ITO 15(1)(1), MUMBAI V. THE CENTRAL TELEGRAPH OFFICE CO OP CREDIT SOCIETY LTD, MUMBAI

ITA 2936/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3358 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 23-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH BAREDR
• Keywords: Business income
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.2936/MUM/2014 ASSESSMENT YEAR-2010-11 INCOME TAX OFFICER - 15(1)(1) ROOM NO.119, MATRU MANDIR 1 ST FLOOR, TARDEO ROAD, MUMBAI-400007 / VS. M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED, CTO COMPOUND, GR. FLOOR, FORT, MUMBAI-400001 PAN NO. AAAAT7914M ( / REVENUE) ( / ASSESSEE) ITA NO.3414/MUM/2014 ASSESSMENT YEAR-2010-11 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED, CTO COMPOUND, GR. FLOOR, FORT, MUMBAI-400001 / VS. INCOME TAX OFFICER - 15(1)(1) ROOM NO.119, MATRU MANDIR 1 ST FLOOR, TARDEO ROAD, MUMBAI-400007 PAN NO. AAAAT7914M ( / ASSESSEE) ( / REVENUE) ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 2 / ASSESSEE BY SHRI ROHIT C. KASAT / REVENUE BY SHRI GANESH BARE-DR / DATE OF HEARING : 23/05/2016 / DATE OF ORDER: 23/05/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE AS WELL AS THE REVENUE IS IN CROSS APP EAL AGAINST THE IMPUGNED ORDER DATED 24/02/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. 2. FIRST, WE SHALL TAKE UP THE APPEAL OF THE REVEN UE (ITA NO.2936/MUM/2014) ALLOWING DEDUCTION U/S 80P(2)(A)(I) WITHOUT CONSIDERING INSERTION OF SECTI ON 80P(4) AND SUB-CLAUSE (VIIA) TO SECTION 2(24) OF THE INCOM E TAX ACT, 1961 (HEREINAFTER THE ACT), WITHOUT APPRECIATING TH E FACT THAT THE ASSESSEE FALLS UNDER THE CATEGORY OF PRIM ARY CO- OPERATIVE BANK AS PER THE DEFINITION IN PART-V OF THE BANKING REGULATION ACT AND FURTHER APPLYING THE DEC ISION IN THE CASE OF JAFARI MOMIN VIKAS CO-OPERATIVE CRED IT SOCIETY LIMITED FROM HONBLE GUJARAT HIGH COURT. ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 3 2.1. DURING HEARING, THE LD. COUNSEL FOR THE ASSES SEE, SHRI ROHIT C. KASAT, AT THE OUTSET, POINTED OUT THA T THE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE CASE OF PUNJAB NATI ONAL BANK EMPLOYEES CREDIT SOCIETY LTD. (ITA NO.3415 & 2935/MUM/2014) ORDER DATED 31/03/2016. THIS FACTUAL MATRIX WAS CONSENTED TO BE CORRECT BY THE LD. DR, S HRI GANESH BARE. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION OF THIS ORDER DATED 31/03/2016 FOR READY REFERENCE AND ANALYSIS:- THERE ARE TWO APPEALS UNDER CONSIDERATION FOR THE AY 2010-2011 AND THEY ARE CROSS APPEALS. THESE TWO APPEALS ARE FIELD AGAINST THE ORDER OF THE CIT (A)-26, MUMBAI DATED 18.2.2014. SINCE, THE I SSUES RAISED IN THESE APPEALS ARE INTER- CONNECTED, THEREFORE, FOR THE SA KE OF CONVENIENCE, THEY ARE CLUBBED, HEARD TOGETHER AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. ITA NO.293S/M/2014 (BY REVENUE) 2. THIS APPEAL FILED BY THE REVENUE ON 29 . 4.2014. IN THIS APPEAL, REVENUE RAISED OBJECTIONS ON THE APPLICABILITY OF THE PROVI SIONS OF SECTION 80P(4) OF THE ACT. THE REVENUE IS OF THE OPINION THAT THE REF ERENCES PROVIDED IN THE ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 4 SUB-SECTION 4 OF SECTION 80P OF THE ACT EXTENDS TO ALL SOCIETIES ENGAGED IN THE ACTIVITIES OF GIVING & TAKING DEPOSITS. CONSEQUENTLY, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT . BUT, CIT (A) EXPLAINED THIS ISSUE AND GRANTED RELIEF TO THE ASSESSEE VIDE HIS DISCUSSION IN PARA 3 AND ITS SUB-PARAS OF HIS ORDER. CIT (A) EXPLAINED I N THE LIGHT OF VARIOUS DECISIONS. ON PERUSAL OF THE SAME AND AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE ORDER OF THE CIT (A) ON THIS ISSUE IS FAIR AND REASONABLE. ALL SUCH SOCIETIES ARE NOT BANKS. REFERENCE IS MADE TO THE DISCUSSION AT PARAS 4 AND 5 OF THIS ORDER. THEREFORE, IN OUR OPIN ION, THERE IS NO NEED TO INTERFERE WITH THE DECISION OF THE CIT (A). ACCORDI NGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 3. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ITA NO.341S/M/2014 (BY ASSESSEE) 4. THIS APPEAL FILED BY THE ASSESSEE ON 13.5.2014 A GAINST THE SAID ORDER OF THE CIT (A)-26, MUMBAI. THE ISSUE RAISED IN THIS AP PEAL RELATES TO THE ALLOWABILITY OF DEDUCTION OF INTEREST AND DIVIDEND U/S 80P(2)(D) OF THE ACT. AS PER THE ASSESSEE, THE COOPERATIVE BANKS ARE COOP ERATIVE SOCIETIES AND THEY ARE NOT 'BANK' AS DEFINED IN THE IN THE BANKIN G REGULATION ACT, 1969 . ON THIS ISSUE, ASSESSEE RELIED ON VARIOUS DECISIONS AS WELL AS THE COORDINATE BENCH DECISION IN THE CASE OF ITO VS. M/ S. RCF EMPLOYEES COOPERATIVE CREDIT SOCIETY LTD IN ITA NOS. 6903 AND 7465/M/2013 (AY 2010-2011), DATED 29.01 . 2016. PARAS 6 AND 7 OF THE SAID TRIBUNAL'S DECISION (SUPRA) ARE RELEVANT IN THIS REGARD. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED DECISION OF THE TR IBUNAL IN THE CASE OF M/S. RCF EMPLOYEES COOPERATIVE CREDIT SOCIETY LTD (SUPRA). O N PERUSAL OF THE SAID TRIBUNAL'S ORDER (SUPRA),WE FIND, PARAS 6 AND 7 ARE RELEVANT IN THIS REGARD. CONSIDERING THE SIGNIFICANCE OF THE SAID PA RAS 6 AND 7 AND ALSO FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAME AR E EXTRACTED AS UNDER:- ' 6. FURTHER, WE HAVE ALSO PERUSED THE JUDGMENT OF THE J URISDICTIONAL HIGH COURT IN THE CASE OF QUEPEM URBAN COOPERATIVE CREDIT SOCIETY LTD VS. ACI T [2015} 377 ITR 272 (BOM WHICH WAS RELIED UPON BY THE LD COUNSEL FOR THE ASS ESSEE FOR THE PROPOSITION THAT SUCH LENDING ACTIVITIES DO NOT CON STITUTE BANKING ACTIVITIES AS THE SAME ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 5 ARE TRANSACTED BETWEEN THE COOPERATIVE SOCIETY AND THE MEMBERS OF THE SOCIETY. SINCE, NO PUBLIC IS INVOLVED THE DEFINITION OF 'BANKING' D OES NOT COVER SUCH ACTIVITIES. AS SUCH, THERE IS NO RESERVE BANK OF INDIA'S APPROVAL FOR CON DUCTING SUCH BANKING ACTIVITIES IN THIS CASE. HE ALSO RELIED ON THE DEFINITION OF ''BA NKING'' AND READ OUT FROM THE CONTENTS OF SECTION S OF THE BANKING REGULATION ACT 1949 AND THE SAME READS AS UNDER:- SEC . 5(B) 'BANKING' MEANS THE ACCEPTING, FOR THE PURPOSE OF LENDING OR INVESTMENT, OF DEPOSITS OF MONEY FROM THE PUBLIC, REPAYABLE ON DEMAND OR OTHER WISE, AND WITHDRAWAL BY CHEQUE, DRAFT, OR OTHERWISE; 7. FROM THE ABOVE, LD COUNSEL FOR THE ASSESSEE DEMONST RATED THAT THE MEMBERS OF THE CREDIT COOPERATIVE SOCIETY DO NOT CONSTITUTE 'PU BLIC' AND THERE IS NO DEPOSITING, WITHDRAWAL BY CHEQUE OR DRAFT ETC. AFTER CONSIDERING THE SAID JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF QUEPEM URB AN COOPRATIVE CREDIT SOCIETY (SUPRA), WE ARE OF THE OPINION THAT DECISION OF THE CIT (AJ IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, IS SUE RAISED IN THE REVENUE'S APPEAL IS DISMISSED. ' 6. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSU E AS WELL AS RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN T HE CASE OF RCF EMPLOYEES COOP. CREDIT SOCIETY LTD (SUPRA), WHEREIR I ONE OF US (AM) IS A PARTY TO THE SAID ORDER, AND ALSO TO MAINTAIN THE P RINCIPLE OF CONSISTENCY, WE ARE OF THE OPINION THAT THE ASSESSEE IS ENTITLED TO RELIEF. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. 8. CONCLUSIVELY, REVENUE'S APPEAL IS DISMISSED A ND THE APPEAL OF THE ASSESSEE IS ALLOWED. WE FIND THAT IN THE AFORESAID ORDER, THE TRIBUNAL H AS PLACED RELIANCE UPON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF ITO VS M/S R.C.F. EMPLOYEES COOPERAT IVE CREDIT SOCIETY LTD. (ITA NOS.6903 & 7465/MUM/2013) ORDER DATED 29/01/2016. IN THAT CASE, THE DECISION FROM HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF QU EPEM URBAN COOPERATIVE CREDIT SOCIETY LTD. VS ACIT (2015 ) 377 ITR 272 (BOM.) WAS DISCUSSED. CONSIDERING THE AFORE SAID DECISION AND THE CONTENTION RAISED FROM BOTH SIDES, THE ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 6 FACTS BEING SIMILAR, WE FIND NO INFIRMITY IN THE CO NCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THEREF ORE, THE APPEAL OF THE REVENUE IS HAVING NO MERIT, CONSEQUEN TLY, DISMISSED. 3. NOW, WE SHALL TAKE UP THE APPEAL OF THE ASSESS EE (ITA NO.3414/MUM/2014), WHEREIN, THE ONLY GROUND AGITATED BY THE ASSESSEE IS WITH RESPECT TO NOT ALL OWING DEDUCTION OF INTEREST AND DIVIDEND RECEIVED FROM CO - OPERATIVE BANK AMOUNTING TO RS.13,38,674/- U/S 80P( 2)(D) OF THE ACT. THE CRUX OF ARGUMENT ON BEHALF OF THE ASSESSEE IS THAT THE ASSESSEE IS A COOPERATIVE SOCIETY AND I N VIEW OF THE MAHARASHTRA STATE COOPERATIVE SOCIETY ACT, THE ASSESSEE COMPULSORILY HAS TO DEPOSIT 25%. SO FAR AS , THE INVESTMENT IN THE BANK IS CONCERNED, IT WAS EXPLAIN ED BY THE LD. COUNSEL THAT THESE ARE NOT THE INVESTMENT B UT ARE CURRENT ACCOUNTS. IT WAS CONTENDED THAT THE IMPUGN ED ISSUE IS COVERED BY THE DECISION ITO VS GOVT. CENTR AL PRINTING PRESS (ITA NO.5030/MUM/2013) ORDER DATED 29/07/2015. THIS FACTUAL MATRIX WAS CONSENTED TO BE CORRECT BY THE LD. DR. ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 7 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 29/0 7/2015 FOR READY REFERENCE AND ANALYSIS:- THIS APPEAL FILED BY THE REVENUE ON 03.07.2013 IS AGAINST THE ORDER OF THE CIT (A)-26, MUMBAI DATED 30.04.2013 FOR THE ASSESSMENT YEAR 2010-2011. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT (A) ERRED IN DIRECTING TO ALLOW DEDUCTION U/ S 80P TO THE ASSESSEE EVEN THOUGH ASSESSEE CARRIES ON THE BANKIN G BUSINESS AND OTHER BUSINESS IN THE NAME OF A CREDIT COOPERATIVE SOCIETY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) HAS ERRED IN ALLOWING DEDUCTION U/S 80P( 2)(A)(I) WITHOUT CONSIDERING INSERTION OF SECTION 80P(4) AND SUB CLA USE (VIIA) TO SECTION 2(24) VIDE FINANCE ACT, 2006 W.E.F. 1.4.200 7. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) HAS ERRED IN HOLDING THAT THE FACTS OF T HE ASSESSEE S CASE ARE NOT IDENTICAL WITH ANY OF THE CASE LAWS RELIED UPON BY THE AO ESPECIALLY DECISION OF ITAT JAIPUR IN THE CASE OF K EKRI SAHAKARI BHUMI VIKAS BANK LTD AND COCHIN ITAT IN THE CASE OF KERALA STATE COOP. AGRICULTURAL RURAL DEVELOPMENT BANK LTD. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT (A) HAS ERRED IN NOT FOLLOWING HIS OWN ORDER IN THE CASE OF VISHAL JANSEVA SAHAKARI PATSANTHA LTD FOR AY 2008-2 009 ON THE SAME ISSUE VIDE ORDER NO. CIT (A)- 26/IT-30/15(3)(3 )/10-11, DATED 4 TH JULY, 2012. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING THE T OTAL INCOME OF RS. NIL AFTER CLAIMING DEDUCTION U/S 80P OF THE ACT FOR AN AMOUNT OF RS. 40,13,467/-. THE CASE WAS SCRUTINIZED UNDER CASS AND THE NOTICES U/S 143(1) & ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 8 143(2) WERE ISSUED AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT DETERMINING THE ASSESSED INCOME A T RS. 40,13,470/- WHEREIN THE AO DISALLOWED RS. 40,13,467 /- AGAINST THE SAID CLAIM OF DEDUCTION U/S 80P OF THE ACT. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BE FORE THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLAT E AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) ALLOWED THE APPEAL. AGGRIEVED WIT H THE SAID DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS . 4. DURING THE PROCEEDINGS BEFORE US, AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO G ROUND NO.1, WHICH IS THE ONLY EFFECTIVE GROUND TO BE ADJU DICATED, AND SUBMITTED THAT THE ASSESSEE IS A CREDIT COOPERA TIVE SOCIETY AND CLAIMED DEDUCTION U/S 80P(2)(A)(I) OF T HE ACT. HOWEVER, ASSESSING OFFICER TREATED THE SAME AS COOPERATIVE BANK. ON APPEAL, CIT (A) GRANTED RELI EF AS PER THE DISCUSSION GIVEN IN PARA 3.2 AND 3.2.1 OF T HE IMPUGNED ORDER. AGGRIEVED WITH THE SAME REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. IN THIS REGARD, LD COUN SEL FOR THE ASSESSEE FILED VARIOUS ORDERS OF THE ITAT, MUMB AI AS WELL AS THE OTHER BENCHES AND THE JUDGMENT OF THE H ONBLE BOMBAY HIGH COURT IN THE CASE OF QUEPEM URBAN COOPERATIVE CREDIT SOCIETY LTD [2015] 58 TAXMANN.CO M 113 (BOMBAY). 5. AFTER HEARING THE BOTH THE PARTIES IN THIS REGAR D, WE FIND THE SAID JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF QUEPEM URBAND COOPERATIVE CREDIT SOCIETY LT D (SUPRA) IS RELEVANT FOR THE FOLLOWING PROPOSITION: WHERE ASSESSEE-COOPERATIVE SOCIETY COULD NOT BE RE GARDED AS CO- OPERATIVE BANK ON, MERE FACT THAT AN INSIGNIFICANT PROPOSITION OF REVENUE WAS COMING FROM NON-MEMBERS, AND THUS, WAS ENTITLED FOR DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. 6. THEREFORE, CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE DECISION TAKEN BY THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENC E. ACCORDINGLY, GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. REST OF THE GROUNDS IE GROUND NO.2, 3 AN D 4 ARE ARGUMENTATIVE IN NATURE AND THEREFORE, THEY NEED NO ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 9 SPECIAL ADJUDICATION. ACCORDINGLY, THE SAME ARE DIS MISSED AS ACADEMIC. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 3.2. DURING HEARING BEFORE US, THE LD. COUNSEL FO R THE ASSESSEE ALSO CONTENDED THAT FOR ASSESSMENT YEAR 20 12-13, IDENTICALLY, THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) VIDE ORDER DATED 25/04/2016, ALLOWED THE CLAIM OF T HE ASSESSEE. A COPY OF THE ORDER WAS ALSO PLACED ON R ECORD. WE FIND THAT FOR ASSESSMENT YEAR 2012-13, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) A) PLACED RELI ANCE UPON THE DECISION FROM HONBLE GUJARAT HIGH COURT I N THE CASE OF JAFARI MOMIN VIKASH COOPERATIVE CREDIT SOCI ETY LTD. (SUPRA) ALONG WITH ANOTHER DECISION FROM HONBLE HI GH COURT IN QUEPEM URBAN COOPERATIVE SOCIETY (SUPRA) A ND ALSO THE DECISION FROM KARNATAKA HIGH COURT IN SHRI VARDHMAN URBAN COOPERATIVE CREDIT SOCIETY LTD. (ITA NO.100038 OF 2014. THERE IS A FINDING BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR ASSESSMENT YEAR 2012-13 (PARA 5.3) THAT THE ASSESSEE HAS LIMITED HI MSELF TO OWN MEMBERS AND HAS NOT PROVIDED BANKING FACILITY E ITHER TO PUBLIC AT LARGE OR EVEN TO THE MEMBERS OF THE SO CIETY. ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 10 THUS, CONSIDERING THE DECISION FROM HONBLE JURISDI CTIONAL HIGH COURT IN QUEPEM URBAN COOPERATIVE CREDIT SOCIE TY (2015) 58 TAXMAN.COM 113 (BOM.), WE FIND MERIT IN T HE CONTENTION OF THE ASSESSEE. IN ANOTHER CASE IN ITO VS M/S HOOSEINI CO-OP. CREDIT SOCIETY LTD. (ITA NO2965/M/2 014 AND 3556/MUM/2014) ORDER DATED 09/02/2016, IT WAS HELD AS UNDER:- 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY AND REGI STERED UNDER THE CO- OPERATIVE SOCIETIES ACT, 1960. THE OBJECT O F THE SOCIETY IS TO ENABLE ITS MEMBERS TO SALE THEIR EARNING AND TO OBTAIN LOAN FROM THE SOCIETY. 3. THE ISSUE CONTESTED BY THE REVENUE RELATES TO TH E CLAIM FOR DEDUCTION U/S 80P OF THE ACT. THE ASSESSEE CLAIMED DEDUCTION U/S 80P((2)(A)(I) OF THE ACT. THE AO TOOK THE VIEW THAT THE ASSESSEE FALLS UNDER THE CATEGORY OF 'CO-OPERATIVE BANK' AND ACCORDINGLY BY FOLLOWING THE PROVISIONS OF SECTION 80P(4) REJEC TED THE CLAIM FOR DEDUCTION U/S 80P OF THE ACT. THE LD. CIT(A), H OWEVER, ALLOWED THE CLAIM OF THE ASSESSEE AND HENCE THE REV ENUE HAS FILED THIS APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES ON THIS ISSUE AND PERU SED THE RECORD. THE LD. AR PLACED RELIANCE ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF QUEPEM URBAN CO-OP ERATIVE CREDIT SOCIETY LTD V/S ACIT REPORTED IN (2015) 377 ITR 272 (BOM) AND SUBMITTED THAT A CO- OPERATIVE SOCIETY TR ANSACTING MAINLY WITH ITS MEMBERS CANNOT BE TREATED AS CO-OPE RATIVE BANK. THE LD. AR FURTHER SUBMITTED THAT IN THE CASE BEFOR E THE HON'BLE BOMBAY HIGH COURT, THE ASSESSEE THEREIN WAS PROVIDI NG CREDIT MAINLY TO ITS MEMBERS AND TRANSACTION WITH NON-MEMB ERS WAS ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 11 INSIGNIFICANT. DESPITE THIS FACT, THE HON'BLE BOMBA Y HIGH COURT HAS HELD THAT THE ASSESSEE THEREIN COULD NOT BE TRE ATED AS CO- OPERATIVE BANK AND ACCORDINGLY ALLOWED THE DEDUCTIO N U/S 80P OF THE ACT TO THE SAID ASSESSEE. THE LD. AR FURTHER SU BMITTED THAT THE ASSESSEE BEFORE US WAS PROVIDING A CREDIT ONLY TO I TS MEMBERS AND HENCE, THE CASE OF THE ASSESSEE STANDS IN STRONGER FOOTING. THE LD. AR FURTHER PLACED RELIANCE ON THE DECISION RENDERED BY THE SMC BENCH OF MUMBAI TRIBUNAL, IN M/S JAOLI TALUKA SAHAK ARI PATPEDHI MARYADIT V/S ITO IN ITA NO.6627/MUM/2014 ( AY- 2010- 11) DATED 10.8.2015, WHEREIN THE TRIBUNAL, BY FOLLO WING THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CAS E OF TUMKUR MERCHANTS SOUHARDA 2965/M/2014 AND 3556/MUM/2014 CR EDIT CO-OPERATIVE LTD. (2015) (230 TAXMAN 309) AND ALSO THE DECISION RENDERED BY THE HON'BLE SUPREME COURT IN THE CASE O F TOTGARS CO- OPERATIVE SALE SOCIETY LTD (2010) (229 CTR (SC) 209) HELD THAT THE DEDUCTION U/S 80P CANNOT BE REJECTED TO A CO-OPERATIVE SOCIETY. 5. ON THE CONTRARY, THE LD. DR PLACED STRONG RELIAN CE ON THE ORDER O F AO. 6. HAVING HEARD THE RIVAL CONTENTIONS, WE NOTICE TH AT THE ISSUE RAISED BEFORE US STANDS SQUARELY COVERED BY THE DEC ISION OF THE HON'BLE BOMBAY HIGH COURT OF BOMBAY RENDERED IN THE CASE OF QUEPEM URBAN CO- OPERATIVE CREDIT SOCIETY LTD (SUPR A). SINCE THE DECISION RENDERED BY LD CIT(A) ON THIS ISSUE IS IN ACCORDANCE WITH THE BINDING DECISION OF HON'BLE BOMBAY HIGH CO URT, WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS ORDER PAS SED ON THIS ISSUE. 7. THE APPEAL FILED BY THE ASSESSEE RELATES TO THE DECISION OF TAX AUTHORITIES IN ASSESSING THE INTEREST INCOME RECEIV ED FROM FIXED DEPOSITS UNDER THE HEAD 'INCOME FROM OTHER SOURCES' . THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION RENDERED BY THE HON'BLE KARNATAKA HIGH COURT RENDER ED IN THE ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 12 CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT CO-OPERATI VE LTD. (SUPRA), WHEREIN THE HON'BLE HIGH COURT HAS HELD TH AT THE INTEREST INCOME EARNED FROM DEPOSITS KEPT WITH BANK SHALL FORM PART OF 'BUSINESS INCOME'. ACCORDINGLY, THE DEDUCTI ON U/S 80P OF THE ACT IS ALLOWABLE TO THE INTEREST INCOME AS PER THE DECISION PASSED BY THE HON'BLE KARNATAKA HIGH COURT. ACCORDI NGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ASSESS THE INTEREST INCOME UNDER THE HEAD 'INCOME F ROM BUSINESS' AND ACCORDINGLY ALLOW THE DEDUCTION U/S 8 0P OF THE ACT. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. 3.3. IN VIEW OF THE EXPLANATION/CLAIM OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE DISPUTED AMOUNTS FROM THE ALLEGED BANKS ARE NOT INVESTMENT BUT IS A CURRE NT ACCOUNT AND THE FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR ASSESSMENT YEAR 2012-13 AND ALSO IN THE ABSENCE OF ANY CONTRARY DECISION MORE SPECIFICALLY FROM THE REVENUE SIDE, THE ASSESSEE BEING A COOPERATIVE SOCI ETY, THEREFORE, PROVIDING CREDIT FACILITIES TO ITS MEMBE RS IS AN ALLOWABLE DEDUCTION U/S 80P(2) OF THE ACT. HOWEVER, IN TERMS OF SECTION 80P, THE MEANING OF THE WORDS COO PERATIVE BANK HAS TO BE THE MEANING ASSIGN TO IT IN CHAPTER V OF THE BANKING REGULATION ACT, 1949. A COOPERATIVE BAN K IS DEFINED IN SECTION 5(CCI) OF THE BANKING REGULATION ACT TO ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 13 MEAN A STATE COOPERATIVE BANK, A CENTRAL COOPERATIV E BAND AND A PRIMARY COOPERATIVE BANK. ADMITTEDLY, THE ASS ESSEE IS NEITHER A STATE COOPERATIVE BANK NOR CENTRAL COO PERATIVE BANK BUT A COOPERATIVE SOCIETY. WE MAY CLARIFY HERE THAT SO FAR AS THE CONTENTION O F THE REVENUE THAT THE ASSESSEE DEALS WITH NON-MEMBER S IS CONCERNED, WE ARE OF THE VIEW THAT SECTION 80P(1) R ESTRICT THE BENEFIT OF DEDUCTION OF INCOME OF COOPERATIVE S OCIETY TO THE EXTENT IT IS EARNED BY PROVIDING CREDIT FACILIT IES TO ITS MEMBERS, THEREFORE, TO THE EXTENT OF INCOME EARNED IS ATTRIBUTABLE TO THE DEALINGS WITH NON-MEMBERS ARE CONCERNED, THE BENEFIT OF SECTION 80P WILL NOT BE A VAILABLE, THUS, WHILE GIVING EFFECT TO THE ORDER, THE AUTHORI TIES WOULD RESTRICT THE BENEFIT OF DEDUCTION U/S 80P ONLY TO T HE EXTENT THAT THE SAME IS EARNED BY THE APPELLANT IN CARRYIN G ON ITS BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMB ERS. WITH THIS RIDER, THE APPEAL OF THE ASSESSEE IS ALLOWED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED AND THAT OF THE ASSESSEE IS ALLOWED. ITA NO.2936 & 3414/MUM/2014 M/S THE CENTRAL TELEGRAPH OFFICE CO-OP. CREDIT SOCIETY LIMITED 14 THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 23/05/2016. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; # DATED : 23/05/2016 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT (RESPECTIVE ASSESSEE) 2. )*'( / THE RESPONDENT. 3. + + , ( %& ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI, 5. /01 )2 , + %& %23 , / DR, ITAT, MUMBAI 6. 14 5 / GUARD FILE. / BY ORDER, */& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI