The Assistant Commissioner of Income Tax, Circle-2(1), Panaji., Panaji V. M/s Candolim Urban Co-op. Credit Society Ltd., Goa

ITA 272/PAN/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2232 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 19-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH S MUTAGAR
• Assessee Lawyers: RAGHU PIKALE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 2 7 2 /PNJ/201 5 (ASST. YEAR : 20 1 0 - 1 1 ) AC IT, CIRCLE - 2( 1 ), PANAJI GOA. VS. M/S. CANDOLIM URBAN COOPERATIVE CREDIT SOCIETY LTD., ST. JOSEPH APARTMENT , NEAR FOOTBALL GROUND, CANDOLIM , BARDEZ - G O A. PAN NO. AAATC 4559 J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAGHU PIKALE C A DEPARTMENT BY : SHRI RAMESH S. MUTAGAR - D R DATE OF HEARING : 07 / 0 9 /2015 . DATE OF PRONOUNCEMENT : 07 / 0 9 /201 5 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , HUBLI , DATED 2 7 /0 2 /201 5 . 2. THE GRIEVANCE OF THE REVENUE IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING DEDUCTION UNDER SEC. 80P(2)(A)(I) TO THE ASSESSEE IGNORING THE FACT THAT THE ASSESSEE IS A COOPERATIVE SOCIETY WHICH CARRIES ON BANKING BUSINESS , AND HENCE A PRIMARY COOPERATIVE BANK AS PER SEC. 5(CCV) OF THE BANKING REGULATION ACT, 1949. 2 ITA NO. 27 2 /PNJ/201 5 3 . THE FACTS AS STATED BY THE ASSESSING OFFICER IN HIS ORDER ARE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY REGISTERED UNDER THE GOA COOPERATIVE SOCIETIES ACT . T HE MAIN OBJECT OF THE SOCIETY WAS TO ACCEPT THE DEPOSITS AND PROVIDE FINANCIAL ACCOMMODATION TO THE MEMBERS OF THE SOCIETY. ACCORDING TO THE ASSESSING OFFICER, AFTER INSERTION OF CLAUSE (VIIA) TO SEC. 2(24) W.E.F. 01/04/2007, INCOME INCLUD ES THE PROFIT AND GAINS OF ANY BUSINESS OF BANKING ( INCLUDING PROVIDING CREDIT FACIL I TIES ) CARRIED O N BY SUCH COOPERATIVE SOCIETY WITH ITS MEMBERS COMES WIT HIN THE DEFINITION OF INCOME. THEREFORE, ASSESSEE COOPERATIVE SOCIETY WAS A PRIMARY COOPERATIVE BANK AND NOT ELIGIBLE FOR DEDUCTION UNDER SEC. 80P AS CLAIMED IN VIEW OF THE PROVISIONS OF SEC. 80P(4). 4 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT SEC. 80P(4) PROVIDES THAT DEDUCTION UNDER THE SAID SECTION WAS NOT AVAILABLE TO ANY COOPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR RURAL DEVELOPMENT BANK. FOR THE PURPOSE OF THE SAID SUB - SECTION, COOPERATIVE BANK SHALL HAVE THE MEANING AS ASSIGNED TO IT IN PART V OF THE BANKING REGULATION ACT, 1949. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT THE ASSESSING OFFICER HELD THAT BY VIRTUE OF SEC. 80P(4), THE ASSESSEE WOULD NOT BE ENTITLED TO BENEFIT OF DED UCTION UNDER SEC. 80P. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE HONBLE HIGH COURT OF KARNATAKA DHARWAD BENCH IN THE CASE OF CIT VS. SHRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA BAGALKOT IN APPEAL NO. 5006/2013 DATED 05/02/2014 HAS HELD THAT THE INTENTION OF THE LEGISLATURE IS CLEAR. IF A CO - OPERATIVE BANK IS EXCLUSIVELY CARRYING ON BANKING BUSINESS, THEN THE INCOME DERIVED FROM THE SAID BUSINESS CANNOT BE DEDUCTED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. THE SAID INCOME IS LIABLE FOR TAX. A CO - O PERATIVE BANK AS DEFINED UNDER THE BANKING REGULATION ACT INCLUDES THE PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THE LEGISLATURE DID NOT WANT TO DENY THE SA ID BENEFITS TO A PRIMARY AGRICULTURAL CREDIT BANK. THEY DID 3 ITA NO. 27 2 /PNJ/201 5 NOT WANT TO EXTEND THE SAID BENEFIT TO A CO - OPERATIVE BANK WHICH IS EXCLUSIVELY CARRYING ON BANKING BUSINESS THAT IS THE PURPORT OF THIS AMENDMENT. THEREFORE, AS THE ASSESSEE IS NOT A COOPERATIVE BANK EARNING ON EXCLUSIVELY BANKING BUSINESS AND AS IT DOES NOT POSSESS A LICENCE FROM RESERVE BANK OF INDIA TO EARN ON BUSINESS, IT IS NOT A CO - OPERATIVE BANK. IT IS A CO OPERATIVE SOCIETY WHICH ALSO CARRIES ON THE BUSINESS OF LENDING MONEY TO ITS MEMBERS WHI CH IS COVERED UNDER SECTION 80P( 2)(A ) (I) I.E. CARRYING ON THE BUSINESS OF BANKING FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE OBJECT OF THE AFORESAID AMENDMENT IS NOT TO EXCLUDE THE BENEFIT EXTENDED UNDER SECTION 80P(1) TO SUCH S OCIETY . THEREFORE, COMMISSIONER OF INCOME TAX (APPEALS) SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND ALLOWED DEDUCTION UNDER SEC. 80P(2)(A)(I) TO THE ASSESSEE FOR 64,50,242/ - . 5. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFI CER. 6 . ON THE OTHER HAND, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE RE L IED ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT AT GOA IN THE CASE OF M/S. THE QUEPEM URBAN COOPERATIVE CREDIT SOCIETY LTD. VS. ACIT IN TAX APPEALS NOS. 22 TO 24/2015 ORDER DATED 17/ 04/2015 AND SUBMITTED THAT THE FACTS OF THE ASSESSEES CASE ARE SIMILAR TO THE FACTS IN THE ABOVE CASE BEFORE THE HONBLE BOMBAY HIGH COURT AT GOA AND THEREFORE, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD BE UPHELD AND APPEAL OF THE REVENUE BE D ISMISSED. 7 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE WHICH IS A COOPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF ACCEPTING THE DEPOSITS FROM ITS MEMBERS AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS, FILED ITS RETURN OF INCOME AND CLAIMED 4 ITA NO. 27 2 /PNJ/201 5 DEDUCTION OF 64,50,242/ - UNDER SEC. 80P(2)(A)(I) OF THE ACT. THE SAME WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT AS PER SEC. 2(24)(VIIA) INCOME INCLUDES THE PROFIT AND GAINS OF ANY BUSINESS OF BANKING (INCLUDING PROVIDING CREDIT FACILITIES) CARRIED O N BY SUCH COOPERATIVE SOCIETY WITH ITS MEMBERS COMES WITHIN THE DEFINITION OF INCOME. THUS, AS PER SEC. 80P(4) READ WITH SEC. 2(24)(VIIA) THE ASSESSEE COOPERATIVE SOCIETY IS HELD TO BE A PRIMARY COOPERATIVE BANK AND HENCE, NOT ELIGIBLE FOR DEDUCTION IN VIEW OF THE PROVISIONS OF SEC. SEC. 80 P . 8 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SHRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA BAGALKOT (SUPRA) , WHERE IN IT WAS HELD THAT WHERE THE ASSESSEE IS NOT A COOPERATIVE BANK EARNING ON EXCLUSIVELY BANKING BUSINESS AND AS IT DOES NOT POSSESS A LICENCE FROM RESERVE BANK OF INDIA TO EARN ON BUSINESS, IT IS NOT A CO - OPERATIVE BANK. IT IS A CO OPERATIVE SOCIETY WHICH AL SO CARRIES ON THE BUSINESS OF LENDING MONEY TO ITS MEMBERS WHI CH IS COVERED UNDER SECTION 80P( 2)(A ) (I) I.E. CARRYING ON THE BUSINESS OF BANKING FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THEREFORE, THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SEC. 80 P OF THE ACT. 9. THE DEPARTMENTAL REPRESENTATIVE HAS SIMPLY RELIED ON THE ORDER OF THE ASSESSING OFFICER. HE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). HE ALSO COULD NOT BRING ANY MATERIAL ON RECORD TO SHOW THAT THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SHRI BILURU GURUBASAVA PATTINA SAHAKARI SANG HA NIYAMITHA BAGALKOT (SUPRA ) RELIED ON BY THE COMMISSIONER OF INCOME TAX (APPEALS) HAS BEEN SET ASIDE BY THE HONBLE SUPREME COURT. FURTHER, WE FIND THAT THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS FILED , BEFORE US , THE ORDER OF THE 5 ITA NO. 27 2 /PNJ/201 5 HONBLE BOMBAY H IGH COURT AT GOA IN THE CASE OF M/S. THE QUEPEM URBAN COOPERATIVE CREDIT SOCIETY LTD. (SUPRA) WHICH IS ON THE SAME LINES AS THAT OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF SHRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA BAGALKOT (SUPRA) . IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS CONF I RMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 10 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON MONDAY , THE 07 TH DAY OF SEPTEMBER , 201 5 AT GOA . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07 TH SEPTEMBER , 201 5 . VR/ - COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 6 ITA NO. 27 2 /PNJ/201 5 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED WITH ITA NO.273/2015 1. DRAFT DICTATED ON 07 .0 9 .2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 08 .09 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 08 /0 9 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 08 /0 9 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 08 /0 9 /2015 SR.PS 6. DATE OF PRONOUNCEMENT 07 /0 9 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 08 /0 9 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER