ITO 17(2)(5), RAIPUR V. PUNJAB NATIONAL BANK EMPLOYEES CO OP CREDIT SOCIETY LTD, MUMBAI

ITA 3730/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9606 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 22-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESHPANDE
• Assessee Lawyers: PRABHAKAR SHETTY
• Keywords: Rule of consistency
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE S HRI G.S. PANNU (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 3730 /MUM/20 1 7 ASSESSMENT YEAR: 2012 - 2013 THE I . T . O . - 17(2)(5 ), ROOM NO. 134 , AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 V S. M/S PUNJAB NATIONAL BANK EMPLOYEES CO - OP CREDIT - SOCIETY LTD. PNB HOUSE, SIR P M ROAD, FORT, MUMBAI - 400001 PAN: AAAAP4318B (APPELLANT) (RESPONDENT) & ITA NO. 3731 /MUM/201 7 ASSESSMENT YEAR: 2013 - 20 14 THE I.T.O. - 17(2)(5), ROOM NO. 134, AAYAK AR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S PUNJAB NATIONAL BANK EMPLOYEES CO - OP CREDIT - SOCIETY LTD. PNB HOUSE, SIR P M ROAD, FORT, MUMBAI - 400001 PAN: AAAAP4318B (APPELLANT) (RESPONDENT) REVENUE BY : SHRI SAURABH DESHPANDE (DR) ASSESSEE BY : SHRI PRABHAKAR SHETTY (AR) DATE OF HEARING: 05/09 /201 7 DATE OF PRONOUNCEMENT: 13 / 0 9 /201 7 O R D E R PER RAM LAL NEGI, JM THESE APPEAL S HAVE BEE N FILED BY THE REVENUE AGAINST TWO ORDER S DATED 01/02/2017 , PASSED BY THE LD. CIT (APPEALS) - 28 , MUMBAI , FOR THE ASSESSMENT YEAR S 2012 - 2013 AND 2013 - 2014 RESPECTIVELY , WHEREBY THE LD. CIT (A) HAS ALLOWED THE APPEAL S FILED BY THE APPELLANT/ASSESSEE AGAINST ASSESSMENT ORDER S 2 ITA NO S . 3730 & 3731/MUM/2017 ASSESSMENT YEAR S : 2012 - 2013 & 2013 - 2014 PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). SINCE, THESE APPEALS PERTAIN TO THE SAME ASSESSEE AND THE ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL, BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER FOR THE SAKE OF C ONVENIENCE . ITA NO. 3730/MUM/2017 (ASSESSMENT YEAR: 2012 - 2013 ) 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A CO - OPERATIVE SOCIETY REGISTERED UNDER THE MAHARASHTRA CO - OPERATIVE SOCIETIES ACT, 1960, FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSME NT YEAR DECLARING NIL INCOME AFTER CLAIMING DEDUCTION U/S 80P(2)(A)(I) AND 80P(2)(D) OF THE ACT TO THE EXTENT OF RS. 8161338/ - . THE MAIN ACTIVITY OF THE SOCIETY IS TO ADVANCE LOANS TO ITS MEMBERS AND RECOVER THE AMOUNT OF LOAN ON THE BASIS OF MONTHLY INSTA LLMENTS. THE AO AFTER HEARING THE SUBMISSIONS OF THE ASSESSEE DENIED THE CLAIM OF THE ASSESSEE HOLDING THAT THE ASSESSEE IS CARRYING ON BANKING ACTIVITIES AND IN TERMS OF THE PROVISIONS U/S 80P(4) OF THE ACT , THE ASSESSEE IS NOT ENTITLED FOR THE SAID DEDUC TION. 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BY FILING THE FIRST APPEAL BEFORE THE CIT(A). THE LD. CIT(A) RELYING ON THE VARIOUS DECISIONS INCLUDING THE DECISIONS OF THE ITAT PASSED IN ASSESSEES OWN CASES FOR THE EARLIER ASSESSMENT YEARS, ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80P OF THE ACT. AGGRIEVED BY THE SAID ORDER THE REVENUE IS IN APPEAL BEFORE THE ITAT. 4 . THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUND OF APPEAL AGAINST THE IMPUG NED ORDER PASSED BY THE LD. CIT (A): - 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT (A) HAS ERRED IN ALLOWING DEDUCTION U/S 80P OF RS. 69,97,495/ - WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS NOT FOUND TO BE A CO - OPERATIV E CREDIT SOCIETY, BUT A CO - OPERATIVE BANK, 3 ITA NO S . 3730 & 3731/MUM/2017 ASSESSMENT YEAR S : 2012 - 2013 & 2013 - 2014 WHICH IS ENGAGED IN THE ACTIVITIES OF LENDING OF MONEY AND EARNING INTEREST, WHICH IS NOTHING, BUT A NORMAL BANKING ACTIVITY ON COMMERCIAL BASIS TO GET COMMERCIAL BENEFIT. 2. ON THE FACTS & IN THE CIRCUMSTANCES O F THE CASE, AND IN LAW, THE LD. CIT (A) HAS ERRED IN ALLOWING DEDUCTION U/S 80P(2)(A)(I) AND U/S 80P(2)(D) HAVE NOT REACHED ITS FINALITY AS THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF QUEPEM URBAN CO - OP. CRE DIT SOCIETY (2015)(58 TAXMANN. COM 113 (BOM) AND SLP BEFORE THE HONBLE APEX COURT HAS BEEN FILED WHICH IS PENDING FOR FINAL ORDERS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT (A) HAS ERRED IN ALLOWING DEDUCTION U/S 80P(2 )(A)(I) AND U/S 80P(2)(D) TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE HONBLE ITAT IN ITA NOS. 3415/MUM/2014 AND 2935/MUM/2014 AND FURTHER APPEAL IS PENDING BEFORE THE HIGH COURT FOR DECISION. 5 . BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY ALLOWED THE DEDUCTION IGNORING THE FACT THAT THE ASSESSEE IS ENGAGED IN THE ACTIVITIES OF LENDING OF MONEY AND EARNING INTEREST INCOME , WHICH AMOUNTS TO BANKING ACTIVITIES. THE LD. DR FURTHER SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL HAS NOT REACHED ITS FINALITY AS THE SAME IS PENDING ADJUDICATION IN THE HONBLE SUPREME COURT IN SLP FILED BY THE DEPARTMENT AGAINST THE JUDGMENT OF HONBLE HIGH COURT OF BOMB AY PASSED IN QUEPEM URBAN CO - OPERATIVE CREDIT SOCIETY [2015] 58 TAXMANN.COM 113 (BOM). THE LD. DR FURTHER SUBMITTED THAT THE DEPARTMENT HAS CHALLENGED THE DECISION OF MUMBAI TRIBUNAL PASSED IN ASSESSEES CASES, ITA NO 3415/MUM/2014 & 29/MUM/2014 BEFORE THE HONBLE HIGH COURT. 6. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE RELYING UPON THE ORDER PASSED BY THE LD. CIT(A) SUBMITTED THAT THE LD. CIT(A) HAS PASSED 4 ITA NO S . 3730 & 3731/MUM/2017 ASSESSMENT YEAR S : 2012 - 2013 & 2013 - 2014 THE ORDER UNDER CHALLENGED BY FOLLOWING THE DECISION OF ITAT RENDERED IN ASSESSEES OWN CAS ES ITA 3415/M/2014 AND ITA 2935/M/2014. SINCE, THE ITAT HAS DECIDED THE IDENTICAL ISSUES IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE JUDGMENT PASSED BY THE HONBLE JURISDICTIONAL HIGH COURT IN QUEPEM URBAN CO - OPERATIVE CREDIT SOCIETY (SUPRA), THERE IS NO ME RIT IN THE APPEAL OF THE DEPARTMENT AND THEREFORE, THE SAME IS LIABLE TO BE DISMISSED. 7. WE HAVE HEARD THE RIVAL SUBMISSION AND CAREFULLY PERUSED THE MATERIAL ON RECORD IN THE LIGHT OF THE SUBMISSIONS OF THE PARTIES. WE NOTICED THAT THE LD. CIT(A) HAS AL LOWED THE DEDUCTION CLAIMED BY THE ASSESSEE BY FOLLOWING THE ORDER DATED 31.03.2016, PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASES. WE FURTHER NOTICE THAT THE CO - ORDINATE BENCH OF THE TRIBUNAL HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE BY F OLLOWING THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT PASSED IN QUEPEM URBAN CO - OPERATIVE CREDIT SOCIETY (SUPRA). THE LD. CIT(A) HAS REPRODUCED THE RELEVANT PORTION OF THE OBSERVATIONS OF THE TRIBUNAL IN ITS ORDER, WHICH READS AS UNDER: 'THIS APPEAL FILED BY THE REVENUE ON 29.04.2014. IN THIS APPEAL, REVENUE RAISED OBJECTIONS ON THE APPLICABILITY OF THE PROVISIONS OF SECTION 80P(4) OF THE ACT. THE REVENUE IS OF THE OPINION THAT THE REFERENCES PROVIDED IN THE SUBSECTION 4 OF SECTION P OF THE ACT EXTEND S TO ALL SOCIETIES ENGAGED IN THE ACTIVITIES OF GIVING AND TAKING DEPOSITS. CONSEQUENTLY, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S.80P(2)(A)(I) OF THE ACT BUT CIT(A) EXPLAINED THIS ISSUE AND GRANTED RELIEF TO THE ASSESSEE VIDE HIS DISCUSSION IN PARA 3 AND ITS SUB - PARAS OF HIS ORDER. CIT(A) EXPLAINED IN THE LIGHT OF VARIOUS DECISIONS. ON PERUSAL OF THE SAME AND AFTER HEARING BOTH THE PARTIES, WE FIND THAT THE ORDER OF THE CIT(A) ON THIS ISSUE IS FAIR AND REASONABLE. ALL SUCH SOCIETIES ARE NOT BANKS. REFERENCE IS MADE TO THE DISCUSSION AT PARAS 4 AND 5 OF THIS ORDER. THEREFORE, IN OUR OPINION, THERE IS NO NEED TO INTERFERE WITH THE DECISION OF THE CIT(A). ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED . 8. ON THE ISSUE OF SECTION 80P(2)(D) , T HE CO - ORDINATE BENCH HAS OBSERVED AS UNDER: 5 ITA NO S . 3730 & 3731/MUM/2017 ASSESSMENT YEAR S : 2012 - 2013 & 2013 - 2014 '5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES A S WELL AS THE CITED DECISION OF THE TRIBUNAL IN THE CASE OF M/S.RCF EMPLOYEES CO - OP CREDIT SOC LTD (SUPRA). ON PERUSAL OF T HE SAID TRIBUNAL'S ORDER (SUPRA), WE FIND PARAS 6 AND 7 ARE RELEVANT IN THIS REGARD. CONSIDERING THE SIGNIFICANCE OF THE SOLD PARAS 6 AND 7 AND ALSO FOR THE SAKE OF COMPLETENESS OF THIS ORDER THE SAME ARE EXTRACTED AS UNDER: '6. FURTHER, WE HAVE ALSO PERU SED THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF QUEPEM URBAN CO - OP CREDIT SOC LTD VS. ACIT(2015) 377 ITR 273 (BOM)WHICH WAS RELIEF UPON THE ID. COUNSEL FOR THE ASSESSEE FOR THE PROPOSITION THAT SUCH LENDING ACTIVITIES DO NOT CONSTITUTE BAN KING ACTIVITIES AS THE SAME ARE TRANSACTED BETWEEN THE COOPERATIVE SOCIETY AND THE MEMBERS OF THE SOCIETY. SINCE, NO PUBLIC IS INVOLVED THE DEFINITION OF 'BANKING' DOES N O T COVER SUCH ACTIVITIES. AS SUCH, THERE IS NO RBI'S APPROVAL FOR CONDUCTING SUCH BANKING ACTIVITIES IN THIS CASE. HE ALSO RELIED ON THE DEFINITION OF 'BANKING' AND READ OUT FROM THE CONTENTS OF SECTION 5 OF THE BANKING REGULATION ACT, 1949 AND THE SAME READS AS UNDER: 'SEC 5(B) 'BANKING' MEANS THE ACCEPTING, FOR THE PURPOSE OF LENDING OR INVESTMENT OF DEPOSITS OF MONEY FROM THE PUBLIC, REPAYABLE ON DEMAND OR OTHERWISE AND WITHDRAWAL BY CHEQUE, DRAFT OR OTHERWISE.' 7. FROM THE ABOVE. L D. COUNSEL FOR THE ASSESSEE DEMONSTRATED THAT THE MEMBERS OF THE CREDIT CO - OP SOCIETY DO NOT CONSTITU TE 'PUBLIC' AND THERE IS NO DEPOSITING, WITHDRAWAL BY CHEQUE OR DRAFT ETC. AFTER CONSIDERING THE SAID JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF QUEPEM URBAN CO - OP CREDIT SOC (SUPRA) WE ARE OF THE OPINION THAT DECISION OF THE CIT(A) I S FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, ISSUE RAISED IN THE REVENUE'S APPEAL IS DISMISSED.' 6. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE AS WELL AS RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENC H IN THE CASE OF RCF EMPLOYEES CO - OP CREDIT SOCIETY LTD (SUPRA), WHEREIN ONE OF US (AM) IS A PARTY TO THE SAID ORDER, AND ALSO TO MAINTAIN THE PRINCIPLE OF CONSISTENCY, WE ARE OF THE OPINION THAT THE 6 ITA NO S . 3730 & 3731/MUM/2017 ASSESSMENT YEAR S : 2012 - 2013 & 2013 - 2014 ASSESSEE IS ENTITLED TO RELIEF. ACCORDINGLY GROUNDS RAIS ED BY THE ASSESSEE ARE ALLOWED,' 9. THE FACTS AND THE ISSUE INVOLVED IN THE PRESEN T CASE ARE IDENTICAL TO THE FACTS AND ISSUE INVOLVED IN THE ASSESSEES OWN CASES ITA 3415/M/2014 AND ITA 2935/M/2014 AFORESAID . THE CO - ORDINATE BENCH HAS ALREADY DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN THE SAID CASES . REVENUE HAS NOT PRODUCED ANY ORDER TO SHOW THAT THE APPELLATE COURT HAS STAYED THE OPERATION OF THE ORDER PASSED BY THE CO - ORDINATE BENCH IN THE SAID CASES. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DE CISION OF THE CO - ORDINARY BENCH DECIDE THE ISSUE INVOLVED IN THIS CASE IN FAVOUR OF THE ASSESSEE FOR THE SAME REASONS AND DISMISS ALL THE GROUNDS OF APPEAL OF THE REVENUE. ITA NO. 3731/MUM/2017 (ASSE SSMENT Y EAR: 2013 - 2014 ) THE FACTS AND THE ISSUE S INVOLVED IN THIS APPEAL ARE ALSO IDENTICAL TO THE FACTS AND THE ISSUES INVOLVED IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2013 - 1 4 EXCEPT THE AMOUNT OF DEDUCTION INVOLVED. HENCE , TO AVOID REPETATION WE DO NOT REPRODUCE THE SAME HERE. 2. THE REVE NUE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE LD. CIT (A): - 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT (A) HAS ERRED IN ALLOWING DEDUCTION U/S 80P OF RS. 81,61,338 / - WITHOU T APPRECIATING THE FACT THAT THE ASSESSEE IS NOT FOUND TO BE A CO - OPERATIVE CREDIT SOCIETY, BUT A CO - OPERATIVE BANK, WHICH IS ENGAGED IN THE ACTIVITIES OF LENDING OF MONEY AND EARNING INTEREST, WHICH IS NOTHING, BUT A NORMAL BANKING ACTIVITY ON COMMERCIAL BASIS TO GET COMMERCIAL BENEFIT. 7 ITA NO S . 3730 & 3731/MUM/2017 ASSESSMENT YEAR S : 2012 - 2013 & 2013 - 2014 2. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT (A) HAS ERRED IN ALLOWING DEDUCTION U/S 80P(2)(A)(I) AND U/S 80P(2)(D) TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE ISSUE OF ALLOWABILIT Y OF DEDUCTION UNDER U/S 80P(2)(A)(I) AND U/S 80P (2)(D) HAVE NOT REACHED ITS FINALITY AS THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF QUEPEM URBAN CO - OP. CREDIT SOCIETY (2015)(58 TAXMANN. COM 113 (BOM) AND S LP BEFORE THE HONBLE APEX COURT HAS BEEN FILED WHICH IS PENDING FOR FINAL ORDERS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT (A) HAS ERRED IN ALLOWING DEDUCTION U/S 80P(2)(A)(I) AND U/S 80P(2)(D) TO THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE HONBLE ITAT IN ITA NOS. 3415/MUM/2014 AND 2935/MUM/2014 AND FURTHER APPEAL IS PENDING BEFORE THE HIGH COURT FOR DECISION. 3. SINCE, WE HAVE DECIDED THE IDENTICAL ISSUES IN F AVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE COORDINATE BENCH RENDERED IN ASSESSEES OWN CASE, BY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH RENDERED IN ASSESSEES OWN CASE, WE ALSO DECIDE THE ISSUES INVOLVED IN THIS CASE IN FAVOUR OF THE AS SESSEE FOR THE SAME REASONS AND DISMISS ALL THE GROUNDS OF THE APPEAL OF THE REVENUE. IN THE RESULT, APPEALS FILED BY THE REVENUE FOR ASSESSMENT YEAR S 2012 - 2013 AND 2013 - 2014 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH . SEPTEMBE R , 2017 . SD/ - SD/ - ( G.S. PANNU ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 13 / 0 9 / 2017 8 ITA NO S . 3730 & 3731/MUM/2017 ASSESSMENT YEAR S : 2012 - 2013 & 2013 - 2014 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI