ITO, Coimbatore V. M/s. Veerakeralam Primary Agricultural Co-op. Society, Coimbatore

ITA 2287/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73790 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 19-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 30-12-2013
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Assessee Lawyers: S RAMACHANDRAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNALC BENCH, CHEN NAI . , , ! ' BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 2287/MDS/2013 / ASSESSMENT YEAR : 2008-09 INCOME TAX OFFICER, WARD-II(3), COIMBATORE ( # /APPELLANT) VS M/S. VEERAKERALAM PRIMARY AGRICULTURAL CO-OPERATIVE SOCIETY, VEERAKERALAM, COIMBATORE-641 007 [PAN: AAAAV 3131 G] ( $% # /RESPONDENT) / APPELLANT BY : SHRI T.N.BETGERI, JCIT / RESPONDENT BY : SHRI S.RAMACHANDRAN, CA., / DATE OF HEARING : 19-03-2014 ! / DATE OF PRONOUNCEMENT : 21-03-2014 & / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, COIMB ATORE DATED 30-10-2013 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 8-09. I.T.A. NO. 2287/MDS/2013 2 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY. IN THE RETURN OF INCOME FILED FOR THE AY.2008-09, THE ASSESSEE HAD C LAIMED THE BENEFIT OF DEDUCTION U/S.80P(2) OF THE INCOME TAX A CT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). IN THE AY .2009-10, THE ASSESSING OFFICER TREATED THE ASSESSEE AS CO-OPERAT IVE BANK AND DEDUCTION CLAIMED BY THE ASSESSEE U/S.80P(2) WAS DI S-ALLOWED. ON THE BASIS OF FINDINGS OF THE ASSESSING OFFICER I N AY.2009-10, NOTICE U/S.148 WAS ISSUED TO THE ASSESSEE FOR THE A Y.2008-09. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 0 6-03-2013 PASSED U/S.143(3) R.W.S.147 HELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80P AND ASSESSED THE INCOME OF TH E ASSESSEE AS ` 2,51,74,970/-. AGAINST THE ASSESSMENT ORDER, THE ASSESSEE PREFERR ED AN APPEAL BEFORE THE CIT(APPEALS). THE CIT(APPEALS) H ELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80P(2) AND T HUS ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED AGAINST THE ORDER OF THE CIT(APPEALS), TH E REVENUE HAS COME IN SECOND APPEAL BEFORE THE TRIBUN AL. 3. SHRI S.RAMACHANDRAN, APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED AT THE OUTSET THAT IN THE APPEAL OF THE R EVENUE FOR THE AY.2009-10, THE CO-ORDINATE BENCH OF THE TRIBUNAL I N ITA I.T.A. NO. 2287/MDS/2013 3 NO.197/MDS/2013 DECIDED ON 11-02-2014 HAS HELD THE ISSUE IN FAVOUR OF THE ASSESSEE AND DISMISSED THE APPEAL OF REVENUE. THE LD.AR PLACED ON RECORD A COPY OF THE ORDER OF T HE TRIBUNAL IN ITA NO.197/MDS/2013 (SUPRA). 4. ON THE OTHER HAND, SHRI T.N.BETGERI, APPEARING O N BEHALF OF THE REVENUE FAIRLY CONCEDED THAT THE ISSUE IN PRESE NT APPEAL IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE RELEVANT TO THE AY. 2009-10. 5. BOTH SIDES HEARD. THE LD.AR OF THE ASSESSEE HAS PLACED ON RECORD THE COPY OF THE ORDER OF THE TRIBUNAL IN ITA NO. 197/MDS/2013 RELEVANT TO THE AY.2009-10, WHEREIN IT HAS BEEN HELD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTI ON U/S.80P. A PERUSAL OF THE ASSESSMENT ORDER PASSED U/S.143(3) R .W.S.147 SHOWS THAT RE-ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE ON THE BASIS OF SCRUTINY ASSESSMENT IN THE AY.2009-10, WHEREIN THE ASSESSEE WAS TREATED AS CO-OPERATIVE B ANK AND THE DEDUCTION CLAIMED BY THE ASSESSEE U/S.80P(2) WAS DI S-ALLOWED. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE APPEAL OF THE REVENUE FOR THE AY.2009-10 HAS HELD THE ISSUE IN FA VOUR OF THE I.T.A. NO. 2287/MDS/2013 4 ASSESSEE. THE RELEVANT EXTRACT OF THE ORDER OF THE TRIBUNAL IS RE-PRODUCED HEREIN BELOW: 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRE SENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE DECISIONS ON WHICH THE LD.AR H AS PLACED RELIANCE. THE ASSESSEE IS AN AGRICULTURAL CO-OPERATIVE CREDIT SOCIETY REGISTERED UNDER THE TAMIL NADU CO-OPERATIVE SOCIETIES ACT, 19 61. THE ASSESSEE- SOCIETY WAS ESTABLISHED IN THE YEAR 1968 AND THE ME MBERS OF THE SOCIETY ARE AGRICULTURISTS. THE PRIMARY ACTIVITY O F THE SOCIETY IS ACCEPTING DEPOSITS FROM ITS MEMBERS AND ADVANCING LOANS TO IT S MEMBERS. THE ASSESSEE HAS BEEN ENJOYING THE BENEFIT OF DEDUCTION U/S.80P TILL THE AMENDMENT WAS BROUGHT IN BY THE FINANCE ACT, 2006 V IDE WHICH SUB- CLAUSE 4 WAS INSERTED IN SECTION 80P. AFTER THE AM ENDMENT, THE BENEFIT OF 80P WAS DENIED TO THE CO-OPERATIVE BANKS. THE S UB-SECTION 4 OF SECTION 80P IS RE-PRODUCED HEREIN BELOW: (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULT URAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. EXPLANATION TO SECTION 80P FURTHER DEFINES CO-OPERA TIVE BANK, PRIMARY AGRICULTURAL CREDIT SOCIETY AND PRIMARY CO-OPERATIV E AGRICULTURAL AND RURAL DEVELOPMENT BANK. THE SAME READS AS UNDER: EXPLANATION.FOR THE PURPOSES OF THIS SUB-SECTION, (A) CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL C REDIT SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO TH EM IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1 949); I.T.A. NO. 2287/MDS/2013 5 (B) PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL D EVELOPMENT BANK MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG-TERM CREDIT FOR AGRICULTURAL AND RURAL DEVELOP MENT ACTIVITIES.] FROM THE PROVISIONS OF SUB-SECTION 4 OF SECTION 80P AND THE EXPLANATION TO SECTION 80P, IT IS EVIDENT THAT THE BENEFIT OF S ECTION 80P IS NOT AVAILABLE TO CO-OPERATIVE BANKS WHEREAS THE PRIMARY AGRICULTURAL CREDIT SOCIETIES ARE ENTITLED FOR THE SAME. FOR THE PURPO SE OF SUB-SECTION 4, CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDI T SOCIETY SHALL HAVE THE MEANINGS ASSIGNED TO THEM UNDER THE BANKING REG ULATION ACT, 1949. WE FIND THAT THE ISSUE WHETHER CREDIT CO-OPE RATIVE SOCIETIES ARE SAME AS CO-OPERATIVE BANKS HAS BEEN DEALT IN DETAIL BY THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S. BALGALORE COMMERCIAL TRANSPORT CREDIT CO-OPERATIVE SOCIETY LT D., (SUPRA). AFTER COMPARATIVE ANALYSIS OF THE CO-OPERATIVE BANKS AN D CO-OPERATIVE SOCIETIES ON VARIOUS PARAMETERS, THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ACTIVITIES OF BOTH THE ORGANIZATIONS AND T HE COMPLIANCES TO BE MADE UNDER VARIOUS ACTS FOR BOTH THE ORGANIZATIONS ARE VARIED. THE SUB-SECTION 4 TO SECTION 80P IS APPLICABLE ONLY TO CO-OPERATIVE BANKS AND NOT TO CREDIT CO-OPERATIVE SOCIETIES. THE DECI SION OF THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S.B ALGALORE COMMERCIAL TRANSPORT CREDIT CO-OPERATIVE SOCIETY LT D., (SUPRA) HAS SUBSEQUENTLY BEEN FOLLOWED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASES OF ITO VS.THE KASIPALAYAM PRIMARY AGRICUL TURAL CO-OPERATIVE BANK LTD., (SUPRA) AND ITO VS. M/S. YESWANTHPUR CRE DIT CREDIT CO- OPERATIVE SOCIETY LTD., (SUPRA). THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE RECENT JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. JAFARI MOMIN VIKAS CO-OP. CREDIT SOCIETY LT D.,(SUPRA) WHEREIN THE HONBLE HIGH COURT AFTER TAKING INTO CONSIDERAT ION THE CBDT CIRCULAR NO.133/07 HAS HELD THAT SUB-SECTION 4 SECTION 80P W ILL NOT APPLY TO I.T.A. NO. 2287/MDS/2013 6 ASSESSEE WHICH IS NOT A CO-OPERATIVE BANK. THE REL EVANT EXTRACT OF THE ORDER OF THE HONBLE HIGH COURT IS REPRODUCED HEREI N BELOW: 5. ASSESSING OFFICER HELD THAT BY VIRTUE OF SECTIO N 80P(4), THE RESPONDENT ASSESSEE WOULD NOT BE ENTITLED TO BENEFI TS OF DEDUCTION UNDER SECTION 80P. CIT(APPEALS) AS WELL AS THE TRIBUNAL REVERSED THE DECISION OF THE ASSESSING OFF ICER ON THE PREMISE THAT THE RESPONDENT ASSESSEE NOT BEING A BA NK, EXCLUSION PROVIDED IN SUB-SECTION(4) OF SECTION 80P WOULD NOT APPLY. THIS, IRRESPECTIVE OF THE FACT THAT THE RESP ONDENT WOULD NOT FALL WITHIN THE EXPRESSION PRIMARY AGRICULTURA L CREDIT SOCIETY. 6. HAD THIS BEEN THE PLAIN STATUTORY PROVISIONS UND ER CONSIDERATION IN ISOLATION, IN OUR OPINION, THE QUE STION OF LAW COULD BE STATED TO HAVE ARISEN. WHEN, AS CONTENDED BY THE ASSESSEE, BY VIRTUE OF SUBSECTION(4) ONLY CO-OPERAT IVE BANKS OTHER THAN THOSE MENTIONED THEREIN WERE MEANT TO BE EXCLUDED FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80P, A QUESTION WOULD ARISE WHY THEN LEGISLATURE SPECIFIED PRIMARY AGRICULTURAL CREDIT SOCIETIES ALONG WITH PRIMARY CO OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANKS FOR EXCLUS ION FROM SUCH EXCLUSION AND IN OTHER WORDS, CONTINUED TO HOL D SUCH ENTITY AS ELIGIBLE FOR DEDUCTION. HOWEVER, THE ISSU E HAS BEEN CONSIDERABLY SIMPLIFIED BY VIRTUE OF CBDT CIRCULAR NO.133 OF 2007 DATED 9.5.2007. CIRCULAR PROVIDES AS UNDER:- SUBJECT: CLARIFICATION REGARDING ADMISSIBLY OF DED UCTION UNDER SECTION 80P OF THE INCOME-TAX ACT, 1961. 1. PLEASE REFER TO YOUR LETTER NO. DCUS/30688/2007, DATED 28.03.2007 ADDRESSED TO CHAIRMAN, CENTRAL BOARD OF DIRECT TAXES, ON THE ABOVE GIVEN SUBJECT. I.T.A. NO. 2287/MDS/2013 7 2. IN THIS REGARD, I HAVE BEEN DIRECTED TO STATE TH AT SUB- SECTION(4) OF SECTION 80P PROVIDES THAT DEDUCTION U NDER THE SAID SECTION SHALL NOT BE ALLOWABLE TO ANY CO-OPERA TIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BAN K. FOR THE PURPOSE OF THE SAID SUB-SECTION, CO-OPERATIVE B ANK SHALL HAVE THE MEANING ASSIGNED TO IT IN PART V OF THE BA NKING REGULATION ACT, 1949. 3. IN PART V OF THE BANKING REGULATION ACT, CO-OPE RATIVE BANK MEANS A STATE CO-OPERATIVE BANK, A CENTRAL CO - OPERATIVE BANK AND A PRIMARY CO-OPERATIVE BANK. 4. THUS, IF THE DELHI CO OP URBAN T & C SOCIETY LTD . DOES NOT FALL WITHIN THE MEANING OF CO-OPERATIVE BANK AS DEFINED IN PART V OF THE BANKING REGULATION ACT, 1949, SUBS ECTION(4) OF SECTION 80P WILL NOT APPLY IN THIS CASE. 5. THE ISSUES WITH THE APPROVAL OF CHAIRMAN, CENTRA L BOARD OF DIRECT TAXES. 7. FROM THE ABOVE CLARIFICATION, IT CAN BE GATHERED THAT SUB- SECTION(4) OF SECTION 80P WILL NOT APPLY TO AN ASSE SSEE WHICH IS NOT A CO-OPERATIVE BANK. IN THE CASE CLARIFIED B Y CBDT, DELHI COOP URBAN THRIFT & CREDIT SOCIETY LTD. WAS U NDER CONSIDERATION. CIRCULAR CLARIFIED THAT THE SAID ENT ITY NOT BEING A COOPERATIVE BANK, SECTION 80P(4) OF THE ACT WOULD N OT APPLY TO IT. IN VIEW OF SUCH CLARIFICATION, WE CANNOT ENTERT AIN THE REVENUES CONTENTION THAT SECTION 80P(4) WOULD EXCL UDE NOT ONLY THE CO-OPERATIVE BANKS OTHER THAN THOSE FULFIL LING THE DESCRIPTION CONTAINED THEREIN BUT ALSO CREDIT SOCIE TIES, WHICH ARE NOT COOPERATIVE BANKS . IN THE PRESENT CASE, RESPONDENT ASSESSEE IS ADMITTEDLY NOT A CREDIT CO-OPERATIVE BA NK BUT A CREDIT CO-OPERATIVE SOCIETY. EXCLUSION CLAUSE OF SU B-SECTION(4) I.T.A. NO. 2287/MDS/2013 8 OF SECTION 80P, THEREFORE, WOULD NOT APPLY. IN THE RESULT, TAX APPEALS ARE DISMISSED. THE REVENUE HAS TRIED TO ESTABLISH THAT THE ASSESSE E ALTHOUGH A CREDIT CO-OPERATIVE SOCIETY IS CARRYING BANKING BUSINESS A ND IS THUS NOT ELIGIBLE. IN OUR OPINION, THE ASSESSEE IS NOT A CO -OPERATIVE BANK. THE ACTIVITIES IN THE NATURE OF ACCEPTING DEPOSITS, ADV ANCING LOANS ETC., CARRIED ON BY THE ASSESSEE ARE CONFINED TO ITS MEMB ERS ONLY AND THAT TOO IN A PARTICULAR GEOGRAPHICAL AREA. THE ACTIVIT IES OF THE ASSESSEE ARE NOT REGULATED BY THE RBI OR THE PROVISIONS OF THE BANKING REGULATION ACT. THUS, IN VIEW OF THE ABOVE STATED FACTS AND V ARIOUS DECISIONS CONSIDERED ABOVE, WE DO NOT FIND ANY INFIRMITY IN T HE ORDER OF THE CIT(APPEALS). THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF MERIT. THE ISSUE IN HAND IS IDENTICAL TO THE ONE ALREADY A DJUDICATED BY THE TRIBUNAL IN ASSESSEES OWN CASE. RESPECTFU LLY FOLLOWING THE SAME, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 21 ST MARCH, 2014 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (VIKAS AWASTHY) JUDICIAL MEMBER DATED: 21 ST MARCH, 2014 TNMM COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR