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

ITA 283/PAN/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7495 (ITAT-PANAJI)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 07-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVENDRA GUPTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K.BANSAL, HON'BLE ACCOUNTANT MEMBER SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 2 8 2 TO 285 /PAN /201 6 (ASST. YEAR : 20 07 08, 2008 09, 2009 10, 2012 13) AC IT, CIRCLE - 2( 1 ), AAYAKAR BHAVAN, EDC COMPLEX, PATTO, PANAJI GOA. V. 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 : NONE DEPARTMENT BY : SHRI SHIVENDRA GUPTA - D R DATE OF HEARING : 27/03/2017 . DATE OF PRONOUNCEMENT : 27 /03/2017 . O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER 1 . THESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A) PANAJI IN APPEAL NO ITA.NO.66/CIT(A)/PNJ/15 - 16 DATED 29/09/2016, ITA.NO.67/CIT(A)/PNJ - 1/15 - 16 DATED 29/09/2016, ITA. NO. 68 / CIT(A) / PNJ / 15 - 16 DATED 29/09/2016 AND ITA.NO.69/CIT(A)/PNJ/15 - 16 DATED 29/09/2016 FOR THE ASSESSMENT YEAR 2007 08, 2008 09, 2009 10 AND 2012 13 RESPECTIVELY. 2 . NO NE REPRESENTED ON BEHALF O F THE ASSESSEE AND SHRI SHIVENDRA GUPTA REPRESENTED ON BEHALF OF THE REVENUE. 2 ITA NO. 2 8 2 TO 285/PAN /201 6 M/S. CONDOLIM URBAN COOPERATIVE SOCIETY LTD. 3 . THE ASSESSEE HAS SOU GHT AD JOURNMENT. HOWEVER AS THE ISSU E S ARE COVERED , ADJOURNMENT SOUGHT IS REJECTED AND THE APPEALS ARE DISPOSED OF. 4 . 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. 5 . 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 WITHIN 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). 6 . ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT SEC. 80P(4) PROVIDES THAT DEDUCTI ON 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 DEDUCTION UNDER SEC. 80P. COMMISSIONER OF INCOME TAX 3 ITA NO. 2 8 2 TO 285/PAN /201 6 M/S. CONDOLIM URBAN COOPERATIVE SOCIETY LTD. (APPEALS) OBSERVED THAT THE HONBLE HIGH COURT OF KARNATAKA DHARWAD BENCH IN THE CASE OF CIT VS. SHRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAM ITHA 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 DEF INED 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 SAID BENEFITS TO A PRIMARY AGRICULTURAL CREDIT BANK. THEY DID 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 WHICH 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 SOCIETY . THEREFORE, COMMISSIONER OF INCOME TAX (APPEALS) SE T ASIDE THE ORDER OF THE ASSESSING OFFICER AND ALLOWED DEDUCTION UNDER SEC. 80P(2)(A)(I) TO THE ASSESSEE . 7 . DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 8 . WE HAVE CONSIDERED THE SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUT HORITIES AND THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER 4 ITA NO. 2 8 2 TO 285/PAN /201 6 M/S. CONDOLIM URBAN COOPERATIVE SOCIETY LTD. 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 DEDUCTION 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 INC LUDES 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. 80P . 9 . 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 ALSO CARRIES ON THE BUSINESS OF LENDING MONEY TO ITS MEMBERS WHICH IS CO VERED 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. 80P OF THE ACT. 10 . THE DEPARTMENTAL REPRESENTATIVE HAS SIMPLY RELIED ON TH E 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 SANGHA NIYAMITHA BAGALKOT (SUPRA ) RELIED ON BY THE 5 ITA NO. 2 8 2 TO 285/PAN /201 6 M/S. CONDOLIM URBAN COOPERATIVE SOCIETY LTD. COMMISSIONER OF INCOME TAX (APPEALS) HAS BEEN SET ASIDE BY THE HONBLE SUPREME COURT. FURTHER, WE FIND THAT THE ORDER OF THE HONBLE BOMBAY HIGH COURT AT GOA IN THE CASE OF M/S. THE QUEPEM URBAN COOPERATIVE CREDIT SOCIETY LTD. (SUPRA) 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. 11 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON MONDAY , THE 27 TH DAY OF MARCH, 2017 AT GOA . SD/ - SD/ - (P.K.BANSAL) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27 TH MARCH, 2017 . VSSGB / - 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