The Coimbatore Co-operative Housing Society Limited, Coimbatore V. DCIT Non Corporate Circle I, Coimbatore

ITA 2495/CHNY/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5173 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 13-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S RAMACHANDRAN
• Section: 45(2); 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , . , BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NOS.1869 & 2495/CHNY/2017 ( / ASSESSMENT YEAR: 2013-14 & 2014-15) THE COIMBATORE CO-OPERATIVE HOUSING SOCIETY LIMITED, C/O., S. RAMACHANDRAN, CHARTERED ACCOUNTANT, SETHURAM, NO.15, SUNDARESA IYER LAYOUT, TRICHY ROAD, COIMBATORE 641 018. VS THE DEPUTY COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE I, COIMBATORE PAN: AABAT0297N ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI S. RAMACHANDRAN, CA / RESPONDENT BY : SHRI AR. V. SREENIVASAN, JCIT /DATE OF HEARING : 10.04.2018 /DATE OF PRONOUNCEMENT : 31.05.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS)-2, COIMBATORE, BOTH PASSED U/S.250(6) R.W.S. 143(3) OF THE ACT DATED 30.05.2017 & 31.07.2017 IN ITA NO.59/16-18 & ITA N O.199/16-17 FOR THE ASSESSMENT YEARS 2013-14 & 2014-15 RESPECTI VELY. 2 ITA NOS.1869 & 2495/CHNY/201 7 2. THE ASSESSEE HAS RAISED SEVERAL IDENTICAL GROUN DS IN BOTH THE APPEALS HOWEVER THE CRUX OF THE ISSUE IS THAT T HE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD.AO WHO HAD D ENIED DEDUCTION U/S.80P(2)(A)(I) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A CO- OPERATIVE HOUSING SOCIETY REGISTERED AS HOUSING SOC IETY UNDER TAMILNADU CO-OPERATIVE SOCIETIES ACT, FILED ITS RET URN OF INCOME FOR THE ASSESSMENT YEARS 2013-14 & 2014-15 ELECTRONICAL LY ON 14.05.2014 & 22.07.2015 RESPECTIVELY DECLARING NIL INCOME FOR BOTH THE ASSESSMENT YEARS. THE RETURNS WERE SELECTE D FOR SCRUTINY UNDER CASS AND NOTICE U/S.143(2) OF THE ACT WAS ISS UED ON 31.08.2015 AND 06.08.2016 FOR THE ASSESSMENT YEARS 2013-14 & 2014-15 RESPECTIVELY. FINALLY ASSESSMENT ORDERS WER E PASSED U/S.143(3) OF THE ACT ON 22.03.2016 AND 30.11.2016, WHEREIN THE LD.AO MADE ADDITION OF RS.1,54,67,507/- & 1,58,78,0 88/- FOR THE ASSESSMENT YEARS 2013-14 & 2014-15 RESPECTIVELY TOW ARDS DISALLOWANCE OF DEDUCTION CLAIMED U/S.80P(2)(A)(I) OF THE ACT. 4. THE MAIN ACTIVITY OF THE ASSESSEE SOCIETY IS PR OVIDING MEANS TO ACQUIRE RESIDENTIAL HOUSE TO ITS MEMBERS A T AN AFFORDABLE COST. IN ORDER TO FULFILL ITS OBJECTIVES, THE SOCI ETY COLLECTS FUNDS FROM 3 ITA NOS.1869 & 2495/CHNY/201 7 ITS MEMBERS, PURCHASES LAND / CONSTRUCTS HOUSES AND ALLOTS THEM TO THE RESPECTIVE MEMBERS AS PER SECTION 45(2) OF THE TAMILNADU COOPERATIVE SOCIETIES ACT. SINCE SECTION 80P(2)(A)( I) OF THE ACT PROVIDES FOR DEDUCTION WITH RESPECT TO THE COOPERAT IVE SOCIETIES CARRYING ON BANKING BUSINESS OR PROVIDING CREDIT FA CILITIES TO ITS MEMBERS WHICH IS NOT THE CASE OF THE ASSESSEE BECAU SE ITS MAIN OBJECT IS TO PROVIDE HOUSING SITES ETC., TO ITS MEM BERS, THE LD.AO OPINED THAT THE ASSESSEE CO-OPERATIVE SOCIETY IS NO T ENTITLED TO CLAIM THE BENEFIT OF DEDUCTION. THE LD.AO FURTHER P LACING RELIANCE IN THE DECISION OF THE HONBLE APEX COURT IN THE CASE MADRAS AUTO RICKSHAW DRIVERS CO-OPERATIVE SOCIETY VS. CIT REPO RTED IN 249 ITR 330, WHEREIN IT WAS HELD THAT THE ACTIVITY OF R ENDERING SERVICE IN THE NATURE OF HIRE PURCHASE CANNOT BE TREATED AS RE NDERING CREDIT FACILITIES TO THE MEMBERS OF THE SOCIETY, DENIED TH E BENEFIT OF DEDUCTION U/S.80P(2)(A)(I) OF THE ACT TO THE ASSESS EE FOR BOTH THE ASSESSMENT YEARS. ON APPEAL, THE LD.CIT(A) CONCURRE D WITH THE VIEW OF LD.AO AND FOLLOWING HIS EARLIER DECISION FO R THE ASSESSMENT YEAR 2012-13 IN THE ASSESSEES OWN CASE ON THE IDEN TICAL ISSUE UPHELD THE ORDER OF THE LD.AO. 5. AT THE OUTSET, THE LD.AR PRODUCED THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA 4 ITA NOS.1869 & 2495/CHNY/201 7 NO.3166/MDS/2016 FOR THE ASSESSMENT YEAR 2012-13 ON THE IDENTICAL ISSUE, WHEREIN VIDE ORDER DATED 23.06.201 7, THE TRIBUNAL HAD HELD THE ISSUE IN FAVOUR OF THE ASSESSEE AND FU RTHER IT REMITTED THE MATTER BACK TO THE FILE OF LD.AO FOR VERIFYING WHETHER THE ASSESSEE HAD ACTUALLY OFFERED CREDIT FACILITY TO IT S MEMBERS FOR THE PURPOSE OF CONSTRUCTION OF HOUSES, ETC., AND RECEIV ED INTEREST THEREON. THE LD.AR FURTHER PRODUCED THE ORDER GIVIN G EFFECT TO THE ORDER OF THE TRIBUNAL DATED 31.01.2018, WHEREIN THE LD.AO AFTER VERIFYING THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARR IVED AT THE CONCLUSION THAT THE SOCIETY PROVIDES LOANS ONLY TO ITS MEMBERS FOR THE PURPOSE OF PURCHASE OF HOUSE, CONSTRUCTION AND FOR CARRYING OUT REPAIRS ON THE HOUSES. WITH THE ABOVE FINDING THE L D.AO HAD GRANTED DEDUCTION U/S.80P(2)(A)(I) OF THE ACT TO TH E ASSESSEE. IT WAS THEREFORE PLEADED THAT SINCE THE ISSUE WAS DECI DED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL AS WELL AS BY THE LD.A O WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL, IN THE ASSESSE ES OWN CASE FOR THE ASSESSMENT YEAR 2012-13, FOR THE RELEVANT ASSES SMENT YEARS ALSO THE SAME DECISION MAY BE FOLLOWED BECAUSE THE FACTS ARE IDENTICAL. THE LD.DR COULD NOT CONTROVERT TO THE SU BMISSION OF THE LD.AR. 5 ITA NOS.1869 & 2495/CHNY/201 7 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS AVAILABLE ON RECORD. ON EXAMINING THE FACTS OF THE CASE, WE FIND MERIT IN THE SUBMISSIONS OF THE LD.AR . AS STATED BY THE LD.AR THE TRIBUNAL HAD HELD THE ISSUE IN FAVOUR OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2012-13 AND REMITTED THE MA TTER BACK TO THE FILE OF LD.AO FOR VERIFYING WHETHER THE ASSESSE E HAD ACTUALLY OFFERED CREDIT FACILITIES TO ITS MEMBERS. THE GIST OF THE RELEVANT DECISION OF THE TRIBUNAL IN ITA NO.3166 DATED 23.06 .2017 FOR THE ASSESSMENT YEAR 2012-13 IS EXTRACTED HEREIN BELOW F OR REFERENCE: 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. A DMITTEDLY, THE ASSESSEE'S SOCIETY IS A COOPERATIVE SOCIETY REGISTERED UNDER T HE TAMILNADU CO- OPERATIVE SOCIETIES ACT AS A HOUSING SOCIETY AND NO T A CREDIT SOCIETY., THEREFORE, THE ASSESSING OFFICER HAS DENIED CLAIMIN G DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. AS PER BYE-LAWS OF THE SOCIETY, THE LD. CIT(A) HAS REPRODUCED THE OBJECTS OF THE SOCIETY IN THE AP PELLATE ORDER, IN WHICH, AS PER CLAUSE (6), ONE OF THE OBJECTS OF THE SOCIETY W AS TO ADVANCE LOANS TO THE MEMBERS FOR CONSTRUCTION OF NEW DWELLING HOUSES OR FOR ADDITIONS ARID REPAIRS, MAINTENANCE TO THEIR EXISTING HOUSES AND D ISCHARGE OF PRIOR DEBTS. IT IS IMMATERIAL TO SEE THAT TITLE OF THE ASSESSEE SOCIETY RATHER THAN THE BUSINESS ACTIVITIES OF THE SOCIETY. IN THE CASE OF CIT V. MADRAS AUTORICKSHAW DRIVERS' CO-OPERATIVE SOCIETY LTD. IN T.C.A. NO. 12 34 & 1246 OF 1977 (MAD), WHICH WAS AFFIRMED BY THE HON'BLE SUPREME CO URT, THERE WAS NO OBJECT OF THE SOCIETY TO OFFER CREDIT FACILITIES AN D THE ONLY OBJECT OF THE SOCIETY WAS 'TO PROMOTE THE ECONOMIC INTERESTS OF T HE MEMBERS OF THE SOCIETY BY PURCHASING AUTORICKSHAW VEHICLES AND SELLING THE M ON HIRE PURCHASE TERMS TO THE MEMBERS AND SIMILARLY, IN THE CASE OF ITO V. MODERN ENGINEERS CONSTRUCTION CO-OP. SOCIETY 16 TAXMANN.COM 158 THE ASSESSEE WAS ONLY A LABOUR CONTRACT SOCIETY, EMPLOYING GRADUATES AND TA KING UP ENGINEERING WORKS FROM THE PWD. THEREFORE, IN BOTH THE CASES, T HE CLAIM OF DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT WAS DENIED. H OWEVER, IN THE PRESENT CASE ONE OF THE MAIN OBJECTS OF THE ASSESSEE, AS PE R CLAUSE (6) OF THE BYE- LAW, WAS OFFERING CREDIT FACILITY FOR CONSTRUCTION OF NEW DWELLING HOUSES AS WELL AS ADDITIONS, REPAIRS AND MAINTENANCE TO THEIR EXISTING HOUSES. THEREFORE, THE ABOVE CASE LAW HAVE NO APPLICATION T O THE FACTS OF THE PRESENT 6 ITA NOS.1869 & 2495/CHNY/201 7 CASE. FURTHER, AS PER THE ABOVE CLAUSE (6) IN THE O BJECTS OF THE SOCIETY AND BY REFERRING TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2012 OF THE SOCIETY, THE LD. COUNSEL FOR THE ASSESSEE HAS S UBMITTED THAT THE SOCIETY IS OFFERING CREDIT FACILITY FOR CONSTRUCTION OF NEW DW ELLING HOUSES AS WELL AS ADDITIONS, REPAIRS AND MAINTENANCE TO THEIR EXISTIN G HOUSES, THEREBY THE SOCIETY EARNS INTEREST INCOME OVER THE CREDITS. WE HAVE ALSO PERUSED THE PROFIT AND LOSS ACCOUNTS STATEMENT. HOWEVER, THE AS SESSEE HAS NOT FILED ANY DETAILED BREAK-UP OF THE INTEREST RECEIPT. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE ACCOUNTS OF THE ASS ESSEE AS TO WHETHER THE ASSESSEE HAS ACTUALLY OFFERED CREDIT FACILITY TO IT S MEMBERS FOR THE PURPOSE OF 'CONSTRUCTION OF HOUSES, ETC. AND RECEIVED INTEREST THEREON AND THEREAFTER, DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW BY G IVING SUFFICIENT. OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE. THE A SSESSEE IS ALSO DIRECTED TO FURNISH COMPLETE DETAILS BEFORE THE ASSESSING OFFIC ER FOR VERIFICATION. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. THE FINDING OF THE LD.AO IN HIS ORDER GIVING EFFECT TO THE ORDER OF THE TRIBUNAL DATED 31.01.2018 IS ALSO EXTRACTED HEREIN BELOW FOR REFERENCE:- 4. ACCORDINGLY, IN RESPONSE TO THE NOTICE ISSUED T O THE ASSESSEE, ITS AUTHORISED REPRESENTATIVE CA.S. RAMACHANDRAN, APPEA RED AND PROVIDED THE DETAILS CALLED FOR, INCLUDING THE BREAK-UP OF I NTEREST RECEIPTS. THE BOOKS OF ACCOUNTS WERE SCRUTINIZED., THE LOAN DOCUMENTS W ERE PERUSED ALONG WITH THE MEMBERSHIP REGISTER AND IT WAS FOUND THAT THE S OCIETY PROVIDES LOANS ONLY TO ITS MEMBERS FOR THE PURPOSE OF PURCHASE OF HOUSE, CONSTRUCTION AND CARRYING OUT REPAIRS ON THE HOUSES. SINCE THE ISSUE IS PUT TO REST BY THE TRIBUNAL IN I TS EARLIER ORDER CITED SUPRA, FOLLOWING THE SAME, WE HEREBY HOLD THA T THE ASSESSEE IS ENTITLED FOR THE BENEFIT OF SECTION 80P(2)(A)(I) OF THE ACT IF IT HAD OFFERED CREDIT FACILITY TO ITS MEMBERS FOR CONSTRUC TION OF NEW DWELLING HOUSES AS WELL AS ADDITIONS, REPAIRS AND M AINTENANCE TO THEIR EXISTING HOUSES FOR BOTH THE RELEVANT ASSESSM ENT YEARS IN 7 ITA NOS.1869 & 2495/CHNY/201 7 APPEAL BEFORE US. BY HOLDING SO, WE HEREBY DIRECT T HE LD.AO TO VERIFY THE ACCOUNTS OF THE ASSESSEE FOR BOTH THE RE LEVANT ASSESSMENT YEARS IN APPEAL BEFORE US, AS TO WHETHER THE ASSESSEE HAS ACTUALLY OFFERED CREDIT FACILITY TO ITS MEMBERS FOR THE PURPOSE OF CONSTRUCTION OF HOUSES ETC., AND RECEIVE INTEREST T HEREON AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WI TH LAW BY GIVING SUFFICIENT OPPORTUNITIES OF BEING HEARD TO THE ASSE SSEE. WE ALSO DIRECT THE ASSESSEE AND ITS COUNSEL TO DULY CO-OPER ATE BEFORE THE LD.AO IN ORDER TO EXPEDITE HIS PROCEEDINGS. 7. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. ORDER PRONOUNCED ON THE 31 ST MAY, 2018 AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER #$ /CHENNAI, %& /DATED 31 ST MAY, 2018 RSR & () *) /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. - ( )/CIT(A) 4. /CIT 5. /DR 6. /GF