ITO 21(3)(2), MUMBAI V. SANJAY CO OP CREDIT SOCIETY LTD, MUMBAI

ITA 2294/MUM/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6278 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2013-2014
• Appeal Filed On: 12-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH
• Section: 80P; 201; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHR I N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO . 2294 / MUM . /2018 ( ASSESSMENT YEAR : 201 3 14 ) INCOME TAX OFFICER WARD 21(3)(2), MUMBAI . APPELLANT V/S SANJAY CO OPERATIVE SOCIETY LTD. 3/13, UPENDRA NAGAR SENAPATI BAPAT MARG DADAR (W), MUMBAI 400 028 PAN AABAS6287R . RESPONDENT REVENUE BY : SHRI CHAUDHARY ARUNKUMAR SINGH ASSESSEE BY : NONE DATE OF HEARING 31 .07.2019 DATE OF ORDER 11.10.2019 O R D E R PER SAKTIJIT DEY, J.M. AFORESAID APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 3 RD JANUARY 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 33, MUMBAI, FOR THE ASSESSMENT YEAR 2013 14. 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE DECISION OF LEARNED COMMISSIONER (APPEALS) IN ALLOWING ASSESSEES CLAIM OF 2 SANJAY CO OPERATIVE SOCIETY LTD. DEDUCTION UNDER SECTION 80P(2) OF THE INCOME - TAX ACT, 1961 (FOR SHORT 'THE ACT' ). 3 . BRIEF FACTS ARE, AS STATED BY THE ASSESSING OFFICER, THE ASSESSEE IS A CREDIT CO OPERATIVE SOCIETY. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 28 TH SEPTEMBER 2013, DECLARING NIL INCOME AFTER CLAIMING DEDUCTION OF ` 78,39,987, UNDER SECTION 80P OF THE ACT. DURIN G THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT IN THE COURSE OF ITS ACTIVITY, THE ASSESSEE HAD RECEIVED DEPOSITS FROM MEMBERS AMOUNTING TO ` 15,39,15,660, AS ON 31 ST MARCH 2013. WHEREAS, IT HAS GIVEN LOANS AND ADVANCES TO THE MEMBERS AMOU NTING TO ` 13,26,74,642, AND RECEIVED INTEREST THEREON AMOUNTING TO ` 1,53,32,915. ON GOING THROUGH THE COMPUTATION OF INCOME, HE FOUND THAT THE ASSESSEE THOUGH HAS OFFERED GROSS TOTAL INCOME OF ` 78,39,987, UNDER THE HEAD INCOME FROM BUSINESS OR PROFESSIO N, HOWEVER, IT HAS CLAIMED DEDUCTION OF THE VERY SAME AMOUNT UNDER SECTION 80P OF THE ACT. REFERRING TO THE PROVISIONS CONTAINED UNDER SECTION 80P OF THE ACT, THE ASSESSING OFFICER OBSERVED THAT THE ALLOWABILITY OF DEDUCTION UNDER THE SAID PROVISION IS SUBJECT TO THE CONDITION IMPOSED UNDER SUB SECTION (4) THEREIN . HE OBSERVED , AS PER THE SAID PROVISION , THE DEDUCTION IS NOT ALLOWABLE TO A CO OPERATIVE BANK. ACCORDINGLY, HE CALLED UPON THE ASSESSEE TO JUSTIFY ITS CLAIM OF DEDUCTION UNDER SECTION 80P OF THE ACT. IN RESPONSE, IT WAS SUBMITTED 3 SANJAY CO OPERATIVE SOCIETY LTD. BY THE ASSESSEE THAT IT IS REGISTERED UNDER T HE MAHARASHTRA STATE CO OPERATIVE SOCIETIES ACT, 1960 , WITH THE OBJECT OF PROVIDING CREDIT FACILITIES TO THE MEMBERS. IT WAS ALSO SUBMITTED THAT THE SOCIETY IS NOT REGIS TERED UNDER THE BANKING REGULATION ACT, 1949 WITH RESERVE BANK OF INDIA. IT WAS SUBMITTED , THE ASSESSEE IS GOVERNED BY T HE MAHARASHTRA STATE CO OPERATIVE SOCIETIES ACT, 1960, AND RULES FRAMED THERE UNDER AS WELL AS BY THE BY LAWS OF THE SOCIETY. THUS, IT W AS SUBMITTED , THE ASSESSEE NOT BEING A CO OPERATIVE BANK , THE RESTRICTION IMPOSED UNDER SUB SECTION (4) OF SECTION 80P OF THE ACT WOULD NOT BE APPLICABLE. THE ASSESSING OFFICER, HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE AND CONCLUDED T HAT THE ASSESSEE IS A CO OPERATIVE BANK, HENCE, IS NOT ELIGIBLE TO AVAIL DEDUCTION UNDER SECTION 80P OF THE ACT. FURTHER, HE HELD THAT THE ASSESSEE FULFILLED THE CONDITIONS OF SECTION 56 (C) (CCV) OF PART (V) OF THE BANKING REGULATION ACT, 1949 , HENCE, FALLS IN THE CATEGORY OF A PRIMARY CO OPERATIVE BANK. ACCORDINGLY, HE DISALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80P(2) OF THE ACT, AMOUNTING TO ` 78,39,987. BEING AGGRIEVED WITH THE AFORESAID DISALLOWANCE, THE ASSESSEE PREFERRED APPEAL BEFORE THE F IRST APPELLATE AUTHORITY. 4 . THE LEARNED COMMISSIONER (APPEALS), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD AND THE CASE LAWS CITED BEFORE HIM, CONCLUDED THAT THE 4 SANJAY CO OPERATIVE SOCIETY LTD. ASSESSEE CANNOT BE TREATED AS CO OPERATIV E BANK SINCE ASSESSEES ACTIVITY IS RESTRICTED TO ACCEPTANCE AND LENDING OF MONEY ONLY FROM MEMBERS AND NOT FROM GENERAL PUBLIC. FURTHER, HE OBSERVED , SINCE THE ASSESSEE IS NOT RECOGNIZED AS A CO OPERATIVE BANK BY THE RESERVE BANK OF INDIA UNDER BANKING RE GULATION ACT, 1949, IT CANNOT BE TREATED AS CO OPERATIVE BANK. THUS, HE HELD THAT ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT AMOUNTING TO ` 13,31,460, IS ALLOWABLE. 5 . AS REGARDS DEDUCTION CLAIMED UNDER SECTION 80P(2)(D) OF THE ACT, LEARNED COMMISSIONER (APPEALS) NOTED THAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010 11, THE TRIBUNAL IN ITA NO.7052/MUM./2013, DATED 11 TH JANUARY 2017, HAS ALLOWED SUCH DEDUCTION. ACCORDINGLY, FOLLOWING THE DECISION OF THE TRIBUNAL, HE ALLOWED AS SESSEES CLAIM OF DEDUCTION UNDER SECTION 80P(2)(D) OF THE ACT. 6 . WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE TO REPRESENT THE CASE . ACCORDINGLY, WE PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 5 SANJAY CO OPERATIVE SOCIETY LTD. 7 . W E HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, THE ASSESSING OFFICER HAS DISALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT PRIMARILY ON THE REASONING THAT THE ASSESSEE BEING A CO OPERATIVE BANK FALLS WITHIN THE RESTRICTION IMPOSED UNDER SUB SECTION (4) OF SECTION 80P OF THE ACT. HOWEVER, AS RIGHTLY OBSERVED BY THE LEARNE D COMMISSIONER (APPEALS) AND THE FACTUAL MATRIX OF THE CASE ALSO REVEALS THAT THE ASSESSEE IS A CREDIT CO OPERATIVE SOCIETY REGISTERED UNDER THE MAHARASHTRA CO OPERATIVE SOCIETIES ACT, 1960, AND HAS NOT BEEN RECOGNIZED AS A BANK BY THE RESERVE BANK OF INDI A UNDER THE BANKING REGULATION ACT, 1949. FURTHER, THE ASSESSEE IS GOVERNED UNDER THE PROVISION S OF THE MAHARASHTRA STATE CO OPERATIVE SOCIETY ACT, 1960 AND RULES MADE THERE UNDER AS WELL AS THE BYLAWS OF THE SOCIETY. THUS, FROM THE AFORESAID FACT S , IT IS VERY MUCH CLEAR THAT THE ASSESSEE CANNOT BE TREATED AS A CO OPERATIVE BANK. THAT BEING THE CASE, LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN ALLOWING ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. AS REGARDS ASSESSEES CLAIM OF DE DUCTION UNDER SECTION 80P(2)(D) OF THE ACT, IT IS EVIDENT , THE LEARNED COMMISSIONER (APPEALS) HAS ALLOWED ASSESSEES CLAIM FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE ASSESSMENT YEAR 2010 11. THEREFORE, NO FAULT CAN BE FOUND WITH T HE DECISION OF THE LEARNED COMMISSIONER (APPEALS). IN VIEW OF THE AFORESAID, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE 6 SANJAY CO OPERATIVE SOCIETY LTD. DECISION OF LEARNED COMMISSIONER (APPEALS) ON THE ISSUE. GROUNDS RAISED ARE DISMISSED. 8 . BEFORE PARTING, WE MUST OBSERVE , THE TAX EF FECT ON THE AMOUNT DISPUTED BY THE REVENUE IN THE PRESENT APPEAL IS BELOW THE MONETARY LIMIT OF ` 50 LAKH. THAT BEING THE CASE, THE PRESENT APPEAL BY THE REVENUE IS ALSO NOT OTHERWISE MAINTAINABLE KEEPING IN VIEW THE CIRCULAR NO.17/2019, DATED 8 TH AUGUST 2019, R/W CIRCULAR NO.3/2018, DATED 11 TH JULY 2018, ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES. 9 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 11.10.2019 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 11.10.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI