The ITO, Wd-2(4), Trichur, Trichur V. M/s.Pullur Service Co-op Bank Ltd, Thrissur

ITA 219/COCH/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2047 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 25-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A.S.BINDHU
• Keywords: Competent authority; Set aside
• Section: 80P; 201

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFOR E S/ SHRI CHANDRA POOJARI , AM & GEORGE GEORGE K., J M I .T.A. NO. 2 18 /COCH/ 2019 ASSESSMENT YEAR : 201 4 - 15 THE I NCOME T AX OFFICER, WARD - 2( 4 ), T HRISSUR. VS. M/S. PEECHI SERVICE CO - OPERATIVE BANK LTD., PEECHI ROAD JUNCTION, 410L KALLERY BUILDING, PATTIKAD P.O., T HRISSUR - 680 652 . [PAN: AA B A P 9771 B] (REVENUE - APPELLANT ) (ASSESSEE - RESPONDENT) I .T.A. NO.219/COCH/2019 ASSESSMENT YEAR : 2015 - 16 THE INCOME TAX OFFICER, WARD - 2(4), THRISSUR. VS. M/S. PULLUR SERVICE CO - OPERATIVE BANK LTD., PULLUR POST, RAILWAY STATION ROAD, THRISSUR - 680 683. [PAN: AABAP 6391H] (REVENUE - APPELLANT) (ASSESSEE - RESPONDENT) REVENUE BY SMT. A.S. BINDHU, SR. DR ASSESSEE BY NONE D ATE OF HEARING 18/06/2019 DATE OF PRONOUNCEMENT 18 / 0 6 /201 9 O R D E R PER CHANDRA POOJARI, AM: TH ESE APPEAL S FILED BY DIFFERENT ASSESSEE S ARE DIRECTED AGAINST THE DIFFERENT ORDER S OF THE CIT(A) , T HRISSUR A ND PERTAIN TO THE ASSESSMENT YEAR S 2014 - 15 AND 2015 - 16. I.T.A. NO S . 218&219/C OCH/201 9 2 2. NONE APPEARED ON BEH ALF OF THE ASSESSEE . HOWEVER, WE PROCEED TO DECIDE THE APPEALS ON MERITS AFTER HEARING THE LD. DR. 3. SINCE THE ISSUE INVOLVED IN THESE APPEALS IS COMMON, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. WE SHALL TAKE UP THE GROU NDS OF APPEAL TAKEN BY THE REVENUE IN ITA NO. 218/COCH/2019 WHICH READS A FOLLOWS : 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THRISSUR IN ITA NO. 1337/16 - 17 DATED 24.01.2019 FOR THE ASSESSMENT YEAR 2014 - 15 IS ERRONEOUS IN LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN DELETING THE DISA LLOWANCE OF DEDUCTION OF RS. 71, 18,060 / - CLAIMED BY THE ASSESSEE UNDER SECTION 80P(2) (A) (I) OF THE ACT SOLELY ON THE BASIS OF THE DECISION OF T HE HON'BLE KERALA HIGH COURT IN THE CASE OF M/S CHIRAKKAL SERVICE CO - OPERATIVE BANK & OTHERS IN ITA NO. 212 OF 2013 WITHOUT PERUSING THE FACTS OF THE CASE IN DETAIL. 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT TH AT THE HON. HIGH COURT OF KERALA HAS BASED ITS DECISION ON ALLOWING DEDUCTION U/S 80P(2)(A ) (I) OF THE INCOME - TAX ACT,1961 ON THE CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY (AS DEFINED IN THE THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969 (KCS ACT)) FOR CLA SSIFYING A COOPERATIVE SOCIETY AS PRIMARY AGRICULTURAL CREDIT SOCIETY. 4. THE LEARNED CIT(A) HAS ERRED IN EQUATING A SOCIETY REGISTERED AS A PRIMARY AGRICULTURAL CREDIT SOCIETY UNDER KCS ACT TO A PRIMARY AGRICULTURAL CREDIT SOCIETY UNDER THE BANKING REGU LATION ACT AND INCOME - TAX ACT, 1961 AND THEREBY ALLOWING DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME - TAX ACT, 1961 WITHOUT PERCEIVING THE DIFFERENCE IN DEFINITION OF A PRIMARY AGRICULTURAL CREDIT SOCEITY IN THE TWO ACTS. 5 . THE LD. CLT(A) OUGHT TO HAVE CONSIDERED THE DECISION OF THE JURISDICTIONAL HON. HIGH COURT IN THE CASE OF M/S. PERINTHALMANNA SERVICE CO - OPERATIVE BANK (363 ITR 268) WHEREIN IT HAS BEEN HELD THAT WITH THE INTRODUCTION OF SECTION 80P(4) OF THE ACT, DEDUCTION U/S 80P(2) CANNOT BE ALLOWED MERELY ON THE STRENGTH OF CERTIFICATE OF REGISTRATION AS 'PRIMARY AGRICULTURAL CREDIT SOCIETY.' 6. THE LEARNED CIT (APPEALS) OUGHT TO HAVE SEEN THAT THE HON. SUPREME COURT IN THE CASE OF SABARKHANTA ZIL L A KHARID VECHAR SANGH LTD. VS. CIT REPORTED IN 203 ITR 1027 (SC) HAD HELD THAT ELIGIBLE DEDUCTION UNDER SECTION 8 OP OF THE INCOME T AX ACT, 1961 IN RESPECT OF CO - OPERATIVE SOCIETIES / BANKS DOING BOTH AGRICULTURAL I.T.A. NO S . 218&219/C OCH/201 9 3 AND NON - AGRICULTURAL ACTIVITIES SHOULD NOT BE 100% OF THE GROSS PROFITS OF SUCH SOCIETI ES ETC. BUT SHOULD BE LIMITED TO THE PROFITS GENERATED FROM AGRICULTURAL ACTIVITIES ALONE PERFORMED BY SUCH ASSESSEES. 7. THE LEARNED CIT (APPEALS) OUGHT TO HAVE SEEN THAT THE ABOVE DECISION OF THE HON. APEX C OURT IS IN SHARP CONTRAST TO THE DECISION OF T HE HON. HIGH COURT OF KERALA IN THE CASE OF M/S . CHIRAKKAL SERVICE CO - OPERATIVE BANK & OTHERS IN ITA NO. 212 OF 2013, THAT HELD THAT THE AUTHORITIES UNDER THE INCOME T AX ACT CANNOT PROBE INTO QUESTION WHETHER THE ASSESSEE CO - OPERATIVE SOCIETY IS A PRIMARY AGRICULTURAL CREDIT SOCIETY', ONCE IT IS REGISTERED AND CLASSIFIED AS 'PRIMARY AGRICULTURAL CREDIT SOCIETY' BY THE COMPETENT AUTHORITIES UNDER THE PROVISIONS OF THE KERALA COOPERATIVE SOCIETIES ACT, 1969. 8. THE LEARNED CIT (APPEALS) OUGHT TO HAVE CONSID ERED THE REFERENCE ORDER OF HON'BLE HIGH COURT OF KERALA TO A LARGER BENCH IN ITA NOS. 97 OF 2016 DATED 09.07.2018 IN VIEW OF TWO CONFLICTING DECISIONS OF THE TWO SEPARATE BENCHES OF THE HON'BLE HIGH COURT OF KERALA IN THE CASES OF M/S CHIRAKKAL SERVICE CO - OPERATIVE BANK & OTHERS AND M/S.PERINTHALMANNA SERVICE CO - OPERATIVE BANK. 9. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE CIT (A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 10. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 4 . THE FACTS OF THE CASE AS NARRATED IN ITA NO. 218/COCH/2019 ARE THAT THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY (PACS) UNDER THE KERALA CO - OPERATIVE SOCI ETIES ACT, 1969 AND REGISTERED JOINT REGISTRAR OF CO - OPERATIVE SOCIETIES (GENERAL), THRISSUR. ITS MAIN ACTIVITY IS THAT OF ACCEPTING DEPOSITS AND LENDING MON E Y . THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2014 - 15 ON 29/03/2016 AT RS. 71,18,060/ - AFTER CLAIMING DEDUCTION UNDER SECTION 8 0 P OF THE I.T. ACT. THE ASSESSING OFFICER DENIED THE DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80P OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS DOING BANKING ACTIVITIES OUTSIDE I.T.A. NO S . 218&219/C OCH/201 9 4 THE PURVIEW OF BANKING REGU LATION ACT, 1961 AND IT WAS NOT ACCORDING TO THE OBJECTIVES OF THE PRIMARY AGRICULTURAL CREDIT SOCIETY. 5. ON APPEAL, THE CIT(A) HELD THAT THE ISSUE OF ELIGIBILITY OF PRIMARY AGRICULTURAL CREDIT SOCIETY TO CLAIM DEDUCTION U/S. 80P WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HIGH COURT OF KERALA IN THE CASE OF CHIRAKKAL SERVICE CO - OPERATIVE BANK LTD. VS. CIT IN 384 ITR 490. THE CIT(A) ALSO RELIED ON THE DECISION OF THE ITAT, COCHIN BENCH IN THE CASE OF ITO VS. M/S. MARUTHONKARA SERVIC E CO - OPERATIVE BANK LTD. (ITA NO. 474/COCH/2017) WHEREIN IT WAS HELD THAT DECISION OF M/S. CITIZEN CO - OPERATIVE SOCIETY LTD. VS. ACIT IS NOT APPLICABLE TO PRIMARY AGRICULTURAL CREDIT SOCIETIES. FOLLOWING THE ABOVE JUDGMENTS, AS THE ASSESSEE IS A REGISTERED PRIMARY AGRICULTURAL CREDIT CO - OPERATIVE SOCIETY, THE CIT(A) HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80P OF THE ACT. 6. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 7. W E HAVE HEARD THE LD. DR. IN OUR OPINION, THE ISSUE WAS CONSIDERED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF MAVILAYI SERVICE CO - OPERATIVE BANK LTD. VS. CIT REPORTED IN ITA NO.97/2018 DATED 19.03.2019 WHEREIN IT WAS HELD THAT THE ASSESSING OFFICER IS NOT OBLIGED TO GRANT DEDUCTION BY MERELY LOOKING AT THE CERTIFICATE OF REGISTRATION ISSUED BY THE COMPETENT AUTHORITY UNDER THE CO - OPERATIVE SOCIETIES ACT. INSTEAD, HE HAS TO CONDUCT AN ENQUIRY INTO THE FACTUAL SITUATION AS TO I.T.A. NO S . 218&219/C OCH/201 9 5 THE ACTIVITIES OF THE ASSESS EE AND ARRIVE AT A CONCLUSION WHETHER THE BENEFITS OF SECTION 80P CAN BE EXTENDED OR NOT. THUS, THE FULL BENCH OVERRULED THE EARLIER JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO - OPERATIVE BANK LTD. VS. CIT (384 ITR 490). T HE FULL BENCH HAD FOLLOWED THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CITIZEN CO - OPERATIVE SOCIETY LTD. VS. ACIT REPORTED IN 397 ITR 1 (SC). IN VIEW OF THE LATEST JUDGMENT OF THE JURISDICTIONAL HIGH COURT CITED SUPRA, THIS ISSUE IS REMITTED TO THE F ILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE ACTUAL ACTIVITIES CARRIED ON BY THE ASSESSEE SO AS TO GRANT DEDUCTION U/S. 80P OF THE ACT. ACCORDINGLY, THE ISSUE IN DISPUTE IS REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDER ATION IN ACCORDANCE WITH THE ABOVE DIRECTION. THIS GROUND OF APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES FOR BOTH THE ASSESSMENT YEARS . 8 . IN THE RESULT, THE APPEAL S FILED BY THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH JUNE, 2019. SD/ - SD/ - (GEORGE GEORGE K.) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 18 TH JUNE, 2019 GJ COPY TO: 1 . M/S. M/S. PEECHI SERVICE CO - OPERATIVE BANK LTD., PEECHI ROAD JUNCTION, 410L KALLERY BUILDING , PATTIKAD P.O., THRISSUR - 680 652. 2. M/S. PULLUR SERVICE CO - OPERATIVE BANK LTD., PULLUR POST, RAILWAY STATION ROAD, THRISSUR - 680 683. I.T.A. NO S . 218&219/C OCH/201 9 6 3 . THE INCOME TAX OFFICER, WARD - 2( 4 ), T HRISSUR. 4 . THE COMMISSIONER OF INCOME - TAX (AP P EALS) , THRISSUR. 5 . THE PR. COM MISSIONER OF INCOME - TAX, THRISSUR. 6 . D. R., I.T.A.T., COCHIN BENCH, COCHIN. 7. . GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN