INCOME TAX OFFICER 17(2)(1), MUMBAI V. THE MAHARASHTRA MANTRALAYA CO-OPERATIVE CREDIT SOCIETY LIMITED, MUMBAI

ITA 2687/MUM/2022

AI Insights

The case involves a series of appeals by the Revenue against the decision of the learned Commissioner of Income Tax (Appeals), which allowed the deduction under section 80P of the Income Tax Act, 1961 to The Maharashtra Mantralaya Co-operative Credit Society Ltd. for the assessment years 2014-15, 2015-16, and 2017-18. The primary legal issue was whether the assessee, a cooperative credit society, qualifies for the deduction under section 80P(2)(a)(i) despite the provisions of section 80P(4) introduced by the Finance Act, 2006, which restricts such deductions for cooperative banks. The Tribunal's decision was influenced by previous rulings in similar cases involving the same assessee, where it was established that the assessee is not a cooperative bank and thus not subject to the restrictions of section 80P(4).

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125862 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 20-10-2022
• Other Referred Cases: ITO vs Maharashtra Mantraliya Va Sanlagana Shaskiya Karamchari Co-op. Credit Society Ltd., CIT vs. Jafari Momin Vikas Co-op. Credit Society Ltd., Delhi Co-op. Urban Thrift & Credit Society Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Co-operative Credit Society
• Section: 143(3); 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA no.2686/Mum./2022 (Assessment Year : 2014–15) ITA no.2687/Mum./2022 (Assessment Year : 2015–16) ITA no.2685/Mum./2022 (Assessment Year : 2017–18) Income Tax Officer Ward–17(2)(1), Mumbai ................ Appellant v/s The Maharashtra Mantralaya Co–operative Credit Society Ltd., Amdar Niwas (Back Side) Ground Floor, Opp. Aakashwani Bhavan Churchgate, Mumbai 400 032 PAN – AAAAT8908R ................Respondent Assessee by : Ms. Akruti Sheth Revenue by : Smt. Mahita Nair Date of Hearing – 09/01/2023 Date of Order – 11/01/2023 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present batch of 3 appeals has been filed by the Revenue against the separate impugned order of even date 13/09/202, passed under section 250 of the Income Tax Act, 1961 (‘the Act’) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [‘learned CIT(A)’], for the assessment years 2014–15, 2015–16 and 2017–18. The Maharashtra Mantralaya Co–operative Credit Society Ltd. ITA no.2687/Mum./2022 ITA no.2686/Mum./2022 ITA no.2685/Mum./2022 Page | 2 2. Since these appeals pertain to the same assessee and the issues involved are also identical, therefore, as a matter of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. With the consent of the parties, the Revenue’s appeal for the assessment year 2014–15 is taken up as a lead case and the decision rendered therein would apply mutatis mutandis to other appeals. 3. In all these appeals, the Revenue has raised similar grounds of appeal. For reference, the grounds of appeal raised by the Revenue in ITA No. 2686/Mum./2022, for the assessment 2014-15, are as under: "i. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the deduction u/s. 80P of the I.T. Act, 1961 without considering insertion of section 80P(4) of the Act and sub-clause (viia) to Section 2(24) vide Finance Act, 2006 w.e.f. 01.04.2007. ii. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing deduction u/s. 80P of the 1.T. Act, 1961 without considering the fact that the assessee fulfils all the three conditions laid down u/s. 56(c)(ccv) of Part V of the Banking Regulation Act 1949 and therefore falls in the category of a primary co-operative bank. iii. The appellant craves leave to amend or alter or add a new ground which may be necessary.” 4. The only grievance of the Revenue is against the allowance of deduction under section 80P of the Act to the assessee. 5. The brief facts of the case as emanating from the record are: The assessee is a Co-operative Credit Society and is engaged in the business of accepting and lending money to its members only in the normal course of its activities. For the assessment year 2014–15, the assessee filed its return of income on 22/09/2014 declaring total income at Rs. Nil. Thereafter, the The Maharashtra Mantralaya Co–operative Credit Society Ltd. ITA no.2687/Mum./2022 ITA no.2686/Mum./2022 ITA no.2685/Mum./2022 Page | 3 assessee filed its revised return of income on 24/06/2015, whereby total income was declared at Rs. Nil, after claiming a deduction of Rs. 2,87,10,285, under section 80P(2)(a)(i) of the Act. During the assessment proceedings, the assessee was asked to submit the note on the justification of the claim of deduction claimed under section 80P in terms of provisions of said section. After considering the submissions of the assessee, the Assessing Officer (‘AO’) vide order dated 17/12/2016, passed under section 143(3) of the Act held that deduction allowable under section 80P(2)(a)(i) of the Act in the case of a co-operative credit society engaged carrying on the business of banking (co- operative banks) has been withdrawn from the assessment year 2007-08 except in the case of primary agricultural credit society or a primary co- operative agricultural and rural development bank. Further, the AO held that under section 80P(4) of the Act the provisions of the section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Accordingly, the AO came to the conclusion that the assessee is a co- operative bank and therefore is covered under the provisions of section 80P(4) of the Act, and thus the deduction provided under section 80P of the Act would not be available to it from the assessment year 2007-08 onwards. As a result, the deduction claimed by the assessee under section 80P(2)(a)(i) of the Act was disallowed. 6. The learned CIT(A), vide impugned order, by following the judicial precedents in the case of the assessee, allowed the appeal filed by the assessee and held that the assessee is eligible for deduction claimed under The Maharashtra Mantralaya Co–operative Credit Society Ltd. ITA no.2687/Mum./2022 ITA no.2686/Mum./2022 ITA no.2685/Mum./2022 Page | 4 section 80P(2)(a)(i) of the Act. Being aggrieved, the Revenue is in appeal before us. 7. During the hearing, the learned Departmental Representative vehemently relied upon the order passed by the AO. On the contrary, the learned Authorised Representative submitted that this issue has been decided in favour of the assessee by the coordinate bench of the Tribunal in the preceding assessment years. 8. We have considered the rival submissions and perused the material available on record. We find that the coordinate bench of the Tribunal in assessee’s own case in ITO vs Maharashtra Mantraliya Va Sanlagana Shaskiya Karamchari Co-op. Credit Society Ltd., in ITA No. 5051/Mum./2013, for assessment year 2010–11, vide order dated 29/10/2014, while deciding a similar issue in favour of the assessee observed as under: “4. We have carefully perused the orders of the authorities below and the decisions brought to our notice. The Hon'ble Gujarat High Court in the case of CIT vs. Jafari Momin Vikas Co-op. Credit Society Ltd. in ITA Nos. 442 of 2013 with 443 of 2013 and 863 of 2013 held as under: 7. From the above clarification, it can be gathered that sub-section (4) of section 80P will not apply to an assessee which is not a co-operative bank. In the case clarified by CBDT, Delhi Co-op. Urban Thrift & Credit Society Ltd. was under consideration. Circular clarified that the said entity not being a co- operative bank, section 80P(4) of the Act would not apply to it In view of such clarification, we cannot entertain the Revenue's contention that section 80P(4) would exclude not only the co-operative banks other than those fulfilling the description contained O/TAXAP/442/2013 ORDER therein but also credit societies, which are not co-operative banks. In the present case, respondent assessee is admittedly not a credit co-operative bank but a credit co-operative society. Exclusion clause of sub-section (4) of section 80P, therefore, would not apply. In the result, Tax Appeals are dismissed. Similar view is taken by the Tribunal's Mumbai Bench in the case of M/s. Mumbai Teleworkers Co-op. Credit Society Ltd. in ITA No. 7106/Mum/2012 and in the case of M/s. Kulswami Co-op. Credit Society Ltd. in ITA No. The Maharashtra Mantralaya Co–operative Credit Society Ltd. ITA no.2687/Mum./2022 ITA no.2686/Mum./2022 ITA no.2685/Mum./2022 Page | 5 3223/Mum./2011 and 505/Mum./2012 As the facts and the issues are identical to the facts and issues involved in the judicial decisions referred to hereinabove, we do not find any reason to interfere with the findings of the Id. CIT(A).” 9. We find that similar findings were rendered by the coordinate bench of the Tribunal vide order dated 10/07/2019 in assessee’s own case in ITO vs Maharashtra Mantraliya Va Sanlagana Shaskiya Karamchari Co-op. Credit Society Ltd., in ITAs No. 3475/Mum./2018 and 3476/Mum./2018, for the assessment years 2012–13 and 2013–14. We find that this issue is recurring in nature and has been decided in favour of the assessee by the decision of the coordinate bench of the Tribunal for the preceding assessment years. The learned Departmental Representative could not show us any reason to deviate from the aforesaid decisions and no change in facts and law was alleged in the relevant assessment year. Thus, respectfully following the orders passed by the coordinate bench of the Tribunal in assessee’s own case cited supra, we find no infirmity in the impugned order passed by the learned CIT(A), which has rightly followed the judicial precedents in assessee’s own case. As a result, grounds raised by the Revenue are dismissed. 10. In the result, the appeal by the Revenue is dismissed. ITA No. 2687/Mum./2022 and ITA No. 2685/Mum./2022 Revenue’s Appeals – A.Ys. 2015-16 and 2017-18 11. Since, similar issue is arising in appeals for assessment years 2015–16 and 2017–18, therefore, our findings/conclusions in Revenue’s appeal for the The Maharashtra Mantralaya Co–operative Credit Society Ltd. ITA no.2687/Mum./2022 ITA no.2686/Mum./2022 ITA no.2685/Mum./2022 Page | 6 assessment year 2014–15 shall apply mutatis mutandis to these appeals as well. 12. In the result, these appeals by the Revenue are also dismissed. 13. To sum up, all the appeals by the Revenue are dismissed. Order pronounced in the open Court on 11/01/2023 Sd/- OM PRAKASH KANT ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 11/01/2023 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