The ITO, Wd-2, Guruvayur V. M/s.Punnayurkulam Service Co-opBank Ltd, Thrissur

ITA 372/COCH/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9059 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-07-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 09-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: M RAMDAS
• Keywords: Competent authority
• Section: 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI CHANDRA POOJAR I, AM & SHRI GEORGE GEORGE K, JM ITA NO. 372 /COCH/201 9 : ASST.YEAR 2014 - 2015 THE INCOME TAX OFFICER WARD 2 GURUVAYOOR . VS. M/S. PUNNAYURKULAM SERVICE CO - OPERATIVE BANK LTD., NO.P - 417 PUNNAYURKULAM P.O. THRISSUR 679 561 PAN : AACAP6129J . (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. A.S.BINDHU, SR.DR RESPONDENT BY : SRI.M.RAMDAS, CA DATE OF HEARING : 08.07 .2019 DATE OF PRONOUNCEMENT : 09 .0 7 .2019 O R D E R PER BENCH : THIS APPEAL AT THE INSTANCE OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) DATED 28.02.2019 . THE RELEVANT ASSESSMENT YEAR IS 2014 - 2015. 2. THE SOLITARY ISSUE RAISED IN TH IS APPEAL IS WHETHER THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80P OF THE I.T.ACT? 3. BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IN THIS CASE IS REGISTERED AS CO - OPERATIVE SOCIET Y UNDER THE KERALA STATE CO - OPERATIVE SOCIETIES ACT, 1969. THE ASSESSMENT W AS COMPLETED IN ASSESSEE S CASE BY DENYING DEDUCTION CLAIMED U/S 80P OF THE I.T.ACT. THE ASSESSING OFFICER FOR DENYING THE CLAIM OF DEDUCTION U/S 80P OF THE I.T.ACT, ITA NO. 372 /COCH /201 9. M/S. PUNNAYURKULAM SCB LTD. 2 TREATED THE ASSESSEE AS CO - OPERATIVE BANK AND NOT CO - OPERATIVE SOCIETY . 4. AGGRIEVED BY THE ORDER OF THE ASSESSMENT, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) BY FOLLOWING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO - OPERATIVE BANK LTD. (384 ITR 490) ALLOWED THE CLA IM OF DEDUCTION U/S 80P OF THE I.T.ACT. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE DEPARTME NT HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. THE GROUNDS RAISED READ AS FOLLOWS: 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THRISSUR IN ITA NO. 1282 /16 - 17 DATED 28.02.2019 FOR THE ASSESSMENT YEAR 2014 - 15 IS ERRONEOUS IN LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HA S ERRED IN DELETING THE DISALLOWANCE OF DEDUCTION OF RS. 82,77,206 / - CLAIMED BY THE ASSESSEE UNDER SECTION 80P(2) (A) (I) OF THE ACT SOLELY ON THE BASIS OF THE DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF M/S CHIRAKKAL SERVICE CO - OPERATIVE BANK & OTHERS IN ITA NO. 212 OF 2013 WITHOUT PERUSING THE FACTS OF THE CASE IN DETAIL. 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT THE HON. HIGH COURT OF KERALA HAS BASED ITS DECISION ON ALLOWING DEDUCTION U/S 8 0P(2) (A) (I) OF THE INCOME - TAX ACT,1961 ON THE CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY (AS DEFINED IN THE THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969 (KCS ACT)) FOR CLASSIFYING A COOPERATIVE SOCIETY AS PRIMARY AGRICULTURAL CREDIT SOCIETY. ITA NO. 372 /COCH /201 9. M/S. PUNNAYURKULAM SCB LTD. 3 4. THE L EARNED CIT(A) HAS ERRED IN EQUATING A SOCIETY REGISTERED AS A PRIMARY AGRICULTURAL CREDIT SOCIETY UNDER KCS ACT TO A PRIMARY AGRICULTURAL CREDIT SOCIETY UNDER THE BANKING REGULATION ACT AND INCOME - TAX ACT, 1961 AND THEREBY ALLOWING DEDUCTION UNDER SECTION 80P(2) (A) (I) OF THE INCOME - TAX ACT,1961 WITHOUT PERCEIVING THE DIFFERENCE IN DEFINITION OF A PRIMARY AGRICULTURAL CREDIT SOCIETY IN THE TWO ACTS. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON T HE GROUNDS RAISED IN THE APPEAL . FURTHER, THE LEA RNED DR PLACED RELIANCE ON THE LATEST JUDGMENT OF THE LARGER BENCH OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE MAVILAYI SERVICE CO - OPERATIVE BANK LTD. V. CIT [ITA NO.97/2016 ORDER DATED 19 TH MARCH, 2019] . THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LARGER BENCH OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE MAVILAYI SERVICE CO - OPERATIVE BANK LTD. (SUPRA) HELD THAT THE ASSESSING OFFICER HAS TO CONDUCT AN INQUIRY INTO THE FACTUAL SITUATION AS TO THE ACTIVITIES OF THE ASSESSEE SOCIETY TO DETERMINE THE ELIGIBILITY OF DEDUCTION U/S 80P OF THE I.T.ACT. IT WAS HELD BY THE HO NBLE HIGH COURT THAT THE ASSESSING OFFICER IS NOT BOUND BY THE REGISTRATION CERTIFICATE ISSUED BY THE REGISTRAR OF KERALA CO - OPERATIVE SOCIETY CLASSIFYING THE ASSESSEE - SOCIETY AS A CO - OPERATIVE SOCIETY. THE HONBLE HIGH COURT HELD THAT EACH ASSESSMENT YEA R IS SEPARATE AND ELIGIBILITY SHALL BE VERIFIED BY ITA NO. 372 /COCH /201 9. M/S. PUNNAYURKULAM SCB LTD. 4 THE ASSESSING OFFICER FOR EACH OF THE ASSESSMENT YEARS. THE FINDING OF THE LARGER BENCH OF THE HONBLE HIGH COURT READS AS FOLLOWS: - 33. IN VIEW OF THE LAW LAID DOWN BY THE APEX COURT IN CITIZEN CO - OPER ATIVE SOCIETY [397 ITR 1] IT CANNOT BE CONTENDED THAT, WHILE CONSIDERING THE CLAIM MADE BY AN ASSESSEE SOCIETY FOR DEDUCTION UNDER SECTION 80P OF THE IT ACT, AFTER THE INTRODUCTION OF SUB - SECTION (4) THEREOF, THE ASSESSING OFFICER HAS TO EXTEND THE BENEFIT S AVAILABLE, MERELY LOOKING AT THE CLASS OF THE SOCIETY AS PER THE CERTIFICATE OF REGISTRATION ISSUED UNDER THE CENTRAL OR STATE CO - OPERATIVE SOCIETIES ACT AND THE RULES MADE THEREUNDER. ON SUCH A CLAIM FOR DEDUCTION UNDER SECTION 80P OF THE IT ACT, THE AS SESSING OFFICER HAS TO CONDUCT AN ENQUIRY INTO THE FACTUAL SITUATION AS TO THE ACTIVITIES OF THE ASSESSEE SOCIETY AND ARRIVE AT A CONCLUSION WHETHER BENEFITS CAN BE EXTENDED OR NOT IN THE LIGHT OF THE PROVISIONS UNDER SUB - SECTION (4) OF SECTION 80P. 33. IN CHIRAKKAL [384 ITR 490] THE DIVISION BENCH HELD THAT THE APPELLANT SOCIETIES HAVING BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE KCS ACT, IT HAS NECESSARILY TO BE HELD THAT THE PRINCIPAL OBJECT OF SUCH SO CIETIES IS TO UNDERTAKE AGRICULTURAL 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 TO BE FIXED BY THE REGISTRAR OF CO - OPERATIVE SOCIETIES UNDER THE KCS ACT A ND HAVING ITS AREA OF OPERATION CONFINED TO A VILLAGE, PANCHAYAT OR A MUNICIPALITY AND AS SUCH, THEY ARE ENTITLED FOR THE BENEFIT OF SUB - SECTION (4) OF SECTION 80P OF THE IT ACT TO EASE THEMSELVES OUT FROM THE COVERAGE OF SECTION 80P AND THAT, THE AUTHORIT IES UNDER THE IT ACT CANNOT PROBE INTO ANY ISSUES OR SUCH MATTERS RELATING TO SUCH SOCIETIES AND THAT, PRIMARY AGRICULTURAL CREDIT SOCIETIES REGISTERED AS SUCH UNDER THE KCS ACT AND CLASSIFIED SO, UNDER THE ACT, INCLUDING THE APPELLANTS ARE ENTITLED TO SUC H EXEMPTION. 34. IN CHIRAKKAL [384 ITR 490] THE DIVISION BENCH EXPRESSED A DIVERGENT OPINION, WITHOUT NOTICING THE LAW LAID DOWN IN ANTONY PATTUKULANGARA [2012 (3) KHC 726] AND PERINTHALMANNA [363 ITR 268]. MOREOVER, THE LAW LAID DOWN BY THE DIVISION BEN CH IN CHIRAKKAL [384 ITR 490] IS NOT GOOD LAW, SINCE, IN VIEW OF THE LAW LAID DOWN BY THE APEX COURT IN CITIZEN CO - OPERATIVE SOCIETY [397 ITR 1], ON A CLAIM FOR DEDUCTION UNDER SECTION 80P OF THE INCOME TAX ACT, BY REASON OF SUB - SECTION (4) THEREOF, THE AS SESSING OFFICER HAS TO CONDUCT ITA NO. 372 /COCH /201 9. M/S. PUNNAYURKULAM SCB LTD. 5 AN ENQUIRY INTO THE FACTUAL SITUATION AS TO THE ACTIVITIES OF THE ASSESSEE SOCIETY AND ARRIVE AT A CONCLUSION WHETHER BENEFITS CAN BE EXTENDED OR NOT IN THE LIGHT OF THE PROVISIONS UNDER SUB - SECTION (4) OF SECTION 80P OF THE IT ACT. IN VIEW OF THE LAW LAID DOWN BY THE APEX COURT IN CITIZEN CO - OPERATIVE SOCIETY [397 ITR 1] THE LAW LAID DOWN BY THE DIVISION BENCH PERINTHALMANNA [363 ITR 268] HAS TO BE AFFIRMED AND WE DO SO. 35. IN VIEW OF THE LAW LAID DOWN BY THE APEX COURT IN ACE MULTI AXES SYSTEMS CASE (SUPRA), SINCE EACH ASSESSMENT YEAR IS A SEPARATE UNIT, THE INTENTION OF THE LEGISLATURE IS IN NO MANNER DEFEATED BY NOT ALLOWING DEDUCTION UNDER SECTION 80P OF THE IT ACT, BY REASON OF SUB - SECTION (4) THEREOF, IF THE ASSESSEE SOCIETY CEASES TO BE THE SPECIFIED CLASS OF SOCIETIES FOR WHICH THE DEDUCTION IS PROVIDED, EVEN IF IT WAS ELIGIBLE IN THE INITIAL YEARS. 7.1 IN VIEW OF THE DICTUM LAID DOWN BY THE FULL BENCH OF THE HONBLE HIGH COURT, THE ISSUE OF DEDUCTION U/S 80P(2)(A )(I) IS RESTORED TO THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL EXAMINE THE ACTIVITIES OF THE ASSESSEE AND DETERMINE WHETHER THE ACTIVITIES ARE IN COMPLIANCE WITH THE ACTIVITIES OF A CO - OPERATIVE SOCIETY FUNCTIONING UNDER THE KERALA CO - OPERATIVE SOC IETIES ACT, 1969 AND GRANT DEDUCTION U/S 80P(2) IN ACCORDANCE WITH LAW. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 09 TH DAY OF JULY , 2019 . SD/ - SD/ - ( CHANDRA POOJARI ) ( GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIA L MEMBER COCHIN ; DATED : 09 TH JULY , 2019 . DEVDAS* ITA NO. 372 /COCH /201 9. M/S. PUNNAYURKULAM SCB LTD. 6 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, COCHIN 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (APPEALS) THRISSUR. 4. THE PR.CIT THRISSUR. 5. DR, ITAT, COCHIN 6 . GUARD FILE.