Income tax officer Ward 7(2), Nagpur V. M/s Vishal Nagri Sahakari Pat Sanshta Ltd., Nagpur

ITA 186/NAG/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3195 (ITAT-NAGPUR)
• Duration Of Justice: 6 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 22-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SSHRISMT
• Section: 143(3); 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) . . , . / , . . BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER /AND SHRI RAJENDRA, ACCOUNTANT MEMBER S.N. ITA NO. & AY APPELLANT RESPONDENT 1. 156/NAG/2012 (2009-10) ITO WARD-7(1), NAGPUR M/S. BLACK DIAMOND KARMACHARI CREDIT CO-OPERATIVE SOCIETY LTD., DIST. NAGPUR PAN: AAAJB 0206 D 2. 172/NAG/2012 (2009-10) ITO WARD-1, BHANDARA BHANDARA ZILLA PARISHAD AND PANCHAYAT SAMITI KARMACHARI SAH. PAT SANSTHA LTD., BHANDARA PAN: AAAAB 1563 A 3. 173/NAG/2012 (2009-10) ITO WARD-1, BHANDARA M/S. GRAHAK KARMACHARI SAHKARI BHANDAR LTD., BHANDARA PAN: AAAAG 1605 N 4. 174/NAG/2012 (2009-10) ITO WARD-1, BHANDARA JANKALYAN NAGRI SAHKARI PAT SANSTHA MARYADIT, DIST. BHANDARA PAN: AAAAJ 2673 F 5. 186/NAG/2012 (2009-10) ITO WARD-7(2), NAGPUR M/S. VISHAL NAGARI SAHAKARI PATH SANSTHA LTD., DIST. NAGPUR PAN: AAAJV 0417 E 6. C.O. NO. 07/NAG/2012 (ARISING OUT OF ITA NO. 186/NAG/2012) (2009-10) M/S. VISHAL NAGARI SAHAKARI PATH SANSTHA LTD., DIST. NAGPUR ITO WARD-7(2), NAGPUR ITA NO. REVENUE BY (S/SHRI/SMT) ASSESSEE BY (S/S H RI/SMT) 156/NAG/2012 (2009-10) H. WANARE AVINASH P. JOSHI 172/NAG/2012 (2009-10) H. WANARE SUNDEEP MOTWANI, CA 173/NAG/2012 (2009-10) H. WANARE M. MANI 174/NAG/2012 (2009-10) H. WANARE MANOJ AGRAWAL 186/NAG/2012 (2009-10) H. WANARE V.V. SARMJAME / DATE OF HEARING : 31-01-2013 !' / DATE OF PRONOUNCEMENT : 06-02-2013 #$ / O R D E R PER BENCH, IN ALL THE ABOVE MENTIONED FIVE APPEALS, ASSESSING OFFICERS (AOS) HAVE FILED FOLLOWING COMMON GROUNDS OF APPEAL - ONLY DIFFERENC E IN THEM IS OF AMOUNT OF DEDUCTION CLAIMED. IN THE CASE OF ITA NO. 156/NAG/ 12 GROUNDS OF APPEAL READ AS UNDER: 156 172 173 174 & 186/NAG/2012 (2009-10) 2 1 .ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION OF RS. 88,00,251/- U/S. 80 P(2)(A)(I) OF THE IT ACT, 1961. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE CIT(A ) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE IS NOT A COOPERATIVE BANK FOR THE PURPOSES OF SECTION 80P(4) OF THE I.T. ACT, 1961. 3. ANY OTHER GROUND THAT MAY BE RAISED AT THE TIM E OF HEARING. IN OTHER FOUR CASES, THE AMOUNTS IN DISPUTE IN GOA NO.1 ARE AS FOLLOWS: RS. 24,52,024/- (ITA NO. 172/NAG/12); RS. 32,49,965/- (ITA NO. 173/NAG/12); RS. 24,81,120/- (ITA NO.174/NAG/12); & RS. 73,31,221/- (ITA NO. 186/NAG/12); AS THE ARGUMENTS OF THE AOS AND DECISIONS OF THE FI RST APPELLATE AUTHORITIES (FAAS) IN THESE CASES ARE COMMON, FOR THE SAKE OF CONVENIE NCE, WE ARE PASSING A CONSOLIDATED ORDER. THE DETAILS OF RETURNS FILED, RETURNED INCOM ES, ASSESSED INCOMES, DATES OF ORDER U/S. 143(3) IN THESE CASES CAN BE SUMMARIZED AS UNDER: ITA NO. & AY DATE OF RETURN RETURNED INCOME DATE OF ORDERS U/S. 143(3) OF THE ACT ASSESSED INCOME DATE OF ORDER OF FAA (CIT(A)-II NAGPUR) (1) (2) (3) (4) (5) (6) 156/NAG/2012 (2009-10) 08 - 09 - 2009 NIL 29 - 08 - 2011 88,98,420/ - 20 - 02 - 2012 172/NAG/2012 (2009-10) 30-09-2009 NIL 30-11-2011 24,76,150/- 30-01-2012 173/NAG/2012 (2009-10) 25-09-2009 NIL 28-09-2011 32,49,965/- 06-01-2012 174/NAG/2012 (2009-10) 30-09-2009 NIL 28-11-2011 24,81,120/- 13-02-2012 186/NAG/2012 (2009-10) 28-09-2009 NIL 01-11-2011 73,31,220/- 30-01-2012 2. ASSESSEE CREDIT CO-OPERATIVE SOCIETIES, ENGAGED I N THE BUSINESS OF BANKING / PROVIDING CREDIT FACILITIES TO THEIR MEMBERS FILED THEIR RETURNS OF INCOME AS INDICATED IN THE ABOVE TABLE UNDER COLUMN NO.2 DECLARING TOTA L INCOME AS MENTIONED AT COLUMN NO. 3. ASSESSMENTS WERE FINALISED BY THE AOS U/S. 143(3) OF THE INCOME TAX ACT, 1961 (ACT) ON VARIOUS DATES. 3. DURING THE ASSESSMENT PROCEEDINGS, AOS FOUND THAT A SSESSEE CO-OPERATIVE SOCIETIES HAD CLAIMED DEDUCTION U/S. 80P(2)(D) OF T HE ACT. THEY FURTHER MADE ENQUIRIES ABOUT THE SAID DEDUCTION AND AFTER CONSID ERING THE SUBMISSIONS OF THE SOCIETIES, THEY HELD THAT ASSESSEE-SOCIETIES WERE N OT ENTITLED TO DEDUCTION AS PER THE PROVISIONS OF SEC. 80 P(2)(D) OF THE ACT. INVOKIN G THE PROVISIONS OF SECTION 80P(4) OF THE ACT THEY HELD THAT THE ASSESSEE SOCIETIES HA D WRONGLY CLAIMED THE DEDUCTION IN THE AYS. CONCERNED. 156 172 173 174 & 186/NAG/2012 (2009-10) 3 4. SOCIETIES PREFERRED APPEALS BEFORE THE FAAS. AFTER CONSIDERING THEIR SUBMISSIONS, FAAS HELD THAT AS PER SECTION 80P(2) T WO CATEGORIES OF CO-OPERATIVE SOCIETIES HAVE BEEN CONTEMPLATED BY THE ACT-ONE THA T CARRIED ON BUSINESS OF BANKING AND THE OTHER THAT PROVIDED CREDIT FACILITIES TO IT S MEMBERS. AS PER FAAS, BOTH THE SOCIETIES PERFORMED DISTINCT AND SEPARATE JOBS, THA T PROVISIONS OF THE SECTION 80P USED WORD OR TO DIFFERENTIATE BETWEEN THESE TWO TYPES OF SOCIETIES. AFTER CONSIDERING THE RELEVANT PROVISIONS OF BANKING REGULATION ACT, MAHA RASHTRA CO-OPERATIVE SOCIETY ACT, CIRCULAR ISSUED BY THE RBI AND THE EXPLANATORY NOTES ON PROVISIONS RELATING TO FINANCE ACT, 2006 (CIRCULAR NO. 14/2006), FAA HELD THAT ASSESSEE-SOCIETIES WERE NOT CO-OPERATIVE BANKS THEY WERE CO-OPERATIVE SOCIETI ES. FOR ARRIVING AT THE ABOVE SAID CONCLUSION, FAA OBSERVED AS UNDER: I. ASSESSEES DID NOT OBTAIN LICENSE FROM THE RESER VE BANK OF INDIA U/S. 22 TO FUNCTION AS A BANK. II. ASSESSEES HAD NO POWER TO ISSUE CHEQUE FACILITI ES TO MEMBERS WHICH WAS THE MOST COMMON CHARACTERISTIC OF THE BANK. III. ASSESSEE SOCIETY HAD TO COMPLY WITH THE RULES FRAMED FOR CO-OPERATIVE SOCIETIES UNDER THE MAHARASHTRA CO-OPERATIVE SOCIETIES RULES. IV. AS PER THE BANKING REGULATION (CO-OPERATIVE SOC IETIES) RULES, 1966, CO-OPERATIVE BANK WERE SUBJECT TO RESERVE BANK REGULATIONS AND HAD TO SUBMIT VARIOUS RETURNS EVERY MONTH PRESCRIBED UNDER SUCH RULES. THE MANNER OF PUBLICA TION OF ACCOUNTS AND BALANCE SHEET WAS ALSO PRESCRIBED. AOS HAD NOT POINTED OUT THAT ASSE SSEES WERE ALSO UNDER ANY OBLIGATION TO ADHERE TO THESE REGULATIONS. HE FURTHER HELD THAT AOS HAD FAILED TO APPRECIATE THE DISTINCTION BETWEEN CREDIT CO-OPERATIVE SOCIETIES AND CO-OPERAT IVE BANKS, THAT CREDIT CO-OPERATIVE SOCIETIES WERE IN THE NATURE OF CREDIT RESOURCE SOC IETY WHICH STRIVED TO OBTAIN CREDITS FOR ITS MEMBERS WITH THE OBJECTIVES OF FACILITATING CREDIT TO INDIVIDUALS WHILE CO-OPERATIVE BANKS WERE FULL-FLEDGED BANKING ORGANISATIONS, THAT THE A SSESSEE CO-OPERATIVE CREDIT SOCIETIES WERE UNDER THE PURVIEW OF MAHARASHTRA CO-OPERATIVE SOCIE TY ACT AND COULD NOT CONDUCT THE BUSINESS OF BANKING AS CLAIMED BY THE AO WITHOUT FU LFILLING THE CONDITIONS OF THE REGISTRAR OF SOCIETIES AND THE RESERVE BANK OF INDIA, THAT THE A CTION OF THE AO WAS NOT JUSTIFIED, THAT PROVISIONS OF SECTION 80P(4) HAD ONLY SOUGHT TO EXC LUDE THE CO-OPERATIVE BANKS FROM AVAILING THE BENEFITS OF THE DEDUCTION. AS A RESULT, APPEALS FILED BY THE ASSESSEE-SOCIETI ES WERE ALLOWED BY THE FAA. 5. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) RELIED ON THE ORDER OF THE AO AND IT WAS SUBMITTED THAT ASSESSEE-SOCIETIES WERE A DVANCING LOANS AND RECEIVING INTERESTS FROM OTHER ENTITIES THAT INTEREST RECEIVE D FROM SUCH PERSONS WAS NOT EXEMPT AS PER THE PROVISIONS OF THE ACT. AUTHORISED REPRE SENTATIVES (ARS) SUPPORTED THE ORDER OF THE FAA AND RELIED UPON THE ORDER OF THE M EDICAL COLLEGE HOSPITAL EMPLOYEES CREDIT CO-OP. SOCIETY LTD., (ITA NO.85/NA G/2011 AY.2007-08) DELIVERED BY THE NAGPUR E-BENCH ON 19-12-2012. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE REVENUE AUTHORITIES. WE ARE OF THE OPINION THAT ORDERS OF THE FAAS DO NOT SUFFER FROM ANY 156 172 173 174 & 186/NAG/2012 (2009-10) 4 LEGAL INFIRMITY. AFTER ANALYSING THE VARIOUS PROVI SIONS OF THE ACTS AND THE CIRCULARS (ISSUED BY THE RBI AND CBDT) THEY HAVE HELD THAT AS SESSEES WERE NOT A CO-OPERATIVE BANKS AS ENVISAGED BY THE AOS IN THEIR ASSESSMENT O RDERS. IN OUR CONSIDERED OPINION, ASSESSEE CO-OPERATIVE SOCIETIES CANNOT BE DEPRIVED OF THE BENEFITS OF DEDUCTIONS AVAILABLE AS PER THE PROVISIONS OF SECTION 80P(2)(A ) OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 80P(4) OF THE ACT, AS DONE BY THE AOS. WE FULLY AGREE WITH THE FAAS THAT THE APPELLANTS ARE CREDIT CO-OPERATIVE SO CIETIES AND NOT CO-OPERATIVE BANKS AND THEREFORE THEY ARE ENTITLED TO CLAIM DEDU CTION AVAILABLE UNDER CHAPTER VI-A OF THE ACT. AS POINTED OUT BY THE ARS OF THE ASSES SEES, WE HAVE PASSED SIMILAR ORDER IN THE CASE OF MEDICAL COLLEGE HOSPITAL EMPLOYEES C REDIT CO-OP. SOCIETY LTD., (SUPRA). FOLLOWING OUR OWN SAID ORDER, WE DECIDE TH E ALL THE GROUNDS OF APPEALS AGAINST THE AOS. 6.1 GROUNDS OF CROSS-OBJECTION FILED BY THE ASSESSEE R EADS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS)-II, NAGPUR WAS LAWFULLY JUSTIFIED TO GRANT DEDUCTION OF RS. 73,31,221/- U/S. 80 P(2)(A)(I) OF THE IT ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) WAS LAWFULLY JUSTIFIED IN HOLDING THAT THE RESPONDENT WAS NOT A CO-OPERATIVE BANK ADMINISTRATED BY THE PROVISIONS OF SECTION 80 P4 OF THE IT ACT, 1961. 3. THAT, THE RESPONDENT BEING ELIGIBLE FOR DEDUCTIONS CLAIMED, STRONGLY OBJECT FOR ALL THE GROUNDS OF APPEAL RAISED BY THE APPELLANT THE INCOME TAX OFFICER, WARD 7(2), NAGPUR. 4. ANY OTHER GROUND OF CROSS-OBJECTION AS MAY BE RAISE D BY THE RESPONDENT AT THE TIME OF HEARING OF THIS APPEAL, FOR WHICH THE RESPO NDENT CRAVES LEAVE. 7. BEFORE US, AR SUPPORTED THE ORDER OF THE FAA. AS WE HAVE ALREADY UPHELD THE ORDER OF THE FAA, C.O. FILED BY THE ASSESSEE ST ANDS ALLOWED. 8. AS A RESULT, ALL THE 05 APPEALS I.E., ITA NOS. 156/ NAG/2012 (2009-10); 172/NAG/2012 (2009-10); 173/NAG/2012 (2009-10); 1 74/NAG/2012 (2009-10) AND 186/NAG/2012 (2009-10) STAND DISMISSED AND C.O. FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED BY E-BENCH AT MUMBAI ON THIS 6 TH DAY OF FEBRUARY, 2013 %& '() - &*+ , 6 TH FEBRUARY 2013 ! #$ !-' . . SD/- SD/- ( . . / R.K. GUPTA ) ( / RAJENDRA ) #( / JUDICIAL MEMBER #( / ACCOUNTANT MEMBER %& MUMBAI, .# DATE: 6 TH FEBRUARY, 2013 TNMM 156 172 173 174 & 186/NAG/2012 (2009-10) 5 COPY TO: 1. ITO WARD-7(1), MECL BUILDING, 5 TH FLOOR, R.NO. 514, SEMINARY HILLS, HIGH LAND DRIVE, NAGPUR-440 006. 2. ITO WARD-1, GANGA MOTORS BUILDING, N.H. NO.6, BHAN DARA-441 904. 3. ITO WARD-1, GANGA MOTORS BUILDING, N.H. NO.6, BHAN DARA-441 904. 4. ITO WARD-1, GANGA MOTORS BUILDING, N.H. NO.6, BHAN DARA-441 904. 5. ITO WARD-7(2), MECL BUILDING, AMBEDKAR BHAVAN, NAG PUR. 1. M/S. BLACK DIAMOND KARMACHARI CREDIT CO-OPERATIVE S OCIETY LTD., KAMPTEE COLLIERY, DIST. NAGPUR-441 404. 2. M/S. BHANDARA ZILLA PARISHAD AND PANCHAYAT SAMITI K ARMACHARI SAH. PAT SANSTHA LTD., Z.P. CHOWK, BHANDARA-441 904. 3. M/S. GRAHAK KARMACHARI SAHKARI BHANDAR LTD., VIDARB HA HOUSING BOARD COLONY, Z.P. CHOWK, BHANDARA-441 904. 4. JANKALYAN NAGRI SAHKARI PAT SANSTHA MARYADIT, RAJEN DRA NAGAR, TUMSAR, DIST. BHANDARA -441 904. 5. M/S. VISHAL NAGARI SAHAKARI PATH SANSTHA LTD., KOR ADI ROAD, MAHADULA TQ. KAMPTEE, DIST. NAGPUR. 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR, ITAT, NAGPUR 6. GUARD FILE /- 0 //TRUE COPY// BY ORDER, ASST. REGISTRAR, ITAT