ITO 20(2)(2), MUMBAI V. MAHATMA FULE CO OP CREDIT SOCIETY LTD, MUMBAI

ITA 3130/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9367 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 01-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 142(1); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE S HRI G.S. PANNU (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 3130 /MUM/20 1 7 ASSESSMENT YEAR: 2013 - 14 THE ITO 20(2)(2), 2 ND FLOOR, R. NO. 212, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI VS. M/S MAHATMA FULE CO - OP CREDIT SOCIETY LTD., 3, JERBAI WADIA BUILDING, DR. BABASAHEB AMBEDKAR ROAD, BYCULLA, MUMBAI - 400027 PAN: AAAAM2156N (APPELLANT) (RESPONDENT) & ITA NO. 3131 /MUM/201 7 ASSESSMENT YEAR: 2014 - 15 THE ITO 20(2)(2), 2 ND FLOOR, R. NO. 212, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI VS. M/S MAHATMA FULE CO - OP CREDIT SOCIETY LTD., 3, JERBAI WADIA BUILDING, DR. BABASAHEB AMBEDKAR ROAD, BYCULLA, MUMBAI - 400027 PAN: AAAAM2156N (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SAUR ABH DESHPANDE (DR) ASSESSEE BY : SHRI AKASH KUMAR (A R) DATE OF HEARING: 04 /09 /201 7 DATE OF PRONOUNCEMENT: 27 / 0 9 /201 7 O R D E R PER RAM LAL NEGI, JM THESE APPEAL S HAVE BEE N FILED BY THE REVENUE AGAINST ORDER S DATED 16/02/2017 PASSED BY THE LD. CIT (APPEALS) - 32 , MUMBAI , FOR THE ASSESSMENT YEAR S 2013 - 2014 AND 2014 - 2015 RESPECTIVELY , WH E R E BY THE LD. CIT (A) ALLOWED 2 ITA NO S . 313 0 & 3131 /MUM/2017 ASSESSMENT YEAR S : 2013 - 14 & 2014 - 15 BOTH THE APPEALS FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDERS PASSED U/S 1 43 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). SINCE, BOTH THE APPEALS PERTAIN TO THE SAME ASSESSEE, THE SAME WERE CLUBBED AND HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 3130/MUM/2017 (ASS ESSMENT YEAR: 2013 - 2014 ) 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A CO - OPERATIVE CREDIT SOCIETY REGISTERED UNDER MAHARASHTRA CO - OPERATIVE SOCIETIES ACT, 1960 FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013 - 14 DECLARING TOTAL INCOME OF RS. 2,73,218/ - AFTER CLAIMING DEDUCTIONS U/S 80P OF THE ACT AMOUNTING TO RS. 1,03,54,883/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) AND 142(1) WAS ISSUED. IN RESPONSE THEREOF THE ASSESSEE FILED THE DETAILS THROUGH ITS AUTHORIZED REPRESENTATIVE . THE MAIN OBJECT OF THE SOCIETY IS ACCEPTING DEPOSITS AND ADVANCING LOAN TO ITS MEMBER. THE PAID CAPITAL OF THE SOCIETY WAS RS. 4,24,08,460/ - AS ON 31/03/2013 AND IT RECEIVED INTEREST OF RS. 1,90,42,537/ - FROM DEPOSITS AMOUNT ING TO RS.19,88,50,248/ - . THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE ASKING AS TO WHY CLAIM U/S 80 OF THE ACT SHOULD NOT BE DISALLOWED IN TERMS OF FINANCE ACT AMENDMENT 2006 APPLICABLE FROM 01.04.2007. 3. IN RESPONSE TO THE NOTICE THE ASSESSEE, THROUGH ITS AUTHORIZED REPRESENTATI VE, FILED WRITTEN SUBMISSION STATING THAT BANKING BUSINESS IS DIFFERENT FROM THE ACTIVITIES OF CREDIT CO - OPERATIVE SOCIETIES AND AS PER THE CBDT CIRCULAR NO. 6/2010 AND THE JUDGMENTS OF THE VARIOUS HIGH COURTS INCLUDING THE HONBLE BOMBAY HIGH COURT DELIVE RED IN QUEPEM URBAN CO - OPERATIVE SOCIETY LTD.(2015) 58 TAXMANN113 AND DECISIONS OF THE VARIOUS BENCHES OF THE TRIBUNAL, THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80P OF THE ACT. HOWEVER, THE AO REJECTING THE SUBMISSIONS OF THE ASSESSEE HELD THAT THE ASSES SEE IS NOT ELIGIBLE FOR THE SAID DEDUCTION AND DETERMINED THE INCOME OF THE ASSESSEE ACCORDINGLY. 3 ITA NO S . 313 0 & 3131 /MUM/2017 ASSESSMENT YEAR S : 2013 - 14 & 2014 - 15 4. IN THE FIRST APPEAL, THE LD. CIT(A) DECIDED THE SAID ISSUE IN FAVOUR OF THE ASSESSEE RELYING ON THE CASES RELIED UPON BY THE ASSESSEE AND ALLOWED THE APPEA L OF THE ASSESSEE. THE REVENUE IS IN APPEAL AGAINST THE FINDINGS OF THE LD. CIT(A). 5 . THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT (A) IS JUSTIFIED IN ALLOWING DEDUCTION U/S. 80P TO THE ASSESSEE EVEN THOUGH ASSESSEE CARRIES ON THE BANKING BUSINESS AND OTHER BUSINESS IN THE NAME OF A CREDIT CO - OPERATIVE SOCIETY? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) IS JUSTIFIED IN ALLOWING DEDUCTION U/S. 80P(2)(A)(I) WITHOUT CONSIDERING INSERTED SECTION 80P (4) AND SUB - CLAUSE (VIIA) TO SECTION 2(24) VIDE FINANCE ACT 2006 W.E.F. 01 - 04 - 2007? 6. BEFORE US, THE LD. DEPARTMENTAL REPRESENT ATIVE (DR) RELYING ON THE ASSESSMENT ORDER PASSED BY THE AO SUBMITTED THAT THE ASSESSEE FULFILLS ALL THE THREE CONDITIONS LAID DOWN U/S 56(C) (CCV) OF PART V OF THE BANKING REGULATION ACT, 1949 AND THEREFORE FALLS IN THE CATEGORY OF A PRIMARY CO - OPERATIVE BANK, THEREFORE, THE PROVISIONS OF SECTION 80P (4) COMES INTO PICTURE IN THE CASE. SINCE, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80P (2) (A)(I) READ WITH 80P(4), THE AO HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. THE LD. DR FURTHER SUBMITTED THAT THE ORDER OF THE LD. CIT (A) IS ERRONEOUS THEREFORE THE SAME MAY BE SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER MAY BE RESTORED. 7. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RELYING ON THE FINDINGS OF THE LD. CIT (A) SUBMITTED THAT T HE FINDINGS OF THE LD. CIT (A) ARE BASED ON THE EXPRESSED PROVISIONS OF LAW AND IN ACCORDANCE WITH THE DECISIONS OF THE VARIOUS HIGH COURTS INCLUDING THE HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF QUEPEM URBAN CO - OPERATIVE SOCIETY LTD. (SUPR A) AND THE 4 ITA NO S . 313 0 & 3131 /MUM/2017 ASSESSMENT YEAR S : 2013 - 14 & 2014 - 15 DECISIONS RENDERED BY VARIOUS BENCHES OF THE TRIBUNAL, REFERRED IN THE IMPUGNED ORDER. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THERE IS NO MERIT IN THE APPEAL OF THE REVENUE , THE SAME IS LIABLE TO BE DISMISSED. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE CASES RELIED UPON BY THE AUTHORITIES BELOW. THE ONLY ISSUE TO BE ADJUDICATED IS THAT WHETHER THE LD. CIT (A) HAS ERRED IN HOLDING THE ASSESSEE A CO - OPERATIVE SOCIETY AND IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. THE LD. CIT (A) HAS DECIDED THE ISSUE IN QUESTION HOLDING AS UNDER: - 5.2 FROM THE FACTS OF THE INSTANT CASE, IT IS QUITE CLEAR THAT THE APPELLANT HAS LIMITED HIMSELF TO HIS OWN MEMBERS. THE APPELLANT HAS NOT PROVIDED BANK ING FACILITIES EITHER TO THE GENERAL PUBLIC AT LARGE OR EVEN TO THE MEMBERS OF THE SOCIETY. EVEN THE BYE LAWS OF THE APPELLANT DOES NOT PROVIDE FOR BANKING ACTIVITIES. THEREFORE FACTS OF THIS CASE ARE NOT IDENTICAL WITH ANY OF THE CASE LAWS RELIED UPON THE BY THE AO. ON THE OTHER HAND, THE FACTS OF THE INSTANT CASE ARE ALMOST SIMILAR TO THE DECISIONS OF THE ITAT NAGPUR & PANJI BENCHES IN THE CASES OF (I) ACIT VS BULDANA URBAN COOP CREDIT SOC LTD 32 TAXMAN 69, ITAT NAGPUR AND (II) DCIT VS JAYALAXMI MAHILA V IVIDODESHAGALA SOUHARADA SAHAKARI LTD, KARWAR BY ITAT PAN A J I BENCH 23 TAXMAN 313 WHERE THE ACTIVITIES OF THE ASSESSEE WERE LIMITED TO THE MEMBERS OF A SPECIFIC GROUP AND THE AREA OF OPERATIONS WAS ALSO LIMITED TO THE ACCEPTANCE OF DEPOSITS OF MEMBERS AND P ROV IDING CREDIT FACILITIES TO ON LY MEMBER, WHICH HAVE BEEN HELD AS NOT FALLING UNDER BANKING ACTIVITIES A S DEFINED IN THE BANKING REGULATION ACT. FOLLOWING THE AFORESAID DECI SIONS OF ITAT NAGPUR AND PANAJI, THE APPELLANT CANNOT BE HELD AS COOPERATIVE BANK, HENCE DEDUCTION CLAIMED U/S 80P(A)(A) CANNOT BE DENIED TO IT. I FIND THAT THE AO IN THE PRESENT AY HAS NOWHERE LED ANY FACTS TO SHOW THAT BANKING FACILITIES HAVE BEEN PROVIDED TO MEMBERS OF THE GENERAL PUBLIC WITHOUT RESTRICTING ONLY TO ITS OWN MEMBERS. O N FACTS THEREFORE THE AO HAS NOT DEMONSTRATED AS TO HOW THE APPELLANT QUALIFIES TO BE A BANK. IN THE CIRCUMSTANCES, I HOLD THAT THE APPELLANT IS A COOPERATIVE SOCIETY AND NOT A COOPERATIVE BANK AND IS THEREFORE ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I). AO I S ACCORDINGLY DIRECTED TO ALLOW THE DEDUCTION CLAIMED BY THE APPELLANT. GROUNDS 1 & 2 ARE ALLOWED IN FAVOUR OF THE APPELLANT. 5 ITA NO S . 313 0 & 3131 /MUM/2017 ASSESSMENT YEAR S : 2013 - 14 & 2014 - 15 9. WE NOTICE THAT THE LD. CIT (A) HAS DECIDED TH E ISSUE RELYING ON THE DECISIONS OF THE VARIOUS HIGH COURTS INCLUDING THE HON BLE BOMBAY HIGH COURT AND THE DECISIONS OF VARIOUS BENCHES OF THE TRIBUNAL INCLUDING THE DECISION S OF THE NAGPUR BENCH AND THE PANAJI BENCH . WE FIND THAT THE NAGPUR BENCH OF THE TRIBUNAL IN ACIT VS . BULDANA URBAN COOP CREDIT SOC LTD (SUPRA) AND PAN A JI BEN CH OF THE TRIBUNAL IN DCIT VS JAYALAXMI MAHILA VIVIDODESHAGALA SOUHARADA SAHAKARI LTD, KARWAR ( SUPRA ) HAV E DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. IN QUEPEM URBAN CO - OPERATIVE SOCIETY LTD. (SUPRA), T HE HONBLE BOMBAY HIGH COURT HAS HELD THAT COOPERATIVE SOCIETY COULD NOT BE REGARDED AS CO - OPERATIVE BANK. HENCE, IN OUR CONSIDERED VIEW, THE FINDINGS OF THE LD. CIT(A) ARE BASED ON THE LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT AND THE DECISIONS OF TRIBUNALS REFERRED ABOVE. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). ACCORDINGLY, WE UPHOLD THE ORDER PASSED BY THE LD. CIT(A) AND DISMISS BOTH THE GROUNDS OF APPEAL OF THE REVENUE. ITA NO. 3131 /MUM/2017 (ASSE SSMENT Y EAR: 2014 - 2015 ) THE REVENUE HA S RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) IS JUSTIFIED IN ALLOWING DEDUCTION U/S. 80P TO THE ASSESSEE EVEN THOUG H ASSESSEE CARRIES ON THE BANKING BUSINESS AND OTHER BUSINESS IN THE NAME OF A CREDIT COOPERATIVE SOCIETY? 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) IS JUSTIFIED IN ALLOWING DEDUCTION U/S. 80P(2)(A)(I) WITHOUT CONSIDERI NG INSERTED SECTION 80P (4) AND SUB - CLAUSE (VIIA) TO SECTION 2(24) VIDE FINANCE ACT 2006 W.E.F. 01 - 04 - 2007? 2. THE FACTS AND THE ISSUE S INVOLVED IN THE PRESENT APPEAL ARE IDENTICAL TO THE FACTS OF THE CASE AND ISSUE S INVOLVED IN THE ASSESSEES OWN CASE FO R THE 6 ITA NO S . 313 0 & 3131 /MUM/2017 ASSESSMENT YEAR S : 2013 - 14 & 2014 - 15 ASSESSMENT YEAR 201 3 - 14 DISCUSSED ABOVE , EXCEPT THE AMOUNT OF DEDUCTION CLAIMED BY THE ASSESSEE. SINCE, WE HAVE DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN THE ASSESSEES AP PEAL FOR THE ASSESSMENT YEAR 20 13 - 14, WE DECIDE BOTH THE GROUND S OF THIS APPEAL IN FAVOUR OF THE ASSESSEE AND DISMISS THE APPEAL OF THE REVENUE FOR THE SAME REASONS. IN THE RESULT, APPEALS FILED BY THE REVENUE FOR ASSESSMENT YEAR S 2013 - 2014 AND 2014 - 2015 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH . SEPTEMBER , 2017 . SD/ - SD/ - ( G.S. PANNU ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 27 / 0 9 / 2017 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI