Panniyankara Service Co-op Bank Ltd, Calicut V. The ITO, Calicut

ITA 28/COCH/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7734 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJH
• Assessee Lawyers: MOHAN PULICKKAL
• Keywords: Question of law; Competent authority
• Section: 27

Judgement Text

ITA NO S. 27 TO 30/C/2015 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH (SMC) KOCHI BEFORE S/ SH RI B P JAIN , A M & GEORGE GEORGE K, JM ITA NO S. 27 TO 30/COCH/2015 ( A SST YEAR S 2008 - 09 TO 2011 - 12 ) PANNIYANKARA SERVICE CO - OP BANK LTD PANNIYANKARA KALLAI PO KOZHIKOE 673 003 VS THE INCOME TAX OFFICER WAR 1(2) KOZHIKODE ( APPELLANT) (RESPONDENT) PAN NO. AAALP0308E ASSESSEE BY SH MOHAN P ULI CK K AL REVENUE BY SH A DHANARAJH, SR DR DATE OF HEARING 29 TH AUG 2016 DATE OF PRONOUNC EMENT 29 TH AUG 2016 OR D ER PER B P JAIN, AM : THESE FOUR APPEALS , FILED BY THE ASSESSEE, ARE DIRECTED AGAINST THE CONSOLIDATED ORDER DATED 1 ST O C T 2014 OF THE CIT(A) FOR THE ASSESSMENT YEARS 2008 - 09 T0 2011 - 12 . 2 SINCE COMMON ISSUE IS INVOLVED IN ALL THESE APPEALS; THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 3 THE SOLITARY ISSUE THAT IS RAISED IN ALL THESE APPEALS IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ACTION OF THE AO IN DENYING THE DEDUCTION U/S 80P( 2) OF THE ACT. ITA NO S. 27 TO 30/C/2015 2 4 BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE, IS A PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT, 1969. IT IS ENGAGED IN THE BUSINESS OF PROVIDING AGR ICULTURAL CREDIT TO ITS MEMBERS. THE CLAIM OF DEDUCTION U/S 80P (2) WAS DENIED BY THE AO FOR THE REASON THAT THE ASSESSEE IS PRIMARILY ENGAGED IN THE BUSINESS OF BANKING AND IN VIEW OF SECTION 80P(4) OF THE ACT, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U /S 80P(2) OF THE ACT. THE VIEW TAKEN BY THE AO WAS CONFIRMED BY THE CIT(A). 5 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE RECENT JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE CHIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS IN ITA NO.212 OF 2013 ( JUDGMENT DATED 15 TH FEBRUARY 2016). 5 .1 THE LD DR WAS UNABLE TO CONTROVERT THE ABOVE SUBMISSIONS OF THE ASSESSEE. 6 WE H AVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD.. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE CHIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS (SUPRA) HAS HELD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT, 1969 IS ITA NO S. 27 TO 30/C/2015 3 ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2). THE HONBLE HIGH COURT WAS CONSIDERING THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION, THE TRIBUNAL IS CORRECT IN LAW IN DECIDING AGAINST THE ASSESSEE, THE ISSUE REGARDING ENTITLEMENT FOR EXEMPTION UNDER SECTION 80P, IGNORING THE FACT THAT THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY? 6 .1 IN CONSIDERING THE ABOVE QUESTION OF LAW, THE HONBLE HIGH COURT RENDERED THE FOLLOWING FINDINGS: 15. APPELLANTS IN THESE DIFFERENT APPEALS ARE INDISPUTABLY SOCIETIES REGISTERED UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969, FOR SORT, KCS ACT AND THE BYE - LAWS OF EACH OF THEM, AS MADE AVAILABL E TO THIS COURT AS PART OF THE PAPER BOOKS, CLEARLY SHOW THAT THEY HAVE BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE PROVISIONS OF THAT ACT. THE PARLIAMENT, HAVING DEFINED THE TERM 'CO - OPERATI VE SOCIETY' FOR THE PURPOSES OF THE BR ACT WI TH REFERENCE TO, AMONG OTHER THINGS, THE REGISTRATION OF A SOCIETY U N DER ANY STATE LAW RELATING TO CO - OPERATIVE SOCIETIES FOR THE TIME BEING; IT CANNOT BUT BE TAKEN THAT THE PURPOSE OF THE SOCIETIES SO REGISTERED UNDER THE ST ATE LAW AND ITS OBJECTS HAVE TO BE UNDERSTOOD AS THOSE WHICH HAVE BEEN APPROVED BY THE COMPETENT AUTHORITY UNDER SUCH STATE LAW. THIS, WE VISUALISE AS DUE RECIPROCATIVE LEGISLATIVE EXERCISE BY THE PARLIAMENT RECOGN I SING THE PREDOMINANCE OF DECISIONS RENDER ED UNDER THE RELEVANT STATE LAW. IN TH I S VIEW OF THE MATTER, ALL THE APPELLANTS HAV I NG BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CRED I T SOC I ET I ES B Y THE COMPETENT AUTHOR I TY UNDE R TH E KCS ACT , I T HAS NECESSAR IL Y TO BE HELD THAT THE PRINCIPAL OBJECT OF SUCH S OCIETIES IS TO UNDERTAKE AGR I CULTURAL CREDIT ACTIVITIES AND TO PROVIDE LOANS AND ADVANCES FOR AGRICULTURAL PURPOSES , THE RATE ' OF INTEREST ON SUCH LOANS AND ADVANCES TO BE AT THE RATE FIXED BY THE REGISTRAR OF CO - OPERATIVE SOCIETIES UNDER THE KCS ACT AND HAV I NG I TS AREA OF OPERATION CONFINED TO A VILLAGE, PANCHAYAT OR A MUNICIPALITY. THIS IS THE CONSEQUENCE OF THE DEFINITION CLAUSE IN SECTION 2(OAA) OF THE KCS ACT. THE AUTHORITIES UNDER THE IT ACT CANNOT PROBE INTO ANY ISSUE OR SUCH MATTER RELATING TO SUC H APPLICANTS. 16. THE POSITION OF 1 AW BEING AS ABOVE WITH REFERENCE TO THE ITA NO S. 27 TO 30/C/2015 4 STATUTORY PROVISIONS, THE APPELLANTS HAD SHOWN TO THE AUTHORITIES AND THE TRIBUNAL THAT THEY ARE PRIMARY AGRICULTURA L CREDIT SOCIETIES IN TERMS OF CLAUSE (CCIV) OF SECTION 5 OF THE BR ACT, HAVING REGARD TO THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF EACH OF THE APPELLANTS. IT IS ALSO CLEAR FROM THE MATERIALS ON RECORD THAT THE BYE - LAWS OF EACH OF THE APPELLANTS DO . NOT PERMIT ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS MEMBER, E XCEPT MAY BE, IN ACCORDANCE WITH THE PROVISO TO SUB - CLAUSE 2 OF SECTION 5(CCIV) OF THE BR ACT. THE DIFFERENT ORDERS OF THE TRIBUNAL WHICH ARE IMPEACHED IN THESE APPEALS DO NOT CONTAIN ANY FINDING OF FACT TO THE EFFECT THAT THE BYE - 1AWS OF ANY OF THE APPEL LANT OR ITS CLASS I FICATION BY THE COMPETENT AUTHORITY UNDER THE KCS ACT LS ANYTHING DIFFERENT FROM WHAT WE HAVE STATED HEREIN ABOVE. FOR THIS REASON, IT CANNOT BUT BE HELD THAT THE APPELLANTS ARE ENTITLED TO EXEMPTION FROM THE PROVISIONS OF SECTION 80P O F THE IT ACT BY VIRTUE OF SUB - SECTION 4 OF THAT SECT; ON. IN THIS VIEW OF THE MATTER, THE APPEALS SUCCEED. 17. IN THE LIGHT OF THE AFORESAID, WE ANSWER SUBSTANTIA 1 QUESTION 'A' IN FAVOUR OF THE APPELLANTS AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDI NG THE ISSUE REGARDING THE ENTITLEMENT OF EXEMPT ION UNDER SECTION 80P AGAINST THE APPELLANTS. WE HOLD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETIES, REGISTERED AS SUCH UNDER THE KCS ACT; AND CLASSIFIED SO, UNDER THAT ACT, INCLUDING THE APPELLANTS ARE ENTI TLED TO SUCH EXEMPTION. 6 .2 IN THE INSTANCE CASE , THE CERTIFICATE OF REGISTRATION UNDER THE KERALA COOPERATIVE SOCIETIES ACT AND THE BYE - LAWS, ARE PLACED ON RECORD. IT IS CLEAR FROM THE PERUSAL OF THE SAME THAT THE ASS ESSEE IS PRI MARY AGRICULTURAL CREDIT SOCIET Y AND PROVIDING AGRICULTURAL CREDIT FACILITIES TO ITS MEMBERS. THE HONBLE JURISDICTIONAL HIGH COURT, IN THE ABOVE CITED JUDGMENT HAS HELD THAT SUCH SOCIETIES ARE ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2) OF THE ACT. IN VIEW OF THE ABOVE FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), WE ALLOW THE APPEALS OF THE ASSESSEE. IT IS ORDERED ACCORDINGLY. ITA NO S. 27 TO 30/C/2015 5 7 IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF AUG 2016 . SD/ - SD/ - ( GEORGE GEORGE K ) ( B P JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER COCHIN: DATED 29 TH AUG 2016 RAJ* COPY TO: 1 . APPELLANT 2 . RESPON DENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN