M/s.Narikkuni Service Co-op Bank Ltd Service Co-op Bank Ltd, Calicut V. The ITO, Calicut

ITA 297/COCH/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3916 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2017
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 05-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 20-05-2015
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Keywords: Question of law; Competent authority
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI ABRAHAM P. GEORGE, AM & GEORGE GEORGE K., JM I .T.A. NO. 297/ C OCH/201 5 ASSESSMENT YEAR : 201 0 - 1 1 NARIKUNNI SERVICE CO - OPERATIVE BANK, NO. L L 143, P.O. NARIKUNNI, KOZHIKODE-673 585. [PAN:AAAAN 7161Q] VS. THE INCOME TAX OFFICER, WARD - 2(3), KOZHIKODE. (ASSESSEE - APPELLANT) (REVENUE - RES PONDENT) ASSESSEE BY NONE REVENUE BY SHRI A. DHANARAJ, SR. DR D ATE OF HEARING 05/06 / 201 7 DATE OF PRONOUNCEMENT 06 / 0 6 /201 7 O R D E R PER ABRAHAM P.GEORGE, ACCOUNTANT MEMBER: THIS IS A MATTER REMITTED BACK TO THE TRIBUNAL BY HONBLE JURISDICTIONAL HIGH COURT THROUGH A JUDGMENT DATED 12 TH AUGUST, 2016 IN I.T.A. NO.89/2016. OPERATIVE PART OF THE JUDGMENT OF THE HONBLE JURIS DICTIONAL HIGH COURT IS REPRODUCED HEREUNDER: 2. ON HEARING BOTH SIDES, WE FIND THAT THE ISSUES RAISED ARE ENTIRELY COVERED BY THE JUDGMENT OF THIS COURT IN CHIRAKKAL SERVICE CO- I.T.A. NO.297 /COCH/2015 2 OPERATIVE BANK LIMITED V. COMMISSIONER OF INCOME TA X [2016 (2) KLT 535] . 3. THE QUESTION OF LAW FRAMED STANDS ANSWERED IN T ERMS OF THE JUDGMENT MENTIONED ABOVE AND THE MATTER WILL STAND REMITTED TO THE APPELLATE TRIBUNAL. 2. WHEN THE MATTER WAS TAKEN UP TODAY, PURSUANT TO THE DIRECTIONS OF THE HONBLE JURISDICTIONAL HIGH COURT, NOBODY APPEA RED ON BEHALF OF THE ASSESSEE. ONE OF THE REASONS ASSESSEE WAS DENIED DE DUCTION CLAIMED BY IT U/S. 80P(2)(I)(A) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) WAS THAT IT HAD FILED ITS RETURN OF INCOME FOR THE I MPUGNED ASSESSMENT YEAR BEYOND THE TIME LIMITS SPECIFIED IN SECTION 13 9(4) OF THE ACT. AS PER THE ASSESSING OFFICER, BY VIRTUE OF SECTION 80P (5) OF THE ACT, DEDUCTION UNDER CHAPTER VIA COULD NOT BE GIVEN WHERE THE RETURN OF INCOME WAS FILED BEYOND TIME ALLOWED U/S. 139(4) OF T HE ACT. SECOND REASON FOR DENYING THE CLAIM WAS THAT, AS PER THE AS SESSING OFFICER, ASSESSEE COULD ONLY BE CONSIDERED AS A CO-OPERATIVE BANK AND THUS HIT BY SECTION 80P(4) OF THE ACT. CIT(A), ON ASSESSEE S APPEAL HAD UPHELD THE VIEW OF THE ASSESSING OFFICER. FURTHER APPEAL F ILED BY THE ASSESSEE BEFORE THIS TRIBUNAL ALSO DID NOT HAVE ANY SUCCESS. I.T.A. NO.297 /COCH/2015 3 3. NOW HONBLE JURISDICTIONAL HIGH COURT HAS REMIT TED THE CASE BACK TO USL FOR CONSIDERING THE ISSUES AFRESH BASED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF KERALA, IN THE CASE OF CHIRAK KAL SERVICE CO- OPERATIVE BANK LTD. VS. CIT (384 ITR 490).. 4. LD. DR, STRONGLY SUPPORTING THE ORDERS OF THE AUTHORITIES BELOW, SUBMITTED THAT ASSESSEE HAD ADVANCED LOANS TO ITS M EMBERS FOR SHORT TERM NON AGRICULTURAL PURPOSE AND SUCH LOANS CAME T O 55.35% OF THE TOTAL ADVANCES. ACCORDING TO HIM, DEDUCTION U/S. 8 0P(2)(I)(A) COULD NOT BE ALLOWED AND EVEN IF ALLOWED IT HAD TO BE RESTRICTE D TO THE PROFITS ON LOANS GIVEN BY THE ASSESSEE FOR THE AGRICULTURAL RE LATED ACTIVITIES. 5. WE HAVE HEARD THE CONTENTIONS OF THE LD. DR. ASSESSEE WAS DENIED THE DEDUCTION CLAIMED BY IT FOR THE REASON T HAT THE RETURN WAS FILED BELATEDLY AND TREATING IT AS A CO-OPERATIVE B ANK. IN SO FAR AS BELATED FILING OF RETURN IS CONCERNED, WE FIND THAT THE ISSUE STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE J UDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CH IRAKKAL SERVICE CO- OPERATIVE BANK LTD. VS. CIT (SUPRA). PARAS 18 TO 2 1 OF THE JUDGMENT ARE REPRODUCED HEREUNDER: I.T.A. NO.297 /COCH/2015 4 18. QUESTIONS B AND C RELATE TO DENIAL OF EXEMPTION ON GROUND REFERABLE TO BELATED FILING OF RETURN, THAT IS TO S AY, RETURNS FILED BEYOND THE PERIOD STIPULATED U/S. 139(1) OR SECTION 139(4),AS THE CASE MAY BE, AS WELL AS SECTION 142(1) OR SECTION 1 48, AS THE CASE MAY BE. THERE ARE NO CASES AMONG THESE APPEALS WHE RE RETURNS WERE NOT FILED. THERE ARE CASES WHERE CLAIMS HAVE BEEN MADE ALONG WITH THE RETURNS AND THE RETURNS WERE FILED W ITHIN TIME. STILL FURTHER, THERE ARE CASES WHERE RETURNS WERE FILED B ELATEDLY, THAT IS TO SAY, BEYOND THE PERIOD STIPULATED UNDER SUBSECTI ON 1 OR 4 OF SECTION 139; AND, THERE ARE ALSO RETURNS FILED AFTE R THE PERIOD WITH REFERENCE TO SECTIONS 142(1) AND 148 OF THE I.T. AC T. 19. SECTION 80A(5) PROVIDES THAT WHERE THE ASSESSE E FAILS TO MAKE A CLAIM IN HIS RETURN OF INCOME FOR ANY DEDUCTION, INTER ALIA, UNDER ANY PROVISION OF CHAPTER VIA UNDER THE HEADING C-D EDUCTIONS IN RESPECT OF CERTAIN INCOMES, NO DEDUCTION SHALL BE ALLOWED TO HIM THEREUNDER. THEREFORE, IN CASES WHERE NO RETURNS HA VE BEEN FILED FOR A PARTICULAR ASSESSMENT YEAR, NO DEDUCTIONS SHA LL BE ALLOWED. THIS EMBARGO IN SECTION 80A(5) WOULD APPLY, THOUGH SECTION80P IS NOT INCLUDED IN SECTION 80AC. THIS IS SO BECAUSE, THE INHIBITION AGAINST ALLOWING DEDUCTION IS WORDED IN QUITE SIMIL AR TERMS IN SECTIONS 80A(5) AND 80AC, OF WHICH SECTION 80A(5), IS A PROVISION INSERTED THROUGH THE FINANCE ACT 33/2009 WITH EFFEC T FROM 1.4.2013 AFTER THE INSERTION OF SECTION 80AC AS PER THE FINANCE ACT, 2006 WITH EFFECT FROM 1.4.2006. THIS CLEARLY EVIDENCES THE LEGISLATIVE INTENDIMENT THAT THE INHIBITION CONTAIN ED IN SUBSECTION 5 OF SECTION 80A WOULD OPERATE BY ITSELF. IN CASES W HERE RETURNS HAVE BEEN FILED, THE QUESTION OF EXEMPTIONS OR DEDU CTIONS REFERABLE TO SECTION 80P WOULD DEFINITELY HAVE TO B E CONSIDERED AND GRANTED IF ELIGIBLE. 20. HERE, QUESTIONS WOULD ARISE AS TO WHETHER BELAT ED RETURNS FILED BEYOND THE PERIOD STIPULATED U/S. 139(1) OR S ECTION 139(4) AS WELL AS FOLLOWING SECTIONS 142(1) AND 148 PROCEEDIN GS COULD BE CONSIDERED FOR EXEMPTION. IF THOSE RETURNS ARE ELI GIBLE TO BE ACCEPTED IN TERMS OF LAW, GOING BY THE PROVISIONS O F THE STATUTE AND THE GOVERNING BINDING PRECEDENTS, IT GOES WITHO UT SAYING THAT THE CLAIM OF EXEMPTION WILL ALSO STAND EFFECTUATED AS A CLAIM DULY MADE AS PART OF THE RETURNS SO FILED, FOR DUE CONSI DERATION. I.T.A. NO.297 /COCH/2015 5 21. WHEN A NOTICE U/S. 142(1) IS ISSUED, THE PERSO N MAY FURNISH THE RETURN AND WHILE DOING SO, COULD ALSO MAKE CLAI M FOR DEDUCTION REFERABLE TO SECTION 80P. NOT MUCH DIFFERENT IS THE SITUATION WHEN PRE-ASSESSMENT ENQUIRY IS CARRIED FORWARD BY ISSUAN CE OF NOTICE UNDER SECTION 142(1) OR WHEN NOTICE IS ISSUED ON TH E PREMISE OF ESCAPED ASSESSMENT REFERABLE TO SECTION 148 OF THE IT ACT. THIS POSITION NOTWITHSTANDING, WHEN AN ASSESSMENT IS SUB JECTED TO FIRST APPEAL OR FURTHER APPEALS UNDER THE IT ACT OR ALL Q UESTIONS GERMANE FOR CONCLUDING THE ASSESSMENT WOULD BE RELE VANT AND CLAIMS WHICH MAY RESULT IN MODIFICATION OF THE RETU RNS ALREADY FILED COULD ALSO BE ENTERTAINED, PARTICULARLY WHEN IT REL ATES TO CLAIMS FOR EXEMPTIONS. THIS IS SO BECAUSE THE FINALITY OF ASSE SSMENT WOULD NOT BE ACHIEVED IN ALL SUCH CASES, UNTIL THE TERMIN ATION OF ALL SUCH APPELLATE REMEDIES. UNDER SUCH CIRCUMSTANCES, THE TRIBUNAL WAS NOT JUSTIFIED IN DENYING EXEMPTION U/S. 80P OF THE IT ACT ON THE MERE GROUND OF BELATED FILING OF RETURN BY THE ASSE SSEE CONCERNED. A RETURN FILED BY THE ASSESSEE BEYOND THE PERIOD ST IPULATED U/S. 139(1) OR 139(4) OR U/S. 142(1) OR SECTION 148 CAN ALSO BE ACCEPTED AND ACTED UPON PROVIDED FURTHER PROCEEDING S IN RELATION TO SUCH ASSESSMENTS ARE PENDING IN THE STATUTORY HI ERARCHY OF ADJUDICATION IN TERMS OF THE PROVISIONS OF THE IT A CT. IN ALL SUCH SITUATIONS, IT CANNOT BE TREATED AS NON EST IN LAW AND INVALID FOR THE PURPOSE OF DECIDING EXEMPTION U/S. 80P OF THE IT AC T. WE THUS ANSWER SUBSTANTIAL QUESTIONS OF LAW B AND C FORMULA TED AND ENUMERATED ABOVE. 6. THE OTHER QUESTION THAT REMAINS IS WHETHER ASSES SEE COULD BE CONSIDERED AS CO-OPERATIVE BANK, THEREBY COMING WITH IN THE RESTRICTIVE SUBSECTION (4) OF SECTION 80P. THERE IS NOTHING ON RECORD TO SHOW WHETHER ASSESSEE WAS RECOGNISED AS A CO-OPERATIVE BA NK WITHIN THE MEANING OF SECTION 5(CCIV) OF BANKING REGULATIONS A CT BY THE RESERVE BANK OF INDIA. CATEGORISATION OF THE ASSESSEE IN T HE CERTIFICATE ISSUED TO THE ASSESSEE BY THE COMPETENT AUTHORITY UNDER KERAL A CO-OPERATIVE SOCIETIES ACT, 1969 IS ALSO NOT ON RECORD. WE ARE, THEREFORE, OF THE I.T.A. NO.297 /COCH/2015 6 OPINION THAT THE ISSUE RELATING TO THE STATUS OF TH E ASSESSEE REQUIRES A FRESH LOOK BY THE ASSESSING OFFICER. THEREFORE, WHI LE HOLDING THAT ASSESSEE COULD NOT BE DENIED ITS CLAIM OF DEDUCTION U/S. 80P FOR A REASON THAT IT FILED ITS RETURN BELATEDLY, WE REMIT THE MATTER BACK TO THE ASSESSING OFFICER TO VERIFY WHETHER ASSESSEE WAS A CO -OPERATIVE BANK FALLING WITHIN THE MEANING OF SECTION 80P(4) OF THE ACT, AFTER CONSIDERING THE LAW LAID DOWN IN THIS REGARD BY HONBLE JURISDICT IONAL HIGH COURT AND RECORDS IN SUPPORT OF ITS CLAIM PRODUCED BY THE ASS ESSEE. ASSESSEE IS DIRECTED TO COOPERATE WITH THE ASSESSING OFFICER. O RDERS OF LOWER AUTHORITIES ARE SET ASIDE TO THIS EXTENT. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESS EE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPE N COURT ON 06-06-2017. SD/- SD/- (GEORGE GEORGE K.) ( ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 06 TH JUNE, 2017 GJ I.T.A. NO.297 /COCH/2015 7 COPY TO: 1.NARIKUNNI SERVICE CO-OPERATIVE BANK, NO. L L 143, P.O. NARIKUNNI, KOZHIKODE-673 585. 2. THE INCOME TAX OFFICER, WARD-2(3), CALICUT. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE. 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN