ITO, Kottayam V. The Kizhathadiyoor Service Co-op Bank Ltd, Kottayam

ITA 2/COCH/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7244 (ITAT-COCHIN)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 26-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 08-01-2014
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NO. 02/COCH/2014 ASSESSMENT YEAR : 2008-09 THE INCOME TAX OFFICER, WARD-2, KOTTAYAM. VS. THE KIZHATHADIYOOR SERVICE CO-OP BANK LTD., MAIN ROAD, PALA, KOTTAYAM-686 575. [PAN:AAAAK 3240R] (REVENUE -APPELLANT) (ASSESSEE-RESPONDEN T) C.O. NO.16/COCH/2014 (ARSG. OUT OF I.T.A. NO. 02/COCH/2014) ASSESSMENT YEAR : 2008-09 THE KIZHATHADIYOOR SERVICE CO-OP BANK LTD., MAIN ROAD, PALA, KOTTAYAM-686 575. [PAN:AAAAK 3240R] VS. THE INCOME TAX OFFICER, WARD-2, KOTTAYAM. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) REVENUE BY SMT. LATHA V. KUMAR, JR. DR ASSESSEE BY SHRI PRASANTH SRINIVAS, CA DATE OF HEARING 26/08/2014 DATE OF PRONOUNCEMENT 28/08/2014 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJ ECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 25-10 -2013 PASSED BY THE LD. CIT(A)-IV, KOCHI FOR THE ASSESSMENT YEAR 2008-09. I.T.A. NO.02 /COCH/2014 & C.O. NO. 16/COCH/2014 2 2. THE REVENUE IS CHALLENGING THE ORDER OF THE CIT( A) IN GRANTING DEDUCTION U/S. 80P(2)(A)(I) OF THE I.T. ACT. THE L D. DR SUBMITTED THAT THE FINDING RECORDED BY THE CIT(A) THAT THE ASSESSEE HA S GIVEN 91% OF THE TOTAL LOANS FOR AGRICULTURAL PURPOSES IS NOT CORRECT. TH E ASSESSING OFFICER HAS GIVEN A CATEGORICAL FINDING IN HIS ORDER THAT THE A SSESSEE HAS GIVEN LOANS ONLY TO THE EXTENT OF 12% OF THE TOTAL ADVANCE TO T HE AGRICULTURISTS AND THE CIT(A)S CONCLUSION IS WRONG BECAUSE OF THIS FINDIN G AND HENCE THIS ISSUE IS TO BE VACATED. 3. THE LD. AR SUBMITTED THAT THE ASSESSEE IS A PRI MARY AGRICULTURAL CREDIT SOCIETY PROVIDING CREDIT FACILITY TO ITS MEMBERS FO R AGRICULTURAL PURPOSES AND GIVING LOANS FOR NON-AGRICULTURAL PURPOSES ALSO AND THERE CANNOT BE ANY REASON TO DENY DEDUCTION U/S. 80P(2)(I)(A) OF THE I .T. ACT. 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE OR DER OF THE TRIBUNAL, COCHIN BENCH IN THE CASE OF PINARAYI SERVICE CO-OPE RATIVE BANK LTD. AND OTHERS VS. ITO IN I.T.A. NOS. 123/COCH/2012 ETC. DA TED 31 ST JULY, 2014. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. THE ASSESSING OFFICER IN HIS ORDER RECORDED THAT THE PERCENTAGE O F LOAN GIVEN TO THE AGRICULTURISTS IS ONLY 12%. AGAINST THIS FINDING, THE CIT(A) HAS RECORDED THAT THE ASSESSEE HAS GIVEN LOANS TO THE AGRICULTUR ISTS AT 91% OF THE TOTAL I.T.A. NO.02 /COCH/2014 & C.O. NO. 16/COCH/2014 3 LOANS ADVANCED AND OBSERVED THAT THE ASSESSEE IS PR IMARILY PROVIDING CREDIT FACILITY TO ITS MEMBERS FOR AGRICULTURAL PURPOSES A ND ACCORDINGLY, DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT WAS GRANTED, THE BASIS FOR WHICH IS NOT KNOWN. SINCE THE FINDING IS CONTRARY TO EACH OTHER, IN OUR OPINION, IT IS PROPER TO REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE ORDER OF THE TRIBUNAL IN THE CASE OF PINARAYI SERVICE CO-OPERATIVE BANK LTD. AND OTHERS, CITED SUPRA. AC CORDINGLY, THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. ACCORDINGLY, THIS GROUND IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSES. 6. THE ASSESSEE HAS RAISED GROUND NOS. 2,3 & 4 IN ITS CROSS OBJECTION. EXCEPT GROUND NO. 4, ALL OTHER GROUNDS ARE IN SUPPOR T OF THE CIT(A) ORDER ON ISSUE RELATING TO DEDUCTION U/S. 80P(2)(A)(I) OF THE I.T. ACT. THE GROUND NOS. 2 & 3 ARE DISMISSED AS INFRUCTUOUS AS WE HAVE ALREADY REMITTED THE ISSUE RELATING TO DEDUCTION U/S. 80P(2)(A)(I) BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 7. COMING TO GROUND NO. 4 WHICH IS AS FOLLOWS: IN PARA 3 OF THE APPELLATE ORDER (IN PAGES 5 & 6), THE LEARNED CIT(A) FAILED TO CONSIDER THE SUBMISSIONS OF THE ASSESSEE THAT INCOME FROM NON BANKING BUSINESS WAS RS.1,64,421/- (I.E. GROSS AMOUNT OF RS.7,59,730/- CREDITED IN PROFIT AND LOSS ACCOUNT L ESS INCIDENTAL EXPENSES OF RS.5,95,309/- DEBITED IN THE PROFIT AND LOSS ACCOUNT) AND NOT RS.7,59,730 (I.E. THE GROSS RECEIPTS) ASSES SED BY THE ASSESSING OFFICER. AMOUNT SHOWN IN ASSESSMENT ORDE R IS RS.7,62,730 I.T.A. NO.02 /COCH/2014 & C.O. NO. 16/COCH/2014 4 (IN PLACE OF RS.7,59,730/-), WHEREIN THERE WAS A TO TALING MISTAKE OF RS.3000/-. 8. ACCORDING TO THE LD. AR THERE IS A WRONG DETERMI NATION OF INCOME AT RS. 7,59,730/- AND THERE WAS A CLERICAL ERROR WHICH IS TO BE RECTIFIED. 9. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. T HE PLEA OF THE ASSESSEE IS THAT THE GROSS INCOME FROM NON BANKING BUSINESS IS AT RS. 7,59,730/- AND THE INCIDENTAL EXPENSES ON THIS ACCO UNT IS AT RS. 5,95,309/- AND NET INCOME FROM NON BANKING ACTIVITIES IS AT RS . 1,64,421/-. INSTEAD OF THIS, THE CIT(A) HAS CONSIDERED NET INCOME AT RS.7, 59,730/- WHICH IS INCORRECT. IN OUR OPINION, THE ONLY NET INCOME FROM NON BANKING ACTIVITIES IS TO BE CONSIDERED AND NOT GROSS RECEIPTS. ACCORDINGL Y, WE DIRECT THE ASSESSING OFFICER TO SEGREGATE THE NET INCOME FROM NON BANKING ACTIVITIES AND DECIDE ACCORDINGLY. HE IS ALSO DIRECTED TO REC TIFY THE CLERICAL ERROR, IF ANY CREPT IN HIS ORDER. ACCORDINGLY, THIS GROUND O F THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED AND THE I.T.A. NO.02 /COCH/2014 & C.O. NO. 16/COCH/2014 5 CROSS OBJECTION FILED BY THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 28-08-2 014. SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER AC COUNTANT MEMBER PLACE: KOCHI DATED: 28TH AUGUST, 2014 GJ COPY TO: 1. THE KIZHATHADIYOOR SERVICE CO-OP BANK LTD., MAIN ROAD, PALA, KOTTAYAM-686 575. 2. THE INCOME TAX OFFICER, WARD-2, KOTTAYAM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-IV, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN