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

ITA 34/COCH/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8555 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 25-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTOM BOSE
• Assessee Lawyers: V S NARAYANAN
• Keywords: Question of law; Competent authority
• Section: 263

Judgement Text

ITA NO . 33 TO 35/C/2016 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO S . 33 TO 35/COCH/2016 ( A SST YEAS 2008 - 09, 2009 - 10 & 2011 - 12 ) THE ERAMALA SERVICE COOP BANK LTD ORKKATTERI VADAKARA 673 501 VS THE INCOME TA X OFFICER WARD 2(2), CALICUT ( APPELLANT) (RESPONDENT) PAN NO. AAAAT7252Q ASSESSEE BY SH V S NARAYANAN REVENUE BY SH SHANTOM BOSE, CIT - DR DATE OF HEARING 7 TH J UNE 2016 DATE OF PRONOUNCEMENT 8 TH , JUNE 2016 OR D ER PER GEORGE GEORGE. K. J M: TH ESE APPEALS, AT THE INSTANCE OF THE ASSESSEE ARE DIRECTED AGAINST THREE SEPARATE ORDER OF THE CIT , PASSED U/S 263 OF THE ACT (ALL THE ORDERS ARE DATED 27.11.201 5 ). 2 SINCE COMMON ISSUE IS INVOLVED IN THESE APPEALS, THEY WERE HEARD TOGETHER AND DISPOSED OF F BY THIS CONSOLIDATED ORDER. 3 THE SOLITARY ISSUE FOR OUR CONSIDERATION IS WHETHER THE CIT IS JUSTIFIED IN REVISING THE ASSESSMENT S FOR THE ASSESSMENTS YEARS 2008 - 09, 2009 - 10 AND 2011 - 12 , FOR THE PURPOSE OF DENYING THE BENEFIT OF DEDUCTION U/S 80P(2 ) OF THE ACT. ITA NO . 33 TO 35/C/2016 2 4 BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A COOPERATIVE SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT, 1969. THE ORIGINAL ASSESSMENTS WERE COMPLETED BY ALLOWING THE CLAIM OF DEDUCTION U/S 80P(2) OF THE ACT. THE CIT BY INVOKING HIS POWERS U/S 263 OF THE AC T HELD THAT THE ASSESSEE IS NOT A PRIMARY AGRICULTURAL CREDIT SOCIETY , SINCE THE PRINCIPLE BUSINESS CARRIED OUT BY THE ASSESSEE WAS FOR NON - AGRICULTURAL PURPOSES. THE CIT CONCLUDED THAT THE AO HAS NOT CONDUCTED ANY ENQUIRY AND HAS ALLOWED THE CLAIM OF DEDUCTION U/S 80P OF THE ACT. THE CIT HELD THAT THE ORDER S OF ASSESSMENT S FOR THE AYS 2008 - 09, 2009 - 10 AND 2011 - 1 2 , ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND SET ASIDE THE SA ME. 5 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD AR SUBMITTED THAT THE ASSESSEE IS REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT, 1969 AS A PRIMARY AGRICULTURAL CREDIT SOCIETY. IT WAS SUBMITTED THAT IN THE RECENT JUDGMENT OF T HE HONBLE KERALA HIGH COURT, IN THE IN THE CASE OF THE CHIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS IN ITA NO.212 OF 2013 ( JUDGMENT DATED 15 TH FEBRUARY 2016) HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. 5 .1 THE LD DR WAS UNABLE TO CONTROVERT THE ABOVE SUBMISSIONS OF THE ASSESSEE. ITA NO . 33 TO 35/C/2016 3 6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD.. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE CHIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS (SUPRA) HAS HELD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT, 1969 IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2). THE HONBLE HIGH COURT WAS CONSIDERING THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: 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 PRIMARY AGRICULTURAL CREDIT SOCIETY? 6 .1 IN CONSIDERING THE ABOVE QUESTION OF LAW, THE HONBLE HIGH COURT RENDERED THE FOLLOWING FINDINGS: 15. APPELLANTS IN THESE DIFFERENT APPEALS ARE INDISPUTABLY SOCIETIES REGISTERED UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969, FOR SORT, K CS ACT AND THE BYE - LAWS OF EACH OF THEM, AS MADE AVAILABLE TO THIS COURT AS PART OF THE PAPER BOOKS, CLEARLY SHOW THAT THEY HAVE BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE PROVISIONS OF THAT ACT. THE PARLI AMENT, HAVING DEFINED THE TERM 'CO - OPERATI VE SOCIETY' FOR THE PURPOSES OF THE BR ACT WI TH REFERENCE TO, AMONG OTHER THINGS, THE REGISTRATION OF A SOCIETY U N DER ANY STATE LAW RELATING TO CO - OPERATIVE SOCIETIES FOR THE TIME BEING; IT CANNOT BUT BE TAKEN THA T THE PURPOSE OF THE SOCIETIES SO REGISTERED UNDER THE STATE LAW AND ITS OBJECTS HAVE TO BE UNDERSTOOD AS THOSE WHICH HAVE BEEN APPROVED BY THE COMPETENT AUTHORITY UNDER SUCH STATE LAW. THIS, WE VISUALISE AS DUE RECIPROCATIVE LEGISLATIVE EXERCISE BY THE PA RLIAMENT RECOGN I SING THE PREDOMINANCE OF DECISIONS RENDERED UNDER THE RELEVANT STATE LAW. IN TH I S VIEW OF THE MATTER, ALL THE APPELLANTS HAV I NG BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CRED I T SOC I ET I ES B Y THE COMPETENT AUTHOR I TY UNDE R TH E KCS ACT , I T HAS N ECESSAR IL Y TO BE HELD THAT THE PRINCIPAL OBJECT OF SUCH SOCIETIES IS TO UNDERTAKE AGR I CULTURAL CREDIT ACTIVITIES AND TO PROVIDE LOANS AND ADVANCES FOR AGRICULTURAL PURPOSES , THE RATE ' OF INTEREST ON SUCH LOANS AND ADVANCES TO BE AT THE RATE FIXED BY THE R EGISTRAR OF CO - OPERATIVE SOCIETIES UNDER THE KCS ACT AND HAV I NG I TS AREA OF OPERATION CONFINED TO A VILLAGE, PANCHAYAT OR A MUNICIPALITY. THIS IS THE CONSEQUENCE OF THE DEFINITION CLAUSE IN SECTION 2(OAA) OF THE KCS ACT. THE AUTHORITIES UNDER THE IT ACT C ANNOT PROBE INTO ANY ISSUE OR SUCH MATTER RELATING TO SUCH APPLICANTS. ITA NO . 33 TO 35/C/2016 4 16. THE POSITION OF 1 AW BEING AS ABOVE WITH REFERENCE TO THE STATUTORY PROVISIONS, THE APPELLANTS HAD SHOWN TO THE AUTHORITIES AND THE TRIBUNAL THAT THEY ARE PRIMARY AGRICULTURA L CREDI T SOCIETIES IN TERMS OF CLAUSE (CCIV) OF SECTION 5 OF THE BR ACT, HAVING REGARD TO THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF EACH OF THE APPELLANTS. IT IS ALSO CLEAR FROM THE MATERIALS ON RECORD THAT THE BYE - LAWS OF EACH OF THE APPELLANTS DO . NOT PERMIT ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS MEMBER, EXCEPT MAY BE, IN ACCORDANCE WITH THE PROVISO TO SUB - CLAUSE 2 OF SECTION 5(CCIV) OF THE BR ACT. THE DIFFERENT ORDERS OF THE TRIBUNAL WHICH ARE IMPEACHED IN THESE APPEALS DO NOT CONTAIN ANY FINDING OF FACT TO THE EFFECT THAT THE BYE - 1AWS OF ANY OF THE APPELLANT OR ITS CLASS I FICATION BY THE COMPETENT AUTHORITY UNDER THE KCS ACT IS ANYTHING DIFFERENT FROM WHAT WE HAVE STATED HEREIN ABOVE. FOR THIS REASON, IT CANNOT BUT BE HELD THAT THE APPELLANTS ARE E NTITLED TO EXEMPTION FROM THE PROVISIONS OF SECTION 80P OF THE IT ACT BY VIRTUE OF SUB - SECTION 4 OF THAT SECT; ON. IN THIS VIEW OF THE MATTER, THE APPEALS SUCCEED. 17. IN THE LIGHT OF THE AFORESAID, WE ANSWER SUBSTANTIA 1 QUESTION 'A' IN FAVOUR OF THE APP ELLANTS AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE REGARDING THE ENTITLEMENT OF EXEMPT I ON UNDER SECTION 80P AGAINST THE APPELLANTS. WE HOLD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETIES, REGISTERED AS SUCH UNDER THE KCS ACT; AND CLASS IFIED SO, UNDER THAT ACT, INCLUDING THE APPELLANTS ARE ENTITLED TO SUCH EXEMPTION. 6 .2 IN THE SE CASE S , THE CERTIFICATE OF REGISTRATION OF THE ASSESSEE UNDER THE KERALA COOPERATIVE SOCIETIES ACT AND THE BYE - LAWS ARE PLACED ON RECORD. IT IS CLEAR FRO M THE PERUSAL OF THE SAME THAT THE ASSESSEE IS PRIMARY AGRICULTURAL CREDIT SOCIETY AND PROVIDING AGRICULTURAL CREDIT FACILITIES TO ITS MEMBERS. THE HONBLE JURISDICTIONAL HIGH COURT, IN THE ABOVE CITED JUDGMENT HAS HELD THAT SUCH SOCIETIES ARE ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2) OF THE ACT. IN VIEW OF THE ABOVE FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COU RT (SUPRA), WE ALLOW THESE APPEALS OF THE ASSESSEE. IT IS ORDERED ACCORDINGLY. ITA NO . 33 TO 35/C/2016 5 7 IN THE RESULT, THE APP EALS FILED BY THE ASSESSEE ARE ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF JUNE 2016 . SD/ - S D . - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 8 TH J UNE 2016 RAJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY OR DER ASSISTANT REGISTRAR ITAT, COCHIN