ACIT, New Delhi V. Khattri Co-operative Urban Bank Ltd., New Delhi

ITA 3545/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8593 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 16-07-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 02-12-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K GUTPA
• Assessee Lawyers: S C LAHIRI
• Section: 80P; 2

Judgement Text

I.T.A. NO.3545/DEL/2008 1 IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH D BEFORE SHRI K. G. BANSAL, ACCOUTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ITA NO. 3545 /DEL/2008 (ASSESSMENT YEAR 2005-06) ACIT, CIRCLE 30(1), VS. KHATTRI COOPERATIVE URBAN NEW DELHI. BANK LTD., 4830/24, DARYA GANJ, NEW DELHI. (APPELLANTS) (RESPONDENTS) APPELLANT BY: SHRI B K GUTPA, SR. DR RESPONDENT BY: SHRI S C LAHIRI, ADV. ORDER PER GEORGE MATHAN, JM: 1. THIS APPEAL BY THE REVENUE HAS BEEN PREFERRED AG AINST THE ORDER OF LD. CIT(A) XXV, IN APPEAL NO.62/07-08 DA TED 29.9.2008 FOR THE ASSESSMENT YEAR 2005-06. SHRI B K GUPTA, SR. DR APPEARED FOR THE REVENUE AND SHRI S C LAHIRI, ADVOCATE, REPRESENTED ON BEHALF OF THE ASSE SSEE. 2. IT WAS THE SUBMISSIONS BY THE LD. D.R. THAT AS P ER THE PROVISIONS OF SECTION 2(24)(VIIA), WHICH HAD BEEN INTRODUCED W.E.F. 01.04.2007, THE INCOME OF THE COOPERATIVE SOCIETY FROM ITS DEALING WITH THE NON M EMBERS WAS LIABLE TO BE TAXED. IT WAS THE SUBMISSION THAT THE I.T.A. NO.3545/DEL/2008 2 PROVISIONS OF SECTION 2(24) (VIIA) WAS CLARIFICATOR Y IN NATURE. IT WAS ALSO THE SUBMISSION THAT AS PER THE PROVISIONS OF SECTION 80P(2)(A)(I), THE INCOME GENE RATED BY THE ASSESSEE FROM THE BUSINESS OF BANKING CONDUC TED WITHIN ITS MEMBERS WAS ONLY EXEMPTED. IT WAS THE SUBMISSION THAT THE ASSESSING AUTHORITY HAD BROUGHT TO TAX THE INCOME GENERATED FROM THE BUSINESS OF THE ASSES SEE WITH THE NON-MEMBERS TO TAX. IT WAS THE SUBMISSION S THAT THE ORDER OF LD. CIT(A) WAS LIABLE TO BE REVERSED. 3. IN REPLY, THE LD. A.R. SUBMITTED THAT THE PROVIS IONS OF SECTION 2(24) (VIIA) WAS BROUGHT TO THE STATUTE W.E .F. 1.4.2007 AND IT WAS NOT CLARIFICATORY. IT WAS THE SUBMISSION THAT THE ISSUE WAS SQUARELY COVERED BY T HE DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF PUNJAB STATE COOPERATIVE BANK REPORTED IN 169 TAXMA N 290 WHEREIN IT HAD BEEN HELD THAT THE INCOME GENERA TED BY THE ASSESSEE FROM ITS BUSINESS OF BANKING WHETHER F ROM MEMBERS OR NON MEMBERS, IS ENTITLED FOR THE EXEMPTI ON U/S 80P(2)(A)(I) OF THE ACT. HE VEHEMENTLY SUPPORTED T HE ORDER OF THE CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUS AL OF THE PROVISIONS OF SECTION 2(24)(VIIA) CLEARLY SHOWS THAT THE DEFINITION OF THE TERM INCOME HAS BEEN WIDENED TO INCLUDE THE INCOME OF A COOPERATIVE SOCIETY FROM IT S DEALING WITH NON MEMBERS. IT HAS BEEN AGREED BY A.R . THAT I.T.A. NO.3545/DEL/2008 3 THE INTRODUCTION OF THE PROVISIONS OF SECTION 2(24) (VIIA), THE ASSESSEE HAS ALSO BEEN OFFERINGS THE INCOME GEN ERATED BY IT FROM ITS DEALING WITH THE NON MEMBERS, TO TAX . IT IS ALSO NOTICED THAT THE INTRODUCTION OF SUB-CLAUSE (V IIA) HAS BEEN DONE W.E.F. 01.04.2007. IT IS ALSO NOTICED TH AT IT HAS NOT BEEN MENTIONED THAT IT IS RETROSPECTIVE OR CLAR IFICATORY NOR UNDER THE MEMORANDUM OF EXPLANATION OF THE PROVISIONS SHOW THAT THIS SUB-CLAUSE IS CLARIFICATO RY. IT IS ALSO NOTICED THAT THE ISSUE OF THE INCOME GENERATED BY THE COOPERATIVE SOCIETY WHICH IS DOING BUSINESS OF BANK ING FROM ITS DEALING WITH THE NON MEMBERS IS SQUARELY C OVERED BY THE DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF PUNJAB STATE COOPERATIVE BAN K LTD. REFERRED TO SUPRA WHEREIN AT PARA 8, THE HON'BLE HI GH COURT HAS SPECIFICALLY HELD AS FOLLOWS: CLAUSE (A)(I) OF SUB-SECTION (2) OF SECTION 80P OF THE ACT PROVIDES THAT A COOPERATIVE SOCIETY IS CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILIT IES TO ITS MEMBERS, SHALL BE ENTITLED FOR EXEMPTION FRO M TAX AS REFERRED IN SUB-SECTION (1). THUS, SUB-CLAU SE TALKS OF A COOPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILIT IES TO ITS MEMBERS. IT MEANS THAT A COOPERATIVE SOCIET Y ENGAGED IN CARRYING ON THE BUSINESS OF BANKING AND A COOPERATIVE SOCIETY PROVIDING CREDIT FACILITIES T O ITS MEMBERS WILL BE ENTITLED FOR EXEMPTION UNDER THIS SUB-CLAUSE. THE CARRYING ON THE BUSINESS OF BANKIN G BY A COOPERATIVE SOCIETY OR PROVIDING CREDIT FACILI TIES TO ITS MEMBERS ARE TWO DIFFERENT TYPES OF ACTIVITIE S WHICH ARE COVERED UNDER THIS SUB-CLAUSE. A SOCIETY I.T.A. NO.3545/DEL/2008 4 ENGAGED IN CARRYING ON THE BUSINESS OF BANKING WHETHER FROM ITS MEMBERS OR NON MEMBERS IS ENTITLED FOR EXEMPTION UNDER THIS SUB-CLAUSE AND A SOCIETY WHICH IS NOT ENGAGED IN CARRYING ON THE BUSINESS OF BANKING BUT PROVIDING CREDIT FACILITIES TO ITS MEMB ERS IS ALSO ENTITLED FOR EXEMPTION UNDER THIS SUB-CLAUS E BECAUSE THE WORD OR USED IN THE SECTION CANNOT BE READ AS AND. THEREFORE, A COOPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING IS EARNING SOME INCOME FROM THE BUSINESS ACTIVITIES OF BANKING WHETHER FROM ITS MEMBERS OR NON MEMBERS, IS ENTITLED FOR EXEMPTION UNDER THIS CLAUSE. 5. AS IT IS NOTICED THAT THIS ISSUE IS SQUARELY COV ERED BY THE DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA, RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA REFERRED TO ABOVE, THE FINDINGS OF LD. CIT(A) ON THIS ISSUE STAND CONFIRMED AND THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. 7. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT O N 24 TH JULY 2009. (K.G.BANSAL) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:24 TH JULY, 2009 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) I.T.A. NO.3545/DEL/2008 5 5. DR DY. REGISTRAR, ITAT, NEW DELHI