M/s. Tellicherry Public Servants Co-op Bank Ltd, Kannur V. The ITO, Kannur

ITA 329/COCH/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96701 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 01-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 04-06-2015
• Court: TRIBUNAL
• Department Lawyers: V R GOPAKUMAR
• Assessee Lawyers: T M SREEDHARAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH C OCHIN BEFORE S/SHRI B.P. JAIN, AM AND GEORGE GEOR GE K., JM I.T.A. NO. 329/COCH/2015 ASSESSMENT YEAR : 2010-11 M/S. TELLICHERRY PUBLIC SERVANTS CO-OPERATIVE BANK LTD., M.G. ROAD, THALASSERY , KANNUR-670 692. [PAN: AABAT 2158G] VS. THE INCOME TAX OFFICER, WARD-2, KANNUR. (ASSESSEE -APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI T.M. SREEDHARAN, SR. ADV. REVENUE BY SHRI V.R. GOPAKUMAR, SR. DR DATE OF HEARING 01/09/2015 DATE OF PRONOUNCEMENT 03/09/2015 O R D E R PER B.P.JAIN, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS ARISING FROM THE ORDER OF THE CIT(A), MANANCHIRA, KOZHIKODE DATED 17/03/2015 FOR THE ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE HAS RAISED AS MANY AS 10 GROUNDS OF APPEAL MAINLY ON THE ISSUE OF DISALLOWANCE OF DEDUCTION U/S. 80P(2)( A)(I) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E CLAIMED TO BE A CREDIT SOCIETY PROVIDING CREDIT FACILITY TO ITS MEM BERS, WHO ARE GOVERNMENT I.T.A. NO.329/COCH/2015 2 SERVANTS. THE ASSESSEE FILED THE RETURN OF INCOME FOR THIS YEAR CLAIMING DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. WHILE COM PLETING THE SCRUTINY ASSESSMENT, THE ASSESSING OFFICER DISALLOWED THE CL AIM. 4. BEFORE THE CIT(A), THE LD. COUNSEL FOR THE ASSESSEE FILED WRITTEN SUBMISSION WHICH WAS SENT TO THE ASSESSING OFFICER FOR REMAND REPORT WHO IN TURN SUBMITTED THE REMAND REPORT ON 10-03-2015. FOR THE SAKE OF CONVENIENCE, THE REMAND REPORT IS REPRODUCED BELOW: 3. THE ASSESSEE IS AGGRIEVED THAT THE ASSESSING O FFICER HAS ADDED BACK THE LOAN GIVEN BY THE ASSESSEE DISALLOWING THE DEDUCTION U/S. 80P OF THE INCOME TAX ACT. AS PER THE RETURN OF IN COME FOR THE A.Y. 2010-11, THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80 P FOR THE ENTIRE TOTAL INCOME OF RS.36,59,392/-. 4. ON ANALYZING THE R&D STATEMENT FILED BY THE BAN K FOR THE A.Y. 2010-11, IT WAS APPARENT THAT THE ASSESSEE BANK HAS GIVEN A TOTAL LOAN OF RS.52,81,88,642/- OUT OF WHICH, THE AGRICUL TURAL LOAN GIVEN TO THE MEMBERS WAS NIL. FOR ALL THE YEARS, AGRICULTUR AL LOANS GIVEN BY THE BANK ARE NEGLIGIBLE. FROM THE ABOVE IT IS PATE NT THAT PROVIDING AGRICULTURAL CREDITS IS DEFINITELY NOT THE PRINCIPA L BUSINESS OF THE BANK. IT WAS NOTICED THAT THE BANK PROVIDES FACILITIES LI KE SAVING DEPOSITS, FIXED DEPOSITS, RECURRING DEPOSITS, DAY DEPOSITS ET C. FROM THE ABOVE OPERATIONS OF THE BANK IT IS EVIDENT THAT THE BANK IS DOING BANKING BUSINESS AND CANNOT BE THEREFORE TREATED AS A CO- OPERATIVE SOCIETY PROVIDING CREDIT FACILITIES TO IT S MEMBERS. THUS, ALL PRIMARY CHARACTERISTICS OF A BANKING BUSI NESS WAS FOUND IN ASSESSEES ACTIVITY WHICH CLEARLY SHOWED THAT, THE PRINCIPAL BUSINESS CARRIED OUT BY THE SOCIETY WAS TRUE BANKING BUSINES S. 5. MOREOVER IN THE COMPUTATION STATEMENT FILED AL ONGWITH THE RETURN OF INCOME AND FORM 3CD ENCLOSED IT IS SPECIF ICALLY MENTIONED THAT THE NATURE OF BUSINESS OR PROFESSION IS MAINLY BANKING BUSINESS AND NOWHERE IT IS STATED THAT THE NATURE OF BUSINES S IS GIVING CREDIT TO ITS MEMBERS. I.T.A. NO.329/COCH/2015 3 THE ASSESSING OFFICER AFTER ANALYZING THE ACTIVITIE S OF THE ASSESSEE IN THE LIGHT OF EVIDENCE/DOCUMENTS ON HAND, HAS ARRIVE D AT THE CONCLUSION THAT ASSESSEES MAIN ACTIVITIES ARE RELA TED TO BANKING BUSINESS AND THEREFORE NOT ELIGIBLE FOR DEDUCTION U /S. 80P OF THE INCOME TAX ACT, 1961. HENCE THE ASSESSEE WAS TREAT ED AS CO- OPERATIVE BANK WHICH IS NOT ELIGIBLE FOR DEDUCTION U/S. 80P. 5. AFTER DISCUSSING THE REMAND REPORT WITH THE L D. COUNSEL FOR THE ASSESSEE AND CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE, THE CIT(A) HELD THAT THE NATURE OF BUSINESS OF THE ASSESSEE IS SPEC IFICALLY MENTIONED AS MAINLY BANKING BUSINESS AND NOWHERE IT IS STATED THAT THE NATURE OF BUSINESS OF THE ASSESSEE IS GIVING CREDIT TO ITS M EMBERS AND ACCORDINGLY, THE CIT(A) HELD THAT THE ASSESSING OFFICER HAS RIGH TLY DISALLOWED THE CLAIM MADE BY THE ASSESSEE U/S. 80P OF THE ACT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE FACTS OF THE CASE. THE ASSESSEES CLAIM IS MAINLY THAT THE ASSE SSEE IS A CREDIT SOCIETY PROVIDING CREDIT FACILITIES TO ITS MEMBERS WHO ARE GOVERNMENT SERVANTS WHICH WAS DISALLOWED BY THE ASSESSING OFFICER. IN HIS REMAND REPORT, THE ASSESSING OFFICER HAS CLEARLY MENTIONED THAT THE AS SESSEE HAS STATED IN THE COMPUTATION STATEMENT FILED ALONGWITH THE RETURN OF INCOME AND FORM 3CD THAT THE NATURE OF BUSINESS OR PROFESSION IS MAINL Y BANKING BUSINESS AND NOWHERE IT IS STATED THAT THE NATURE OF BUSINESS IS GIVING CREDIT TO ITS MEMBERS AS IS EVIDENT FROM THE REMAND REPORT PRODUC ED HEREINABOVE. THE LD. COUNSEL FOR THE ASSESSEE HAS NOT REBUTTED SUCH FINDINGS IN THE I.T.A. NO.329/COCH/2015 4 COMPUTATION STATEMENT FILED ALONGWITH THE RETURN OF INCOME AND FORM 3CD. ACCORDINGLY, IN THE CIRCUMSTANCES AND FACTS OF THE CASE, THE ASSESSEES BUSINESS IS NOT THAT OF GIVING CREDIT TO ITS MEMBER S AND THEREFORE, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S. 80P OF T HE ACT. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A ). THUS, ALL THE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 03 -09-2015. SD/- SD/- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 3RD SEPTEMBER, 2015 GJ COPY TO: 1. M/S. TELLICHERRY PUBLIC SERVANTS CO-OPERATIVE BA NK LTD. M.G. ROAD, THALASSERY , KANNUR-670 692. 2. THE INCOME TAX OFFICER, WARD-2, KANNUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE. 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T.,COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COCHIN