The ACIT, 1(1), Bhopal V. M/s M.P.State Co-operative Agriculture & Rural Development Bank Ltd., Bhopal

ITA 254/IND/2011

• Counselvise Citation: 25422714 RSA 2011
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 28-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: ANIL KHAA
• Section: 6; 56

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS.254 AND 255/IND/2011 AYS: 2007-08 AND 2008-09 ASSISTANT COMMISSIONER OF INCOME TAX 1(1), BHOPAL ... ASSESSEE V/S. M/S M.P. STATE CO-OPERATIVE AGRICULTURE & RURAL DEV.BANK LTD. BHOPAL PAN AACCM2222K ... RESPONDENT APPELLANT BY : ARUN DEWAN RESPONDENT BY : SHRI ANIL KHABYA DATE OF HEARING : 25.1.2012 DATE OF PRONOUNCEMENT: : 01.2.2012 O R D E R PER JOGINDER SINGH THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDERS DA TED 8.7.2011 AND 28.7.2011, RESPECTIVELY, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), BHOPAL, WHERE IN THE ADDITION OF RS.53,32,232/- AND RS.27,77,172/-, RESP ECTIVELY, MADE U/S 80P OF THE ACT WAS DELETED. 2 2. DURING HEARING OF THESE APPEALS, THE LEARNED SEN IOR DR, SHRI ARUN DEWAN, ADVANCED HIS ARGUMENTS WHICH IS ID ENTICAL TO THE GROUND RAISED BY INVITING OUR ATTENTION TO PAGE 1, LAST PARA, OF THE ASSESSMENT ORDER BY FURTHER SUBMITTING THAT SUB -SECTION (4) WAS INSERTED BY FINANCE ACT, 2006, WITH EFFECT FROM 1.4.2007 IN SECTION 80P OF THE ACT. ON THE OTHER HAND, THE LE ARNED COUNSEL FOR THE ASSESSEE , SHRI ANIL KHABYA, DEFENDED THE I MPUGNED ORDER BY SUBMITTING THAT THE ASSESSEE IS AN APEX COOPERAT IVE AGRICULTURAL RURAL DEVELOPMENT BANK, THEREFORE, TH E ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS OF THE CAS E ARE THAT THE ASSESSEE IS A COOPERATIVE LAND MORTGAGE BANK ENGAGE D IN THE ACTIVITIES OF AGRICULTURE CREDIT FINANCING THROUGH VARIOUS DISTRICT LAND MORTGAGE BANKS. THE MAIN SOURCE OF INCOME OF THE BANK IS INTEREST RECEIVED FROM DISTRICT LAND MORTGAGE BANK AND INTEREST INCOME FROM VARIOUS SECURITIES AND INVESTMENTS. AS SUCH, THE BANK IS CARRYING ON BANKING ACTIVITIES BY PROVIDING FACILITIES TO ITS MEMBERS WHO ARE MAINLY AGRICULTURISTS. THE ASSESSEE FILED ITS RETURN OF INCOME SHOWING NIL INCOME AFTER CLAIMING DEDUCTION OF RS. 53,32,232/- U/S 80P OF THE ACT. THE CASE WAS SE LECTED FOR 3 SCRUTINY AND NOTICE U/S 143(2) OF THE ACT WAS ISSUE D, IN RESPONSE TO WHICH THE ASSESSEE SUBMITTED WRITTEN REPLY AND B OOKS OF ACCOUNT WERE PRODUCED WHICH WERE EXAMINED BY THE AS SESSING OFFICER ON TEST CHECK BASIS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND IN THE LIGHT OF PROVISIONS OF SECT ION 80P OF THE ACT, THE ASSESSING OFFICER OBSERVED THAT SUB-SECTIO N (4) OF SECTION 80P OF THE ACT WHICH WAS INSERTED WITH EFFECT FROM 1.4.2007 PROVIDING THAT PROVISIONS OF SECTION 80P OF THE ACT SHALL NOT APPLY IN RELATION TO ANY COOPERATIVE BANK OTHER THAN A PR IMARY AGRICULTURE CREDIT SOCIETY OR A PRIMARY COOPERATIVE AGRICULTURE AND RURAL DEVELOPMENT BANK, BENEFIT OF SECTION 80P SHALL NOT BE APPLICABLE TO THE ASSESSEE. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION BY HOL DING THAT THE ASSESSEE IS ELIGIBLE FOR CLAIMED DEDUCTION U/S 80P OF THE ACT. AGAINST THIS FINDING OF LEARNED COMMISSIONER OF INC OME TAX (APPEALS), THE REVENUE IS IN APPEAL BEFORE THE TRIB UNAL. ADMITTEDLY, THE ASSESSEE IS AN AGRICULTURAL AND RUR AL DEVELOPMENT BANK. 4. AS PER AMENDMENT MADE BY THE FINANCE ACT, 2006, SUB- SECTION (4) WAS INSERTED IN SECTION 80P BY PROVIDIN G THAT ANY COOPERATIVE BANK WHICH IS DEFINED AS PER PART-V OF THE BANKING 4 REGULATION ACT, 1949 WILL NOT BE ELIGIBLE FOR DEDUC TION UNDER SECTION 80P OF THE ACT. HOWEVER, SUB-SECTION (4) PROVIDES THAT SUB-SECTION (4) WILL NOT APPLICABLE IN CASE OF FOLL OWING CATEGORIES OF COOPERATIVE BANKS :- 1. ANY COOPERATIVE BANK (OTHER THAN); (A) PRIMARY AGRICULTURAL CREDIT SOCIETY (B) PRIMARY AGRICULTURAL COOPERATIVE AND RURAL DEVELOPMENT SOCIETY THE AMENDED PROVISION ALSO PROVIDED EXPLANATION AS TO WHAT WILL CONSTITUTE AND INCLUDE IN THE DEFINITION OF COOPERA TIVE BANK, PRIMARY AGRICULTURAL SOCIETY AND PRIMARY COOPERATIV E AND AGRICULTURAL RURAL DEVELOPMENT BANK. THE COOPERATI VE BANK WAS DEFINED BY PART-V OF THE BANKING REGULATION ACT, 19 49. AS PER CLAUSE (CCI) OF THE BANKING REGULATION ACT, THE COO PERATIVE BANK MEANS (A) STATE COOPERATIVE BANK (B) CENTRAL COOPERATIVE BANK (C) PRIMARY COOPERATIVE BANK IF THE LANGUAGE CONTAINED IN THE PROVISIONS OF SECT ION 80P(4) ALONG WITH ITS EXPLANATION ARE ANALYSED, THE MEANING OF C OOPERATIVE BANK, AS CONTAINED IN PART-V OF THE BANKING REGULAT ION ACT, 1949, CLEARLY SUGGESTS THAT THE ASSESSEE BEING A CO OPERATIVE LAND MORTGAGE BANK DOES NOT FALL IN THIS CATEGORY, WHERE AS THE LEARNED 5 ASSESSING OFFICER DISALLOWED THE CLAIM STATING THAT THE ASSESSEE BANK DO NOT FALL IN THE DEFINITION OF PRIMARY AGRIC ULTURAL CREDIT SOCIETY OR PRIMARY AGRICULTURAL RURAL DEVELOPMENT B ANK. PART V OF THE BANKING REGULATION ACT DEALS WITH ITS APPLICABI LITY TO COOPERATIVE BANKS. SUB-CLAUSE (CCII) OF SECTION 56 OF THE BANKING COMPANIES ACT DEFINES COOPERATIVE CREDIT SOCIETY MEANS A COOPERATIVE SOCIETY, THE PRIMARY OBJECT OF WHICH IS TO PROVIDE AGRICULTURAL CREDIT FINANCING THROUGH VARIOUS DISTR ICT MORTGAGE BANKS AND ITS MAIN SOURCE OF INCOME IS INTEREST REC EIVED FROM SUCH BANKS AND ALSO INCOME OF VARIOUS SECURITIES AN D INVESTMENTS. ADMITTEDLY, THE ASSESSEE IS A COOPERAT IVE LAND MORTGAGE BANK, THEREFORE, THE BENEFIT OF SECTION 80 P IS AVAILABLE TO THE ASSESSEE DESPITE INSERTION OF SUB-SECTION (4 ) TO SECTION 80P OF THE ACT. THEREFORE, IN VIEW OF THE CLEAR CUT PRO VISIONS, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80P OF THE AC T BECAUSE THE EXCLUSION MUST BE SPECIFIC AND IS TO BE CONSTRUED S TRICTLY. IF THIS ISSUE IS ANALYSED UNDER THE PROVISIONS OF SECTION 1 94A(3)(VIIA) OF THE ACT, SPECIAL STATUS BY WAY OF EXEMPTION OF INTE REST PAID OR RECEIVED HAS BEEN GRANTED FOR DEDUCTION OF TAX TO A COOPERATIVE LAND MORTGAGE BANK OR A COOPERATIVE LAND DEVELOPMEN T BANK, THEREFORE, IN VIEW OF THE CLEAR CUT PROVISIONS OF E XPLANATION TO 6 SECTION 80P(4) THE ACT, WE FIND NO INFIRMITY IN THE STAND OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND CO NFIRM THE SAME. FINALLY, BOTH THE APPEALS OF THE REVENUE STAND DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON 01 FEBRUAR Y, 2012. SD SD (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER FEBRUARY 01 , 2012 COPY TO ASSESSEE/RESPONDENT/CIT/CIT(A)/DR DN/-