Appeal Details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 0355 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 month(s) 11 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-08-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
SMC
Assessment Year
2012-2013
Appeal Filed On
05-05-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER ITA N O. 3333/MUM./2017 (ASSESSMENT YEAR: 2012 - 1 3 ) M/S. PARAS MAHAVIR COOPERATIVE CREDIT SOCIETY LTD., 356, GHANASHYAM PATIL COMPOUND S.V.ROAD, ANDHERI (W) MUMBAI 400 058 PAN NO.AABAP2161M . APPELLANT V/S ITO 24(3)(3), 701, 7 TH FLOOR, PIRAMAL CHAMBERS PAREL, MUMBAI 400 012 . RESPONDENT ASSESSEE BY : SHRI. RAMESH S IYER REVENUE BY : SHRI. V. JANARDHAMAN DATE OF HEARING 27.06.2017 DATE OF ORDER - 16 .0 8 .2017 O R D E R PER: SHAMIM YAHYA THIS APPEAL BY THE ASSESSEE IS DIRECTED AG AINST ORDER OF LD. CIT - A DATED 15/02/2017 AND PERTAINS TO ASSESSMENT YEAR 2012 - 1 3 . 2. THE GROUNDS OF APPEAL READ AS UNDER: - 1. THE LD. CIT(APPEALS), 36, MUMBAI HAS ERRED IN NOT ALLOWING DEDUCTION U/S.80P(2)(A)(I) AVAILABLE TO THE APPELLANT. 2. THE LD. CIT(APPEALS), 36, HAS ERRED IN DISALLOWING COMMISSION PAID TO DAILY DEPOSIT AND LOAN RECOVERY AGENTS AS BUSINESS EXPENSES. 3. THE STATEMEN T OF FACTS IN THIS CASE READS AS UNDER: - THE ASSESSEE IS A CO - OP CREDIT SOCIETY HAVING THE BUSINESS OF ACCEPTING DEPOSITS AND LENDING MONEY TO THE MEMBERS OF THE SOCIETY. AS PER THE REGISTRATION CERTIFICATE, THE CO - OPERATIVE SOCIETY HAS BEEN CLASSIFIED AS RESOURCE SOCIETY AND ITA NO. 3333/MUM/2017 M/S. PARAS CO - OPERATIVE CREDIT SOCIETY LTD., 2 SUB - CLASSIFIED AS LOAN GIVING RESOURCE SOCIETY. THE SOCIETY GOVERNED BY THE PRINCIPLE OF MUTUALITY. THE ASSESSEE FILED ITS INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2014 - 2015 DECLARING TOTAL INCOME OF RS. 2,02,333/ - AND CLAIMED THE ENT IRE INCOME AS DEDUCTION UNDER SECTION 80(P)(2)(A)(I) OF THE INCOME TAX ACT, 1961. THE CASE WAS SELECTED FOR ASSESSMENT AND NOTICES U/S 142(1) WERE ISSUED. THE LD AO DENIED DEDUCTION U/S 80P(2)(A)(I) AVAILABLE TO A CO - OPERATIVE CREDIT SOCIETY BY STATING THE SOCIETY TO BE A CO - OPERATIVE BANK AND HENCE GOVERNED BY SECTION SOP (4). THE SOCIETY DOES NOT HAVE SUFFICIENT MANPOWER TO ENABLE COLLECTION OF INSTALLMENTS AND DAILY DEPOSITS HENCE HAD APPOINTED AGENTS ON COMMISSION BASIS. THE AGENTS WE RE PAID COMMISSION AT THE RATE OF 3% ON THE COLLECTIONS MADE BY THEM DURING THE YEAR. THE COMMISSION PAID COVERS THE EXPENSES INCURRED BY AGENTS ON CONVEYANCE, CASH HANDLING, COLLECTING DEPOSITS FROM MEMBERS AND HANDING OUT OF DEPOSIT RECEIPTS TO THEM. SIM ILARLY AT THE TIME OF MATURITY, COLLECTING FOR AND OBTAINING PROCEEDS FROM THE SOCIETY & HANDING OUT TO MEMBERS.TDS WAS ALSO DEDUCTED AND DULY PAID. RETRUNS WERE ALSO FILED FROM TIME TO TIME. THE LD. AO ERRONEOUSLY CALCULATED COMMISSION @ 3% ON THE INTEREST RECEIVED BY THE SOCIETY ON LOANS DURING THE YEAR AND DISALLOWED THE COMMISSION PAID IN EXCESS OF THE SAME. THE LD. AO ERRED BY NOT CONSIDERING DAILY DEPOSITS AND LOAN RECOVERY MADE BY AGENTS AS BASIS OF CALCULATING COMMISSION. AGGRIEVED BY THE A SSESSMENT ORDER PASSED BY THE LD. AO, THE SOCIETY FILED AN APPEAL WITH COMMISSIONER OF INCOME TAX (APPEALS), 36 . THE LD. CIT (A) ALSO ERRED IN CONSIDERING THE CO - OPERATIVE CREDIT SOCIETY AS CO OPERATIVE BANK AND DENIED DEDUCTION U/S 80P(2)(A)(I) TH EREBY IGNORING THE DECISION GIVEN BY HON. BOMBAY HIGH COURT (PANAJI BENCH), HON. KARNATAKA HIGH COURT, HON. GUJARAT HIGH COURT, HON MADRAS HIGH COURT AND VARIOUS TRIBUNALS. THE LD. CIT (A) ALSO ERRED IN CALCULATING THE COMMISSION PAID TO AGENTS. A DETAILED CALCULATION OF RECOVERY MADE BY THE AGENTS AND COMMISSION CALCULATED AGENTWISE DURING THE YEAR WAS PROVIDED TO THE LD CIT (A). THE LD. CIT (A) CALCULATED THE AMOUNT OF DEVIATION IN OPENING BALANCE AND CLOSING BALANCE OF LOANS AND DEPOSITS AND CALCULATED COMMISSION @3% ON THE SAME. HOWEVER THE LD. CIT(A) IGNORED THE DEPOSITS RECEIVED AND MATURED WITHIN THE PERIOD APRIL TO MARCH. THE DAILY DEPOSITS COLLECTED BY THE AGENTS ARE GENERALLY OF SHORTER DURATION OF 45 - 90 DAYS AND HENCE WERE INVESTED AND MATURED DURING THE SAME ACCOUNTING YEAR. APROPOS GROUND NO:1 4. I N THIS CASE THE ASSESSING OFFICER DENIED THE DEDUCTION UNDER SECTION 80P (2)(A)(I) TO THE ASSESSEE HOLDING IT TO BE CO - OPERATIVE BANK AND ACCORDINGLY ITA NO. 3333/MUM/2017 M/S. PARAS CO - OPERATIVE CREDIT SOCIETY LTD., 3 NOT ELIGIBLE FOR THE SAID DEDUCTION AS PER SECTION 80(4) . LEARNED CIT - A ALSO CONFIRMED THIS ACTION. 5. AGAINST THIS ORDER , ASSESSEE IS IN APPEAL BEFORE THE ITAT. 6. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS . I FIND THAT THIS ISSUE NOW IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONOURABLE APEX COURT IN CIVIL APPEAL NUMBER 10245 OF 2017 IN THE CASE OF THE CITIZEN COOPERATIVE SOCIETY LTD BY ACIT VIDE ORDER DATED 8 TH OF AUGUST 2017. THE HONOURABLE APEX COURT IN THIS CASE HAS EXPOUNDED THAT IF ONE HAS TO GO BY THE DEFINITION OF COOPERATIVE BANK THE ASSESSEE DOES NOT GET COVERED THEREBY. THAT IT IS ALSO A MATTER OF COMMON KNOWLEDGE THAT IN ORDER TO DO THE BUSINESS OF A COOPERATIVE BANK, IT IS IMPERATIVE TO HAVE A LICENCE FROM THE RESERVE BANK OF INDIA WHICH THE ASSESSEE DOES NOT POS S E S S. IN THE PRESENT CASE BEFORE ME ALSO THE ASSESSEE COOPERATIVE SOCIETY IS NOT LICENSED FROM THE RESERVE BANK OF INDIA TO ACT AS CO - OPERATIVE BANK. HENCE AS PER THE RATIO EMANATING FROM THE AFORESAID HONOURABLE APEX COURT JUDGEMENT THE ASSESSEE IS NOT AFFECTED BY THE PROVISIONS OF SECTION 80P(4). 7. ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT , I SET ASIDE THE ORDER OF AUTHORITIES BELOW AND HOLD THAT ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80 P(2)(A)(I). APROPOS GROUND NO.2: 8 . T HE ASSESSEE HAD CLAIMED 3% COMMISSIONS TO THE AGENTS ON THE COLLECTIONS MADE BY THEM DURING THE YEAR. THE ASSESSING OFFICER PROCEEDED TO EXAMINE THE VERACITY THEREOF. HE ACCEPTED THAT SOME AMOUNT OF COMMISSION IS PAYABLE. HOWEVER HE RESTRICTED THE SAME TO 2%. UP ON ASSESSEE'S APPEAL LEARNED CIT - A MADE SOME VARIATION IN THE BASIS OF COMP UTA TION. ASSESSEE IS AG G RIEVED BY THE SAME. 9. IT IS CONTENDED THAT LEARNED CIT - A CALCULATED THE AMOUNT OF DEVIATION IN OPENING BALANCE AND CLOSING BALANCE OF LOANS AND DEPOSITS AND CALCULATED ITA NO. 3333/MUM/2017 M/S. PARAS CO - OPERATIVE CREDIT SOCIETY LTD., 4 COMMISSION AT THE RATE OF 3%. HOWEVER IT IS PLEADED THAT LEARNED CIT - A IGNORED THE DEP OSITS RECEIVED AND MATURED WITHIN THE PERIOD APRIL TO MARCH. 10 . I FIND COGENCY IN THE SUBMISSION. HENCE I REMIT THE ISSUE THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE ISSUE OF DEPOSITS RECEIVED AND MATURED AND THERE AFTER COMPUTE THE COMMISSION ACCORDINGLY. NEEDLESS TO ADD ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 1 1 . IN THE RESULT THIS APPEAL BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES AS ABOVE ORDER PRONOUNCED IN THE OPEN COURT ON 1 6 .0 8 .2017 S D / - SHAMIM YAHYA ACCOUNTANT MEMBER MUMBAI, DATED: 1 6 .0 8 .2017 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE. BY ORDER KARUNA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI
Mehul