INCOME TAX OFFICER WARD-1(2), Nagpur V. HIMALAYA SAHAKARI PAT SANSTHA MARYADIT, Nagpur

ITA 224/NAG/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93412 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 22-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D P T IWARI

Judgement Text

1 ITA NOS. 224, 225 & 226/NAG/2013 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO.224, 225 & 226/NAG/2013 ASSESSMENT YEAR : 2008 - 09, 2009 - 10 & 2010 - 11. THE INCOME - TAX OFFICER, HIMALAYA SAHAKARI PAT SANSTHA WARD - 1(2), NAGPUR. V/S. MARYADIT, 23, LAHARI KUNJ, NARAYAN B AZAR, PRATAP NAGAR, NAGPUR. PAN AAAAH2738P APPELLANT. RESPONDENT. APPELLANT BY : SHRI D.P. T IWARI. RESPONDENT BY : NONE. DATE OF HEARING - 07 - 05 - 2015 DATE OF PRONOUNCEMENT 26 TH JUNE, 2015. O R D E R PER SHRI MUKUL K. SHRAWAT, J.M. THESE T HREE APPEALS HAVE BEEN FILED BY THE REVENUE ARISING FROM A CONSOLIDATED O RDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 05 - 03 - 2013. THE R EVENUE HAS RAISED IDENTICALLY WORDED GROUNDS IN ALL THE THREE YEARS WHICH ARE REPRODUCED AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN ALLOWING ASSESSEE THE DEDUCTION U/S 80P FOR A.Y. 2008 - 09, 2009 - 10 & 2010 - 11 WHEN THE ASSESSEE IS NOT A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK? 2 ITA NOS. 224, 225 & 226/NAG/2013 2. ON THE DATE OF HEARING NO ONE HAS APPEARED FROM THE SIDE OF THE RESPONDENT - ASSESSEE. HOWEVER, CONSIDERING THE ISSUE BEING COVERED BY SEVERAL DECISIONS OF ITAT, NAGPUR, WE HAVE DECIDED TO PROCEED EXPARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED D.R. 3. THE ASSESSING OFFICER HAS MADE AN OB SERVATION THAT THE ASSESSEE IS A COOPERATIVE CREDIT SOCIETY AND CLAIMED DEDUCTION UNDER SECTION 80P OF I.T. ACT. FOR ASSESSMENT YEAR 2008 - 09 THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80P OF ` .18,43,652/ - , FOR ASSESSMENT YEAR 2009 - 10 THE DEDUCTION CL AIMED WAS ` . 6,32,101 AND FOR ASSESSMENT YEAR 2010 - 11 THE AMOUNT OF DEDUCTION CLAIMED WAS ` .12,43,953/ - . THE ASSESSING OFFICER HAS RAISED AN OBJECTION THAT IN VIEW OF THE PROVISIONS OF SECTION 80P(4) THE ASSESSEE IS NOT ENTITLED FOR THE SAID CLAIM OF DEDU CTION. THE ASSESSING OFFICER HAS DISCUSSED THE PROVISIONS OF SECTION 80P IN THE LIGHT OF THE BANKING REGULATION ACT, 1949 AND FEW CASE LAWS AND THEREUPON DENIED THE BENEFIT OF SECTION 80P TO THE ASSESSEE. 4. BEING AGGRIEVED, THE MATTER WAS CARRIED BEFORE T HE FIRST APPELLATE AUTHORITY. THE LEARNED CIT(APPEALS) HAS GRANTED RELIEF AFTER MAKING THE FOLLOWING OBSERVATIONS : 6.3 I HAVE CONSIDERED THE ISSUE BEFORE ME, WITH REFERENCE TO THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. I FIND THAT THE ASSESSING OFFICER HAS BASED THE DISALLOWANCE ON CERTAIN PREMISES THAT THE APPELLANT COOPERATIVE SOCIETY IS ACTUALLY A COOPERATIVE BANK, AND THAT WITH THE INTRODUCTION OF SECTION 80P(4) EXEMPTION IS AVAILABLE ONLY TO A PRIMARY AGRICULTURAL CREDIT SOCIETY OR TO A PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK AND THE APPELLANT BEING A COOPERATIVE SOCIETY CARRYING ON THE BUSINESS OF BANKING NOT FALLING INTO THIS EXEMPT CATEGORY IS NOT ELIGIBLE FOR DEDUCTION U/S 80P. 3 ITA NOS. 224, 225 & 226/NAG/2013 - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6.5 THUS IT IS CLEAR THAT AS PER SECTION 80P(2)(A)(I) TWO CATEGORIES OF COOPERATIVE SOCIETIES ARE CONTEMPLATED ONE THAT CARRIES ON THE BUSINESS OF BANKING AND THE OTHER THAT PROVIDES CREDIT FACILITIES TO ITS MEM BERS. THESE ARE DISTINCT AND SEPARATE ENTITIES, AS IS EVIDENT FROM THE DISJUNCTIVE CLAUSE OR USED TO IDENTIFY THE TWO CATEGORIES. IT IS, THEREFORE, WORTHWHILE TO EXAMINE THE DEFINITIONS OF COOPERATIVE SOCIETY AND COOPERATIVE BANK AS PER PART - V OF T HE BANKING REGULATION ACT, WHICH IS AS FOLLOWS: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6.8 IT IS FURTHER NECESSARY TO NOTE THAT COOPERATIVE BANKS ARE SUBJECT TO CERTAIN ADDITIONAL COMPLIANCES AS FOLLOWS: UNDER RULE 66 OF THE MAHARASHTRA COOPERATIVE SOCIETIES RULES, 1961, ALL REGISTERED COOPERATIVE SOCIETIES CLASSIFIED BY THE REGISTRAR AS CENTRAL BANK OR AS URBAN BANKS, SHALL FURNISH TO THE REGISTRAR EVERY MONTH, A COPY OF EACH OF THE RETURN, REQUIRED TO BE FURNISH ED TO THE RESERVE BANK OF INDIA UNDER SECTION 18, 24 AND 27 OF THE BANKING REGULATION ACT, 1949. THUS IT IS CLEAR THAT COOPERATIVE BANKS HAVE TO FULFILL THE CONDITIONS OF THE REGISTRAR OF SOCIETIES AND ALSO THE RBI TO TRANSCT THE BUSINESS OF BA NKING. HOWEVER, CREDIT COOPERATIVE SOCIETIES ARE NOT REQUIRED TO SUBMIT SUCH RETURNS WITH THE RESERVE BANK OF INDIA AND NEED NOT FOLLOW THE RBI REGULATIONS AS A BANK. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7.3 WHILE IT IS TRUE THAT THE WORD PROVIDING CREDIT FACILITIES AS CONTEMPLATED U/S 80P(2)(A)(I) COLOUR FROM THE ACTIVITY OF BANKING, EVERY SUCH PERSON OR SOCIETY THAT PROVIDES CREDIT FACILITIES CANNOT BE CLUBBED AS A BANKER AS HAS BEEN DONE BY THE A.O. THE DEFINITION OF BANKING AS PER SECTION 5(B) OF THE BANKING REGULATION ACT, 1949, IS AS FOLLOWS: BANKING MEANS THE ACCEPTING FOR THE PURPOSE OF LENDING OR INVESTMENT OF DEPOSITS OF MONEY FROM THE PUBLIC REPAYABLE ON DEMAND OR OTHERWISE AND WIT HDRAWABLE BY CHEQUE, DRAFT, AND ORDER OR OTHERWISE 4 ITA NOS. 224, 225 & 226/NAG/2013 CONSIDERING THIS DEFINITION IN THE CONTEXT OF THE BUSINESS CARRIED ON BY THE APPELLANT COOPERATIVE SOCIETY AND THE VARIOUS REQUIREMENTS PRESCRIBED BY THE BANKING REGULATOR, I AM OF THE CONSIDER ED VIEW THAT IT CANNO9T BE HELD THAT THE APPELLANT IS A COOPERATIVE BANK IN VIEW OF THE FOLLOWING F ACTS - - - - - - - - - - - - - - - - - - - - - - - - - - 5. AFTER CONSIDERING THE DETAILED ORDER OF LEARNED CIT(APPEALS), ONLY RELEVANT PORTIONS REPRODUCED ABOVE, WE ARE OF THE VIEW THAT NOW THIS ISSUE IS SQUARELY COVERED BY SEVERAL DECISIONS OF THIS TRIBUNAL. FEW OF THEM ARE LISTED BELOW : 1 ) ITA N O. 393/NAG/2013 & C.O.NO. 23/NAG/2013 DATED 5 TH JUNE, 2015 IN THE CASE OF ITO V/S. VISHAL NAGRI SAHAKARI SANSTHA LTD. RELEVANT PORTION REPRODUCED BELOW : 2.1 APART FROM DECISION PRONOUNCED BY RESPECTED CO - ORDINATE BENCH NAGPUR IN ASSESSEE'S OWN CASE, WE HAVE ALSO BEEN INFORMED THAT IN THE BUNCH OF CASES ITAT 'E' BENCH, NAGPUR VIDE AN ORDER DATED 1ST FEBRUARY, 2013 OF CASES OF ITAT 'E' BENCH, (AT SERIAL NO. 1, VIDE ITA NO. 68/NAG/2012 (AY 2008 - 09) IN THE CASE OF ITO VS. M/S SHREE GOPALAKRISHNA URBAN CREDIT CO - OPERATIVE SOCIETY MARYADIT, NAGPUR) & OTHERS, WHEREIN E - BENCH OF NAGPUR TRIBUNAL, WHIL E GRANTING THE BENEFIT OF DEDUCTION IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, HELD AS UNDER: 'WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. WE ARE OF THE OPINION THAT ORDERS OF THE FAAS DO NOT SUFFER FROM ANY LEGAL INFIRMITY. AFTER ANALYZING THE VARIOUS PROVISIONS OF THE ACTS AND THE CIRCULARS (ISSUED BY THE RBI AND CBDT) THEY HAVE HELD THAT ASSESSEES WERE NOT A CO - OPERATIVE BANKS AS ENVISAGED BY THE AOS IN THEIR ASSESSMENT ORDERS. IN OUR CONSIDERED OPINIO N, 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 F'AAS T HAT THE APPELLANTS ARE CREDIT CO - OPERATIVE SOCIETIES AND NOT CO - OPERATIVE BANKS AND THEREFORE THEY ARE ENTITLED TO CLAIM DEDUCTION 5 ITA NOS. 224, 225 & 226/NAG/2013 AVAILABLE UNDER CHAPTER VI - A OF THE ACT. AS POINTED OUT BY THE ARS OF THE ASSESSEES, WE HAVE PASSED SIMILAR ORDER IN THE CAS E OF MEDICAL COLLEGE HOSPITAL EMPLOYEES CREDIT CO - OP. SOCIETY LTD., (SUPRA). FOLLOWING OUR OWN SAID ORDER, WE DECIDE THE ALL THE GROUNDS OF APPEALS AGAINST THE AOS'. AND, THEREFORE, UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AS ALSO RESPECTFULLY FOLLOWING THE PRECEDENTS HEREINABOVE, WE FIND NO FORCE IN THIS GROUND OF THE REVENUE HENCE, DISMISSED. 2) ITA N O. 391/NAG/2013 & ITA N O. 397/NAG/2013 DATED 27 - 05 - 2015 IN THE CASE OF ITO V/S. M/S BLACK DIAMOND KARMACHARI CREDIT CO - OP. SOCIETY. RELEVANT PORTION REPRODUCED BELOW: 2. UPON HEARING LEARNED DEPARTMENTAL REPRESENTATIVE AND THE MANAGER OF THE SOCIETY, WE FIND THAT ITAT NAGPUR BENCH IN ASSESSEES OWN CASE IN ITA NO. 156/NAG/2012 FOR ASSESSMENT YEAR 2009 - 10 VIDE ORDER DATED 06.02.2013 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. WE ARE OF THE OPINION THAT ORDERS OF THE FAAS DO NOT SUFFER FROM ANY LEGAL INFIRMITY. A FTER ANALYZING THE VARIOUS PROVISIONS OF THE ACTS AND THE CIRCULARS (ISSUED BY THE RBI AND CBDT) THEY HAVE HELD THAT ASSESSEES WERE NOT A CO - OPERATIVE BANKS AS ENVISAGED BY THE AOS IN THEIR ASSESSMENT ORDERS. IN OUR CONSIDERED OPINION, ASSESSEE CO - OPERATIV E SOCIETIES CANNOT BE DEPRIVED OF THE BENEFITS OF DEDUCTION 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 C REDIT CO - OPERATIVE SOCIETIES AND NOT CO - OPERATIVE BANKS AND THEREFORE THEY ARE ENTITLED TO CLAIM DEDUCTION AVAILABLE UNDER CHAPTER VI - A OF THE ACT. AS POINTED OUT BY THE ARS OF THE ASSESSEE, WE HAVE PASSED SIMILAR ORDER IN THE CASE OF MEDICAL COL LEGE HOSPITAL EMPLOYEES CREDIT CO. - OP. SOCIETY LTD., (SUPRA). FOLLOWING OUR OWN SAID ORDER, WE DECIDE THE ALL THE GROUNDS OF APPEALS AGAINST THE AOS. 3. SINCE THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ITATS DECISION IN ASSESSEES OWN CASE, WE UPHOLD THE ORDER OF LEARNED CIT(A). 6 ITA NOS. 224, 225 & 226/NAG/2013 3 ) ITA NOS. 357/NAG/2012, 359/NAG/2013, 361/NAG/2013 & 371/NAG/2013 DATED 27 - 05 - 2015 IN THE CASE OF ITO V/S. Z.P. PRIMARY TEACHERS CREDIT CO - OP. SOCIETY LTD. AND OTHERS. RELEVANT PORTION REPRODUCED BELOW : 7. NOW, WE FIND THAT IT IS UNDISPUTED, THAT THESE CO - OPERATIVE SOCIETIES ARE ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. IT IS NOT AT ALL THE CASE THAT THEY ARE PROVIDING SERVICES OR FACILITIES TO THE PUBLIC AT L ARGE. THE DECISION REFERRED BY THE LD. DR IN THE CASE OF 144 CTR 240, IS THE JUDGMENT OF HONBLE MADRAS HIGH COURT AND SAME WAS DELIVERED IN THE CONTEXT OF EXGIBILITY TO INTEREST TAX ACT. IN OUR CONSIDERED OPINION, THE FACTS OF THE CASE AND RATIO EMANA TING THEREFROM ARE NOT AT ALL APPLICABLE TO THE FACTS OF THE CASE. WE NOTE THAT NAGPUR TRIBUNAL ITSELF HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSES IN BATCH OF GROUP OF CASES BY ORDER DATED 1 ST FEBRUARY, 2013, WHICH INCLUDED ONE OF THE ASSESSEES M/S INDER COLOUR CREDIT CO - OP. SOCIETY. TWO OF THE CASES IN THE SAID CASE ALSO TRAVELLED TO THE HONBLE JURISDICTIONAL HIGH COURT. BY THE ORDER DATED 26 TH SEPTEMBER, 2013 IN ITA NO. 59 & 60 OF 2013. THE HONBLE JURISDICTIONAL HIGH COURT HAS DISMISSED THE R EVENUES APPEAL IN THIS REGARD. 8. IN THE AFORESAID BACKGROUND OF DISCUSSION AND PRECEDENT, IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE ORDER OF LD. CIT(A). ACCORDINGLY, WE UPHOLD THE SAME. 6. IN ALL THESE PRECEDENTS A CONSTANT VIEW HAS BEEN TAKEN THAT IF A COOPERATIVE SOCIETY IS ENGAGED IN PROVIDING CREDIT F ACILITY TO ITS MEMBERS MAY NOT BE TREATED AS A COOPERATIVE BANK. SINCE THE FACTS OF THIS CASE ARE IDENTICAL ON THIS ISSUE, 7 ITA NOS. 224, 225 & 226/NAG/2013 HENCE F OLLOWING THE ABOVE DECISIONS THE GROUND OF THE REVENUE IS HEREBY DISMISSED. 7. IN THE RESULT, THE APPEAL S FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF JUNE, 2015. SD/ - SD/ - ( SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER. NAGPUR, DATED: 26 TH JUNE, 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE