The ACIT, 3(1), Bhopal V. M/s BHEE Thrift & Credit Co-operative Society, Bhopal

ITA 217/IND/2012

• Counselvise Citation: 21722714 RSA 2012
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 20-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAV SAXENA
• Assessee Lawyers: AJAY K CHHAJED

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 217/IND/2012 A.Y. 2008-09 ACIT-3(1), BHOPAL :: APPELLANT VS BHEE THRIFT & CREDIT CO-OP. SOCIETY, BHOPAL PAN AAAAB-0697H :: RESPONDENT APPELLANT BY SHRI KESHAV SAXENA RESPONDENT BY SHRI AJAY K. CHHAJED DATE OF HEARING 25.07.2012 DATE OF PRONOUNCEMENT 06 .08.2012 O R D E R PER JOGINDER SINGH , JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 31 ST JANUARY, 2012, ON THE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY ERRED IN DELETING THE ADDITION OF RS.39,74,958/- MADE ON ACCOUNT OF 2 CREDIT BALANCE OUTSTANDING AS THE PERSONS OR GROUP CONCERNS ARE RELATIVES OF THE PARTNERS OF THE FIRM. 2. DURING HEARING, WE HAVE HEARD SHRI KESHAVE SAXEN A, LD. CIT(DR) AND SHRI AJAY K. CHHAJED, LD. COUNSEL FOR T HE ASSESSEE. THE CRUX OF THE ARGUMENTS ON BEHALF OF THE REVENUE IS THAT THE PRESENT ISSUE IS COVERED AGAINST THE ASSESSEE BY TH E ORDER OF THE TRIBUNAL IN THE CASE OF M/S. VIDISHA BHOPAL KSHETRI YA GRAMIN BANK, VIDISHA (ITA NOS.215 & 216/IND/2011, AYS 2007 -08 & 2008-09, ORDER DATED 18.6.2012). THE LEARNED CIT D R ALSO CONTENDED THAT AFTER INSERTION OF SUB-SECTION (4) O F SECTION 80P OF THE ACT, WITH EFFECT FROM 1.4.2007, THE DEDUCTION I S ONLY AVAILABLE TO PRIMARY AGRICULTURAL CREDIT SOCIETY AND PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK BY FURTHER SUBMITTING THAT DEDUCTION U/S 80P OF THE ACT IS NOT AVAILABLE TO THE ASSESSEE BECAUSE THE ASSESSEE IS NEITHER A PRIMARY AGRICULTU RAL CREDIT SOCIETY NOR A PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. 2.1 ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT ONLY EMPLOYEES OF BHEL ARE THE MEMBERS OF THIS CREDIT SO CIETY WHO DEPOSIT MONTHLY SUBSCRIPTIONS (THRIFT) WITH THE ASS ESSEE SOCIETY 3 AND THEY ARE ADVANCED LOANS BY THE CREDIT SOCIETY O UT OF SUCH DEPOSITS. THEREFORE, IT WAS CONTENDED THAT THE ASS ESSEE SOCIETY IS ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBE RS ONLY AND NOT TO THE PUBLIC AT LARGE, THEREFORE, THE SOCIETY IS E NTITLED TO DEDUCTION U/S 80P OF THE ACT. 2.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED AO DISAL LOWED THE CLAIMED EXEMPTION U/S 80P AND ADDED TO THE TOTAL IN COME OF THE ASSESSEE. ON APPEAL, THE SAME WAS DIRECTED TO BE DE LETED BY THE LEARNED CIT(A) AGAINST WHICH THE REVENUE IS IN APPE AL BEFORE THE TRIBUNAL. BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE IMPUGNED OR DER :- 2.3 ON EXAMINATION IT IS FOUND THAT THE APPELLANT SOCIETY IS AN DULY REGISTERED COOPERATIVE SOCIETY. IT IS PROVIDING CREDIT TO ITS MEMBERS ONLY. HENCE IS ENT ITLED FOR DEDUCTION U/S 80P(2). THE AOS FINDING THAT TH E SOCIETY IS NOT IN ENTITLED FOR DEDUCTION U/S 80P(2) DUE TO THE REASON THAT IT IS NOT CARRYING ON THE BUSINE SS OF BANKING IS ILL FOUNDED. SECTION 80P(2) PROVIDES TH AT A COOPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS IS ELIGIBLE FOR DEDUCTION U/S 80P(2). ITS SHOWS THAT A SOCIETY CARRYING ON EITHER BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES IS ENTITLED FOR DEDUCTION. SINCE THE APPELLANT SOCIETY IS PROVIDIN G CREDIT FACILITIES TO ITS MEMBERS, IT IS ENTITLED DE DUCTION U/S 80P(2). THE AO IS DIRECTED TO ALLOW DEDUCTION U/S 80P(2) AT RS. 18435916/-. THIS GROUND OF APPEAL IS ALLOWED. 4 2.4 IF THE ASSERTION MADE BY THE LEARNED RESPECTIV E COUNSEL, FACTS AVAILABLE ON RECORD, OBSERVATIONS MADE IN THE ASSESSMENT ORDER AND THE CONCLUSION DRAWN IN THE IMPUGNED ORDE R ARE KEPT IN JUXTAPOSITION AND ANALYSED, THERE ARE CERTAIN UN DISPUTED FACTS WHICH ARE SUMMARISED AS UNDER :- (A) THE ASSESSEE IS REGISTERED AS A THRIFT AND CRED IT COOPERATIVE SOCIETY UNDER MADHYA PRADESH COOPERATIVE SOCIETIES ACT, 1960 (B) THE MEMBERS OF THE SOCIETY ONLY CAN BE FROM THE EMPLOYEES OF BHEL AND NOT THE PUBLIC AT LARGE. (C) THE SOCIETY IS ENGAGED IN PROVIDING CREDIT FACI LITIES TO ITS MEMBERS ONLY. (D) THE SOCIETY IS FORBIDDEN TO GRANT ANY LOAN TO A NY PERSON OTHER THAN ITS MEMBERS MEANING THEREBY THE OBJECT I S OF MUTUAL BENEFIT ONLY. (E) THE OBJECTS OF THE SOCIETY ARE FORTIFIED BY THE LETTER OF THE PRESIDENT DATED 19 TH JANUARY, 2012 (PAGE 50 OF THE PAPER BOOK) AS PER WHICH IT HAS BEEN SPECIFICALLY MENTION ED THAT THE SOCIETY IS RESTRICTED TO EMPLOYEES OF BHEL AND NO 5 OUTSIDER IS PERMITTED TO BECOME A MEMBER OR SHARE H OLDER OF DEPOSITOR OR LENDER OR BORROWER. (F) THE ASSESSEE SOCIETY IS FORBIDDEN TO GRANT ANY LOAN, ADVANCE OR ANY KIND OF ASSISTANCE TO ANY PERSON OTHER THAN ITS MEMBERS (G) THE ACCOUNTS OF THE ASSESSEE SOCIETY ARE DULY A UDITED FROM TIME TO TIME ON PRESCRIBED FORM NO. 3CB (AUDIT REPO RT U/S 44AB) OF THE ACT AVAILABLE ON PAGES 32 TO 49 OF THE PAPER BOOK. 2.5 WE HAVE ALSO PERUSED THE REGISTRATION CERTIFICA TE DATED 23 RD APRIL, 1993 ISSUED BY THE OFFICE OF THE DEPUTY REGI STRAR, COOPERATIVE SOCIETIES, BHOPAL (PAGES 7 TO 31 OF TH E PAPER BOOK). AT PAGE 11 OF THE PAPER BOOK, THERE IS A MENTION OF MEMBERSHIP AS PER WHICH ALSO ONLY THE PERMANENT EMPLOYEES OF B HEL CAN BECOME THE MEMBER OF THE ASSESSEE SOCIETY. EVEN ON RETIREMENT OF SUCH MEMBERS, THERE ARE CERTAIN RESTRICTIONS. T HE ASSESSEE AS ON 31.9.2008 DECLARED INCOME OF RS.38,560/- AFTER C LAIMING DEDUCTION OF RS.1,84,35,916/- U/S 80P OF THE ACT. PURSUANT TO VARIOUS NOTICES, THE ASSESSEE SUBMITTED THE REQUIRE D DETAILS, EXPLANATIONS, DOCUMENTS AND EVIDENCES AS IS EVIDENT FROM THE 6 ASSESSMENT ORDER. IF THESE FACTS ARE ANALYSED WITH THE PROVISIONS OF SECTION 80P(2)(A)(I) OF THE ACT, WHICH SPEAKS AB OUT DEDUCTION IN RESPECT OF INCOME OF COOPERATIVE SOCIETIES. AS PER SUB-SECTION (1) OF SECTION 80P OF THE ACT, WHERE, IN THE CASE OF AN ASSESSEE, BEING A COOPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLU DES ANY INCOME REFERRED TO IN SUB-SECTION (2), THERE SHALL BE DEDU CTED IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, THE SUMS SPECIFIED IN SUB-SECTION (2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. CLAUSE (A) SPEAKS ABOUT COOPERATI VE SOCIETIES WHICH ARE ENGAGED IN CARRYING ON THE BUSINESS OF BA NKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. IN THE PRESENT APPEAL ALSO, THE ASSESSEE SOCIETY IS PROVIDING CREDIT FACI LITIES TO ITS MEMBERS ONLY AND NOT TO THE PUBLIC AT LARGE, THEREF ORE, THE CASE OF THE ASSESSEE IS COVERED BY THIS SECTION AND NOT BY SUB-SECTION (4) OF SECTION 80P WHICH WAS INSERTED BY THE FINANC E ACT, 2006 WITH EFFECT FROM 1.4.2007. EARLIER SUB-SECTION (4) WAS OMITTED BY THE FINANCE ACT, 1969 WITH EFFECT FROM 1.4.1970. T HE ASSESSEE SOCIETY IS NEITHER A BANK NOR A RURAL DEVELOPMENT B ANK, THEREFORE, THE ASSERTION MADE BY THE LEARNED CIT DR IS NOT APP LICABLE TO THE FACTS OF THE PRESENT APPEAL. THE FINDING OF THE AO THAT THE ASSESSEE SOCIETY IS CARRYING ON BUSINESS OF BANKING IS ALSO 7 CONTRARY TO THE FACTS. SINCE THE ASSESSEE SOCIETY IS PROVIDING CREDIT FACILITIES TO ITS MEMBERS ONLY, THEREFORE, C LEARLY ENTITLED TO DEDUCTION U/S 80P(2) OF THE ACT, CONSEQUENTLY, WE F IND NO INFIRMITY IN THE STAND OF THE LEARNED CIT(A). IT IS AFFIRMED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6.8.7.2012. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 6.8.2012 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-2626