The ACIT,Mehsana Circle, Mehsana V. Mehsana Taluqa Prathmic Shishak Nana Dhirnar Sahkari Mandli Ltd., Mehsana

ITA 2336/AHD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80307 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 18-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N DIVATIA
• Assessee Lawyers: B KULSHRASTHASR
• Keywords: Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO S . 1771 / AHD/ 20 1 1 (A SSESSMENT YEAR S : 2008 - 09 ) MEHSANA TALUKA PRIMARY NANA DHIRNAR SAHAKARI MANDALI LTD. JAIL ROAD, MEHSANA V/S THE D.C.I.T., MEHSANA CIRCLE, MEHSANA. (APPELLA NT) (RESPONDENT) ITA NO. 2336/AHD/2012 (ASSESSMENT YEAR: 2009 - 10) THE A.C.I.T., MEHSANA CIRCLE, MEHSANA , DHIRNAR . V/S MEHSANA TALUKA PRATHMIC SHIKSHAK NANA DHIRNAR SAHAKARI MANDALI LTD. , SHIKSHAK BHAVAN, JAIL ROAD, MEHSANA (APPELLANT) (RESPONDENT) ITA NO. 2820/AHD/2013 (ASSESSMENT YEAR: 2010 - 11) THE A.C.I.T., CIRCLE - 1(2) , AHMEDABAD . V/S MEHSANA TALUKA PRIMARY TEA CHERS NANA DHIRNAR SAHAKARI MANDALI LTD. , JAIL ROAD, MEHSANA 384002 (APPELLANT) (RESPONDENT) PAN: AAGFM 2412F APPELLANT BY : SHRI S.N. DIVATIA, A.R. RESPONDENT BY : SHRI B. KULSHRASTHA,SR. D.R. ( )/ ORDER DA TE OF HEARING : 25 - 08 - 2014 DATE OF PRONOUNCEMENT : 05 - 09 - 2014 ITA NOS. 1771/AHD/2011, 2336/AHD/12 & 2820/AHD/2013 . A.YS. 2008 - 09 TO 2010 - 11 2 PER SHRI ANIL CHATURVEDI,A.M. 1. THESE THREE APPEALS FILED BY THE ASSESSEE AND REVENUE ARE AGAINST THE ORDER OF CIT(A), GANDHINAGAR, AHMEDABAD DATED 26.04.2011 , 16.07.2012 & 27.09.2013 FOR A.YS. 2008 - 09, 2009 - 10 & 2010 - 2011 RESPECTIVELY . 2. BEFORE US , AT THE OUTSET THE LD. A.R. SUBMITTED THAT THOUGH THE APPEALS ARE FOR 3 ASSESSMENT YEARS AND ARE OF THREE DIFFERENT ASSESSEES , BUT THE FACTS AND CIRCUMSTANCES OF ALL THE APPEALS ARE IDENTICAL EXCEPT FOR THE AMOUNTS AND THEREFORE THE ARGUMENTS MADE BY THEM IN CASE OF ONE A PPEAL WOULD BE APPLICABLE TO THE OTHER S AND THEREFORE ALL THE APPEALS CAN BE HEARD TOGETHER . WE THEREFORE , FOR THE SAKE OF CONVENIENCE PROCEED TO DIS POSE OF ALL THE APPEALS BY WAY OF A CONSOLIDATED ORDER . WE THUS PROCEED WITH THE FACTS IN ITA NO. 1771/AHD/2011 IN THE CASE OF MEHSANA TALUKA PRIMARY NANA DHIRNAR SAHAKARI MANDALI LTD. 3. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 4. AS SESSEE IS A CO - OPERATIVE SOCIETY STATED TO BE PROVIDING CREDIT FACILITY TO THE MEMBERS OF THE SOCIETY. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 08 - 09 ON 09.09.2007 SHOWING GROSS TOTAL INCOME OF RS. 26,42,098/ - AND THE SAME WAS CLAI MED AS DEDUCTION UNDE R CHAPTER VI A AND THUS THE TOTAL INCOME WAS DECLARED AT RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED U/S. 143(3) VIDE ORDER DATED 07.12.2010 AND THE TOTAL INCOME WAS ASSESSED AT RS. 25,76,310/ - . AGGRIEVED BY THE ORDE R OF A.O, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) VIDE ORDER DATED 26.04.2011 DISMISS ED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND H AS RAISED THE FOLLOWING GROUNDS: - 1.1 THE O RDER, PASSED U/S.250 ON 26/4/2011 FOR A.Y. 2008 - 09 BY CIT(A), GNR, ABAD, UPHOLDING THE DISALLOWANCE OF DEDUCTION U/S. 80 P (2) MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE EXPLANATIONS FURNISHED AND THE EVIDENCE PRODUCED BY THE APPELLANT ITA NOS. 1771/AHD/2011, 2336/AHD/12 & 2820/AHD/2013 . A.YS. 2008 - 09 TO 2010 - 11 3 2.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UPHOLDING THAT THE APPELLANT SOCIETY WAS A CO OP. BANK AND AS SUCH DEDUCTION U/S.80(2)(I) WAS NOT ADMISSIBLE. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE ID. CIT(A) HAS GRIEVOUSLY ERRED IN UPHOLDING THAT THE DEDUCTION U/S.80P(2)(A)(I) WAS NOT ADMISSIBLE TO THE APPELLANT SOCIETY BEING CO - OP. BANK. 3.1 THE ID. CIT(A) OUGHT TO HAVE APPRECIATED THAT THE APPELLANT WAS A CO OP. CREDIT SOCIETY AND NOT A CO - OP BANK . 5. BEFORE US AT THE OUTSET, THE LD. A.R. SUBMITTED THAT THOUGH ASSESSEE HAS RAISED VARIOUS GROUNDS , BUT THE ONLY EFFECTIVE GROUND IS WITH RESPECT TO DENIAL OF DEDUCTIO N UNDER SECTION 80P OF THE ACT. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NOTICED THAT ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80P. A.O WAS OF THE VIEW THAT ASSESSEE IS NOT E LIG IBLE FOR DEDUCTION UNDER 80P I N VIEW OF THE FACT THAT WITH THE INSERTION OF SUB - SECTION (4) TO SECTION 80P INSERTED BY FINANCE ACT, 2006 FROM ASSESSMENT YEAR 2007 - 08 , DEDUCTION UNDER SECTION 80P WILL NOT BE AVAILABLE TO ANY CO - OPERATIVE BANK BUT WOULD ONLY BE AVAILABLE TO PRIMARY AGRIC ULTURAL CREDIT SOCIETY OR PRIMARY AGRICULTURAL AND RURAL DEVELOPMENT BANK WITH PRINCIPAL OBJECT OF PROVIDING LONG TERM FOR AGRICULTURE AND RURAL DEVELOPMENT ACTIVITIES. HE WAS THEREFORE OF THE VIEW THAT SINCE THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PRO VIDING CREDIT FACILITY TO THE MEMBERS AND BEING IN BANKING BUSINESS IT WAS NOT ELIGIBLE FOR DEDUCTION AND HE ACCORDINGLY DENIED THE CLAIM OF DEDUCTION. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). LD. CIT(A) UPHELD THE ORDE R OF A.O AND DISMISS ED THE APPEAL OF ASSESSEE BY HOLDING AS UNDER: - 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS. THE ASSESSEE S CONTENTIONS ARE HELD NOT ACCEPTABLE IN VIEW OF THE FOLLOWING POSITION OF LAW, FACTS AND CIRCUMSTANCES: - 1) TH E RELEVANT PROVISIONS OF SUB SECTION (4) OF SECTION 80P IS REPRODUCED IS AS UNDER: '[4] THE PROVISIONS OF THE SECTION SHALL NOT APPLY IN RELATION TO ANY CO OPERATIVE BANK (A)* OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY (B)* OR A PRIMARY CO - OPERATIVE AGRICULTURAL(C)* AND RURAL DEVELOPMENT BANK (D)*.' *INSERTED TO HELP DISCUSS THE PROVISION. NOW THE LANGUAGE IS (A) OTHER THAN (B) OR (C). IT CLEARLY MEANS THAT (B) AND (C) ARE INCLUDED IN (A). IF IT WAS NOT THE CASE THEY WERE NOT REQUIRED TO BE SPECIFICAL LY EXCLUDED AS HAS BEEN DONE BY THE LEGISLATURE. (B) ,(C) AND (D) ARE THE ONLY TYPE OF CREDIT SOCIETIES / BANK EXCLUDED FROM THE DIFFERENT TYPE OF CREDIT SOCIETIES / BANKS COVERED UNDER CO - OPERATIVE BA NK AND ALLOWED DEDUCTION U/S. 80 P. ONLY ONE TYPE OF CRE DIT SOCIETY I.E. PRIMARY AGRICULTURAL CREDIT SOCIETY IS SPECIFICALLY NOT EXCLUDED THROUGH 80P(4). THE ASSESSEE CLEARLY IS NOT A PRIMARY AGRICULTURAL CREDIT SOCIETY AND ITA NOS. 1771/AHD/2011, 2336/AHD/12 & 2820/AHD/2013 . A.YS. 2008 - 09 TO 2010 - 11 4 THEREFORE, FALLS UNDER THE DEFINITION OF CO - OPERATIVE BANK; AND IS EXCLUDED FROM BEING E LIGIBLE THROUGH THE PROVISIONS OF SECTION 80P(4). 2) IT IS NOTEWORTHY THAT THE DEFINITION OF INCOME U/S. 2(24) HAS BEEN SIMULTANEOUSLY CHANGED BY WAY OF AMENDMENT WHEREIN SUB - SECTION (VIIA) HAS BEEN INTRODUCED WITH EFFECT FROM 1 - 4 - 2007 WHICH READS AS UNDER : - '2(24) INCOME INCLUDES [(VIIA) THE PROFITS AND GAINS OF ANY BUSINESS OF BANKING (INCLUDING PROVIDING CREDIT FACILITIES) CARRIED ON BY A CO - OPERATIVE SOCIETY WITH ITS MEMBERS;]' NOW, IF THE PROFITS OF BANKING WITH MEMBERS BY EVERY TY PE CO OPERATIVE SOCI ETY WAS INTENDED TO BE EXCLUDED/ DEDUCTED AS CONTENDED BY ASSESSEE WHAT WAS THE NEED TO INCLUDE IT IN THE DEFINITION OF INCOME FROM THE SAME DATE. THIS LENDS SUPPORT TO THE OPINION OF THE A.O. IN THIS RESPECT. 3) THE ASSESSEE'S RELIANCE ON THE DECISION OF HON'BLE SUPREME COURT IN CIVIL APPEAL NO. 1622 OF 2010 IN THE CASE OF TOTGARS CO - OP. SALE SOCIETY LTD. V/S. ITO KARNATAKA (2010) 188 TAXMAN 0282 (SC) IS MISPLACED BECAUSE IT WAS GIVEN FOR A CASE BEFORE THE ABOVE TWO AMENDMENTS I.E. TO SECTION 80P(4) AND 2( 24)(VIIA) AS DISCUSSED ABOVE. NOW, CLEARLY EVEN THE INTEREST INCOME FROM MEMBERS IS A TAXABLE INCOME .AND THE ASSESSEE DOING BUSINESS OF BANKING IS A CO - OPERATIVE BANK AND IS DEFINITELY NOT A PRIMARY AGRICULTURE CREDIT SOCIETY. THE ISSUE DISCUSSED AT ( 3) ABOVE HAS BEEN STATED TO BE SECOND GROUND OF APPEAL IN ITS WRITTEN SUBMISSION ALTHOUGH ORIGINALLY ONLY ONE GROUND WAS TAKEN. THE ISSUE IS COVERED IN THE ORIGINAL GROUND ITSELF AND IS DISMISSED IN VIEW OF DISCUSSION AT (3) ABOVE. ASSESSEE'S INCOME IS NOT ELIGIBLE FOR BENEFITS U/S. 80P AS IT FALLS UNDER 80P(4). THEREFORE, THE A.O. IS JUSTIFIED IN DISALLOWING THE CLAIM UNDER DIFFERENT SUB - SECTIONS OF SECTION 8OP. THE GROUND OF APPEAL OF ASSESSEE IS THEREFORE DISMISSED. 7. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 8. BEFORE US, AT THE OUTSET, THE LD. A.R. SUBMITTED THAT THE ISSUE IN THE PRESENT APPEAL IS COVERED IN ASSESSEE S FAVOUR BY THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. JAFARI MOMIN VIKAS CO - OP CRED IT SOCIETY LTD. (TAX APPEAL NO. 442/A/2003 AND OTHERS ORDER DATED 15.01.2014). HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISION. HE THEREFORE SUBMITTED THAT IN VIEW OF TH DECISION OF HON BLE H.C. THE APPEAL OF ASSESSEE NEEDS TO BE ALLOWED. THE LD. D.R. ON THE OTHER HAND RELIED ON THE ORDER OF A.O AND LD. CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT ASSESSEE IS A CREDIT SOCIETY AND PROVIDING CREDIT FACILITY TO ITS MEMBERS AND THE CLAIM OF DEDUCTION U/S. 80P WAS DENIED TO THE ASSESSEE ON THE GROUND THAT ASSESSEE IS A CO - OPERATIVE BANK AND THEREFORE NOT ELIGIBLE FOR DEDUCTION U/S. 80P . WE FIND THAT IN THE CASE OF CIT VS. JAFARI MOMIN (SUPRA), THE ISSUE BEFORE THE HON BLE GUJARAT HIGH COURT WAS AS UNDER: - ITA NOS. 1771/AHD/2011, 2336/AHD/12 & 2820/AHD/2013 . A.YS. 2008 - 09 TO 2010 - 11 5 WHETHER THE HON BLE TRIBUNAL IS CORRECT IN ALLOWING DEDUCTION UNDER SECTIO N 80 P (2)(A)(I ) TO ASSESSEE S SOCIETY EVEN THOUGH SAME IS COVERED UNDER SECTION 80P(4) R.W.S. 2(24) (VIIA) BEING INCOME FROM PROVIDING CREDIT FACILITIES CARR IED ON BY A CO - OPERATIVE SOCIETY WITH ITS MEMBER? 10. HON BLE GUJARAT HIGH COURT AFTER CONSIDERING THE AMENDMENT TO THE ACT AND THE CBDT CIRCULAR NO. 133/A/2007 DATED 09.05.2007 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER: - 7. FROM THE ABO VE CLARIFICATION, IT CAN BE GATHERED T HAT SUB - SECTION (4) OF SECTION 8 0 P WILL NOT APPLY TO AN ASSESSEE WHICH IS .NOT A CO - OPERATIVE BANK. IN THE CASE CLARIFIED BY CBDT, DELHI COOP URBAN THRIFT & CREDIT SOCIETY LTD. WAS UNDER CONSIDERATION. CIRCULAR CLARIFI ED THAT THE SAID ENTITY NOT BEIN G A CO - OPERATIVE BANK; SECTION 8 0 P (4) OF THE ACT WOULD NOT APPLY TO IT. IN VIEW O F SUCH CLARIFICATION, WE CANNOT ENTERTAIN THE REVENUE'S CONTENTION THAT SECTION 8 0 P (4) WOULD EXCLUDE NOT ONLY THE CO - OPERATIVE BANKS OTHER TH AN THOSE FULFILLING THE DESCRIPTION CONTAINED THEREIN BUT ALSO CREDIT, SOCIETIES, WHICH ARE NOT CO - OPERATIVE BANKS. IN THE PRESENT CASE, RESPONDENT ASSESSES IS ADMITTEDLY NOT A CREDIT CO - OPERATIVE BANK BUT A CREDIT CO - OPERATIVE SOCIETY. EXCLUSION CLAUS E OF SUB - SECTION(4) OF SECTION 8 OP, THEREFORE, WOULD NOT APPLY. IN THE RESULT, TAX APPEALS ARE DISMISSED. 11. BEFORE US NO MATERIAL HAS BEEN BROUGHT O N RECORD BY THE REVENUE TO DEMONSTRATE THAT ASSESSEE IS NOT A CREDIT CO - OPERATIVE SOCIETY BUT IS A CREDIT CO - OP ERATIVE BANK. FURTHER , REVENUE HAS ALSO NOT BROUGHT ON RECORD ANY CONTRARY BINDING DECISION IN ITS SUPPORT. WE THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. JAFARI MOMIN (SUPRA) HOLD THAT SINCE THE ASSES SEE BEING A CREDIT CO - OPERATIVE SOCIETY , IT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80P. WE DIRECT ACCORDINGLY. THUS THIS GROUND OF ASSESSEE IS ALLOWED. 12. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ITA NO. 2336/AHD/2012 & 2820/AHD/2013 13. AS A DMITTED BY BOTH THE PARTIES THAT S INCE THE FACTS OF THE ABOVE 2 CASE S ARE IDENTICAL TO THAT OF ITA 1771/AHD/2011, WE THEREFORE FOR THE REASONS GIVEN WHILE DISPOSING OF THE APPEAL IN ITA NO. 1771/AHD/2011 HEREINABOVE AND FOR ITA NOS. 1771/AHD/2011, 2336/AHD/12 & 2820/AHD/2013 . A.YS. 2008 - 09 TO 2010 - 11 6 SIMILAR REASONS ALSO DISMISS THE GROUND S OF REVENUE IN THE PRESENT APPEALS AND THEREFORE THESE APPEAL S OF REVENUE ARE DISMISSED . THUS THE APPEALS OF REVENUE ARE DISMISSED. 14. IN THE RESULT, THE APPEAL OF ASSESSEE ARE ALLOWED AND THE APPEAL OF REVENUE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 05 - 0 9 - 201 4 . SD/ - SD/ - (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD