFORE, IT WOULD NOT FALL WITHIN THE RESTRICTION CONTAINED IN SEC. 80P(4) OF THE ACT. THE SAID POSITION IS NOW WELL - SETTLED BY THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF THE CITIZEN CO - OPERATIVE SOCIETY LTD. THROUGH ITS MANAGING DIRECTOR, HY DERABAD, CIVIL APPEAL NO. 10245 OF 2017 DATED 08.08.2017. 7. IN VIEW OF THE AFORESAID DISCUSSION, I HEREBY AFFIRM THE ORDER OF THE CIT(A) ALLOWING THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 80P(2)(A)(I) OF THE ACT. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 T H OCTOBER, 2017. SD/ - ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 1 7 T H OCTOBER, 2017 * SSL * 5 ITA NO. 1819/MUM/2017 MUMBAI LOHMARG POLICE KARMACHARI SAHAKARI PATPEDHI MARYADIT COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, SMC BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI