M/s.Karakulam Service Co-op bank Ltd, Trivandrum V. The ITO, Trivandrum

ITA 297/COCH/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8387 (ITAT-COCHIN)
• Duration Of Justice: 3 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: T M SREEDHARANSMT DIVYA
• Keywords: Question of law
• Section: 143(3); 260A; 263

Judgement Text

ITA NO . 29 7/C/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH KOCHI BEFORE S/ SHRI B P JAIN , AM & GEORGE GEORGE K, JM ITA NO 297/COCH/2013 (A SST YEAR 2008 - 09 ) M/S KARAKULAM SERVICE COOPERATIVE BANK LTD KARAKULAM PO THI RVANANTHAPURAM VS THE INCOME TAX OFFICER WARD 1(1), THIRUVANANTHAPURAM ( APPELLANT) (RESPONDENT) PAN NO. AAAAT7698C ASSESSEE BY SH T M SREEDHARAN/SMT DIVYA REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 27 TH JU LY 2016 DATE OF PRONOUNCEMENT 27 TH JU LY 2016 ORDER PER GEORGE GEORGE K, JM; THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DIRECTED AGAINST THE CIT S ORDER DATED 21.3.2013 PASSED U/S 263 OF THE I T ACT. THE RELEVANT ASSESSMENT YEAR IS 2008 - 09. 2 THE BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A COOPERATIVE SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT 1969. FOR THE RELEVANT ASSESSMENT YEAR , RETURN OF INCOME WAS FILED ON 22.2.2008 DISCLOSING NIL INCOME AFTER CLAIMING DEDUCTION U/S 80P OF THE I T ACT AMOUNTING TO RS. 62,0 3,216/ - . THE ASSESSMENT U/S 143(3) ITA NO . 29 7/C/2013 2 WAS COMPLETED VIDE ORDER DATED 25.12.2010 ON A TOTAL INCOME OF RS. 6,30,000/ - . THE AO , IN THE SCRUTINY ASSESSMENT COMPLE TE D , HAD GRANTED THE CLAIM OF DEDUCTION U/S 80P OF THE ACT. 3 THE CIT , BY INVOKI NG HIS RE VISIONARY POWER U/S 263 OF THE AC T , HELD THAT DEDUCTION ALLOWED BY THE A O U/S 80P(2)( A)( I ) OF THE ACT , IS ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF REVENUE . THE CIT S E T ASIDE THE ASSESSMENT ORDER AND DIRECTED THE AO TO COMPLETED THE ASSES SMENT AFRESH DENY ING THE BENEFIT OF DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. 4 ON FURTHER APPEAL, THE TRIBUNAL IN ITA NO. 297/COCH/2013 DATED 4.10.2013 UPHELD THE ACTION OF THE CIT IN INVOKING THE PROVISIONS OF SECTION 263 OF THE AC T. HOWEVER , THE DIRECTIONS OF THE CIT WERE MODIFIED AND THE A O WAS GIVEN THE LIBERTY TO EXAMINE THE CLAIM OF DEDUCTION U/S 80P(2) OF THE A C T, DE HORS THE OBSERVATIONS OF THE CIT. THE RELEVANT FINDING OF THE TRIBUNAL READS AS FOLLOWS: 10 THE LD AR SUBMITTED THAT THE LD CIT HAS DIRECTED THE AO TO WITHDRAW DEDUCTION GRANTED U/S 80P OF THE AC T. HENCE, THE AO WILL NOT HAVE ANY OTHER OPTION BUT TO COMPLY WITH HIS DIRECTION. ACCORDINGLY HE SUBMIT TED THAT THE ORDER OF LD CIT MAY BE MODIFIED S UITABLY SO THAT THE AO SHALL BE IN A POSITION TO TAKE AN INDEPENDENT VIEW ON THIS MATTER. WE FIN D FORCE IN THE SAID PLEA OF LD AR. ACCORDINGLY , WE M ODIFY THE ORDER OF LD CIT AND DIRECT THE AO TO EXAMINE INDEPENDENTLY ABOU T THE APPLICABILITY OF SEC. 80P(4) OF THE AC T TO THE FACTS OF THE INSTANT CASE UNTRAMMELED BY THE OBSERVATIONS OF LD CIT AND TAKE APPROPRIATE DEC ISION IN ACCORDANCE WITH LAW, AFTER AFFORDING NECESSARY OPPORTUNITY OF HEA RING TO THE ASSESSEE. 5 THE ASSESSEE, PREFERRED APPEAL TO THE HON BLE HIGH COURT U/S 260A OF THE ACT AGAINST THE T RIBUNAL ORDER DATED 4.10.2013 . T HE HON BLE HIGH COURT ITA NO . 29 7/C/2013 3 DISPOSED OFF THE ASSESSEE S APPEAL ALONG WITH OTHER CASES IN ITA NO.156 OF 2014 (JUDGMENT DATED 15.2.2016). THE HON BLE HIGH COURT CONSIDERED THREE QUESTIONS OF LAW AND THE FIRST QUESTION OF LAW READ AS FOLLWOS : 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 P RIMARY AGRICULTURAL CREDIT SOCIETY? 5.1 IN DECIDING THE ABOVE QUESTION , THE HON BLE HIGH COURT HELD THAT THE ASSESSEE SOCIETY WAS ENTITLED TO EXEMPTION U/S 80 P (2) OF THE ACT , S INCE IT IS REGISTERED AS A PRIMARY AGRICULTURAL CREDIT SOCIETY UNDER KERALA COOPERATIVE SOCIETIES ACT, 1969. THE RELEVANT FINDINGS OF THE HONBLE HIGH COURT READ AS UNDER: 17. IN THE LIGHT OF THE AFORESAID, WE ANSWER SUBSTANTIA 1 QUESTIO N 'A' IN FAVOUR OF THE APPELLANTS AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING 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 UNDE R THE KCS ACT; AND CLASSIFIED SO, UNDER THAT ACT, INCLUDING THE APPELLANTS ARE ENTITLED TO SUCH EXEMPTION. 5.2 THE HON BLE HIGH COURT , AFTER RENDERING THE ABOVE FINDINGS HAS REMITTED THE C A SE TO THE TRIBUNAL. IT IS IN THIS CONTEXT THE MATTER WAS AGAIN HEARD BY US TODAY THE 27 TH JULY 2016. SINCE THE HON BLE HIGH COURT HAS HELD THAT THE ASSESSE E S SOCIETY IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2) , WE QUASH THE ORDER OF THE C IT PASSED U/S 263 OF THE A C T, WHICH HAD DIRECTED THE AO TO DENY THE BENEFIT OF SECTION 80P (2)(A) (I) OF THE AC T. IT IS ORDERED ACCORDINGLY . ITA NO . 29 7/C/2013 4 6 I N THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF JULY 2016 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 27 TH JULY 2016 RAJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT, 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN