ITO, Namakkal V. S-328, Kalpanaickenpatti PACCS Ltd., Namakkal

ITA 260/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9519 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 09-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: M BALU
• Keywords: Assessment record
• Section: 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . ! , '!# BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO.260/MDS/2016 ' $ %$ / ASSESSMENT YEAR : 2012-2013 THE INCOME TAX OFFICER, WARD NO.2, NAMAKKAL VS. M/S. S-328, KALAPANAICKENPATTI PACCS LTD, KALAPANAICKENPATTI, NAMAKKAL 637 404. [PAN AAGAS 1859J] ( / APPELLANT) ( /RESPONDENT) &' ( ) / APPELLANT BY : SHRI. A.V. SREEKANTH, IRS, JCIT. *+&' ( ) /RESPONDENT BY : SHRI. M. BALU, C.A. ( , / DATE OF HEARING : 06-04-2016 -.% ( , / DATE OF PRONOUNCEMENT : 27-04-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE DEPARTMENT IS DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), SALEM IN ITA NO. 225/2014-15, DT 21.12.2015 FOR THE ASSESSMENT YEAR 2012-2013 ITA NO.260/MDS/2016 :- 2 -: PASSED U/S.143(3) AND 250 OF THE INCOME TAX ACT, 1 961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE U NDER:- 2. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THAT THE HON'BLE ITAT, IN SHRI CHANDRAPRABHU URBAN CO-OPERATIVE CREDIT SOCIETY LTD . (2014)(45 TAXMANN 14) HAS CLEARLY BROUGHT OUT THE DEFINITION OF 'BANKING BUSINESS'. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THAT THE ORDER OF HONBLE ITAT B BENCH, CHENNAI IN THE CASE OF M/S. SL (SPL) 151 KARKUDALPATTY PACCS LTD VS. ITO HAS NOT BECOME FINA L AS AN APPEAL HAS BEEN FILED U/S.260A BEFORE THE HONBL E MADRAS HIGH COURT. 4. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THAT IN THE TAMIL NADU CO-OPERAT IVE SOCIETIES ACT, 1983 THE TERM 'MEMBER' IS DEALT IN VARIOUS SECTIONS AND IN ALL THESE SECTIONS THE TERM 'MEMBER' MEANS ONLY SHARE HOLDER - MEMBER. HENCE THE INTENTION OF THE LEGISLATURE IS THAT ASSOCIATE MEMBER WILL NO T BE TREATED AS MEMBER. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THAT THE STATUTORY AUDITOR FOR C O- OPERATIVE SOCIETY, IN HIS REPORT, DISCLOSES ONLY SH ARE HOLDER - MEMBERS AS MEMBERS AND DID NOT INCLUDE THE ASSOCIATE MEMBER IN THE REPORT. 3. THE BRIEF FACTS OF THE CASE THE ASSESSEE IS A PRIM ARY AGRICULTURAL CO-OPERATIVE BANK LTD, ENGAGED IN BANK ING BUSINESS AND TRADING IN CIVIL SUPPLY, GOODS AND FILED RETURN OF INCOME ON 28.09.2012 AND THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICE U/S.143(2) ITA NO.260/MDS/2016 :- 3 -: DATED 12.08.2013 WAS ISSUED TO THE ASSESSEE. THE LD . ASSESSING OFFICER ON PERUSAL FOUND THAT ASSESSEE HAS CLAIMED DEDUCTIO NS UNDER THE PROVISIONS OF SECTION 80P OF B48,18,780/-. IN RESPO NSE TO NOTICE, THE LD. AUTHORISED REPRESENTATIVE OF ASSESSEE APPEARED FROM TIME TO TIME AND FILED BOOKS OF ACCOUNT, BILLS, VOUCHERS AND OT HER RELEVANT DETAILS CALLED FOR. THE ASSESSEE CLAIMED DEDUCTIONS U/S .80P (2)(A) OF THE ACT B3,82,253/- U/S.80P(2)(B), B54,461/- AND U/S.8 0P(2)(D) B43,87,121/-. THE LD. ASSESSING OFFICER VERIFIED BOOKS OF ACCOUNTS AND CONSIDERED THE STATEMENTS FOR CLAIM OF DEDUCTIO N. THE ASSESSING OFFICER ON FURTHER EXAMINATION FOUND THAT THE ASSE SSEE SOCIETY CLAIMED DEDUCTION U/S.80P(2) OF THE ACT IN RESPECT OF BUSI NESS OF BANKING AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND COM PLIED STIPULATED CONDITIONS AND ALSO PROVIDING CREDIT FACILITIES TO MEMBERS AND NON MEMBERS AND RUNNING PUBLIC DISTRIBUTION SHOPS AND D ISTRIBUTION OF FERTILIZERS TO GENERAL PUBLIC INCLUDING NON MEMBERS . THE LD. ASSESSING OFFICER OBSERVED THE ENTIRE BUSINESS ACTIVITIES OF SOCIETY AS PROVIDING CREDIT FACILITIES AND TRADING FOR BOTH MEMBERS AND NONMEMBERS AND REJECTED THE DEDUCTION. THE LD. ASSESSING OFFICER V ERIFIED THE CLAIM OF DEDUCTION U/S.80P(2)(D) OF THE ACT, WERE THE ASSESS EE SOCIETY RECEIVED INTEREST INCOME FROM SALEM DISTRICT CENTRAL CO-OPE RATIVE BANKS AND NOT FROM OTHER CO-OPERATIVE SOCIETY AND PERUSED THE PROVISIONS U/S.80P(2) (D) OF THE ACT AND CONCLUDED THAT DEDUC TION U/S.80P(2)(D) ITA NO.260/MDS/2016 :- 4 -: OF THE ACT IS NOT ALLOWED AS ASSESSEE SOCIETY HAS R ECEIVED INTEREST RECEIPT FROM DISTRICT CENTRAL CO-OPERATIVE BANK AND COMPLETED THE ASSESSMENT WITH ASSESSED INCOME OF B.48,23,835/-. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE REITERATED THE SUBMISSIONS OF ASSE SSMENT PROCEEDINGS. THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) ON PERUSAL OF GROUNDS AND ARGUMENTS, THE ASSESSEE SOC IETY IS WORKING ON THE CONCEPTS OF MUTUALITY, PRINCIPLE BUT THE LD. ASSESSING OFFICER HAS REJECTED SOCIETY, CLAIM OF DEDUCTION UNDER PROVIS IONS OF SEC. 80P OF THE ACT BECAUSE THE ASSESSEE SOCIETY HAS NOT RESTR ICTED ACTIVITIES TO ITS MEMBERS AND ALSO PROVIDED SERVICES ON PAR WITH COM MERCIAL BANKING. THE COMMISSIONER OF INCOME TAX (APPEALS) ON EXAMINA TION OF THE ASSESSMENT RECORDS AND MATERIAL RELIED ON THE RECE NT CO-ORDIANTE BENCH DECISION OF TRIBUNAL IN THE CASE OF M/S. S-13 08, AMMAPET PRIMARY AGRICULTURAL CO-OPERATIVE BANK LTD IN ITA N O.825/MDS/2015, DATED 23.09.2015 ALLOWED THE ASSESSEE APPEAL. AGGR IEVED BY THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE HAS ASSAILED AN APPEAL BEFORE THE TRIBUNAL. ITA NO.260/MDS/2016 :- 5 -: 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE REI TERATED HIS SUBMISSIONS ON THE GROUNDS OF APPEAL AND CONTE STED THE JUDICIAL DECISIONS RELIED BY THE COMMISSIONER OF INCOME TA X (APPEALS) WERE THE DEPARTMENT HAS FILED AN APPEAL IN JURISDICTIONA L HONBLE HIGH COURT AGAINST ITAT ORDER AND PRAYED FOR SET ASIDE OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 6. CONTRA, THE LD. AUTHORISED REPRESENTATIVE RELIED ON THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND JUDICIA L DECISIONS AND OPPOSED TO THE GROUNDS OF THE REVENUE. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD AND JUDICIAL DECISIONS. THE LD. DEPARTM ENTAL REPRESENTATIVE CONTENTION THAT DECISION RELIED BY THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT REACHED FINALITY AND APPEAL HAS B EEN FILED BEFORE JURISDICTIONAL HIGH COURT AND IS PENDING AND ALSO U RGED THAT ON DEFINITION OF THE MEMBER RELYING ON THE AUDIT REPO RT WERE THE MEMBER MEANS SHARE HOLDER AND DOES NOT INCLUDE ASS OCIATE MEMBER. THE LD. AUTHORISED REPRESENTATIVE ARGUED ON MEMBERS HIP OF SOCIETY AND SUPPORTED WITH APEX COURT DECISION OF M/S. U.P. C-OPERATIVE CANE UNION FEDERATION LTD, LUCKNOW VS. CIT (1999) 237 IT R 574(SC) AND DEFINITION OF MEMBER AS THE PROVISION OF T.N. CO-OP ERATIVE SOCIETIES ITA NO.260/MDS/2016 :- 6 -: ACT 1983 AND FILED WRITTEN SUBMISSIONS AND EXPLAINE D THAT THERE IS NO CHEQUE FACILITY IS AVAILABLE TO MEMBERS AND THE BUS INESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND ACTIVITIES OF PRIMARY AGRICULTURE CO- OPERATIVE CREDIT SOCIETY ARE NOT AT PAR WITH CO-OPE RATIVE BANKS AND RELIED ON ITO VS. S-1308, AMMAPET PRIMARY AGRICULTURAL CO-OPE RATIVE BANK LTD IN ITA 825/MDS/20 15. WE CONSIDERING THE APPARENT FACTS AND FINDINGS OF THE LOWER AUTHORITIES ON THE GROUNDS RA ISED BY THE REVENUE AND THE ARGUMENT OF THE LD. AUTHORISED REPRESENTATI VE. PRIME FACIE THE ASSESSEE IS REGISTERED AS CO-OPERATIVE SOCIETY AND ENGAGED IN BANKING BUSINESS AND TRADING IN CIVIL SUPPLIES GOODS. THE DEPARTMENT HAS DISPUTED ON THE ACTIVITIES OF THE SOCIETY ON PAR WI TH ANY COMMERCIAL BANKING. THEREFORE, WE ARE INCLINED TO SET ASIDE T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND REMIT THE ENTIRE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE FOL LOWING:- (I) LOANS ARE GRANTED TO NON-MEMBERS (II) ANY CURRENT ACCOUNTS ARE OPENED FOR TRADERS. (III) WHETHER THE SOCIETY IS A MEMBER OF CLEARING HOUSE. (IV) WHETHER BANK ISSUED GUARANTEE ON BEHALF OF CUSTOMERS (V) WHETHER DEALT IN FOREIGN EXCHANGE TRANSACTIONS. (VI) VERIFY INSPECTION REPORT OF RBI IF ANY. ITA NO.260/MDS/2016 :- 7 -: WITH THESE FINDINGS, THE ASSESSING OFFICER IS DIREC TED TO VERIFY AND PASS THE ORDER ACCORDINGLY AFTER PROVIDING ADEQUATE OPPO RTUNITY OF BEING HEARD. THE GROUNDS OF THE REVENUE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.260/MDS/2016 IS PARTLY ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 27TH DAY OF APRIL, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI 0 / DATED:27.04.2016 KV 1 ( *',23 43%, / COPY TO: 1 . &' / APPELLANT 3. 5, () / CIT(A) 5. 389 *',' / DR 2. *+&' / RESPONDENT 4. 5, / CIT 6. 9:$ ; / GF