MESERS THE BAINS COOPERATIVE THRIFT AND CREDIT SOCIETY LIMITED, HOSHIARPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, HOSHIARPUR CIRCLE, HOSHIARPUR

ITA 384/ASR/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4994 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 11-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S M SURENDRANATH
• Section: 143(3); 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL AMRITSAR BENCH: AMRITSAR BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER I.T.A NO. 384/ASR/2018 (ASSESSMENT YEAR: 2013-14) M/S THE BAINS COOPERATIVE THRIFT & CREDIT SOCIETY LTD., V.P.O. MAHILPUR, HOSHIARPUR (PB). [PAN:AAATT7569H] (ASSESSEE) VS. ASSTT. COMMISSIONER OF INCOME TAX, HOSHIARPUR CIRCLE, HOSHIARPUR (REVENUE) ASSESSEE BY SH. SURINDER MAHAJAN C.A. REVENUE BY SH. S. M. SURENDRANATH D.R. DATE OF HEARING 21.09.2021 DATE OF PRONOUNCEMENT 22.09.2021 ORDER PER LALIET KUMAR, JM: THE PRESENT APPEAL FILED BY THE ASSESSEE FEELING AG GRIEVED BY THE ORDER OF LD. CIT(A)-1, JALANDHAR DATED 27.03.2018 FOR A.Y. 2 013-14. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ORDER PASSED BY LEARNED COMMISSIONER OF IN COME TAX (APPEALS)-L, JALANDHAR [CIT(A)] IS AGAINST LAW AND FACTS OF TH E CASE. 2. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, L EARNED CIT(A) HAS GROSSLY ERRED IN LAW IN CONFIRMING DISALLOWANCE OF RS. 55,90,793/ - BEING DEDUCTION CLAIMED U/S 80P OF THE ACT. DISALLOWANCE CONFIRMED IS BAD IN LA W AND IS ILLEGAL. I.T.A NO. 384/ASR/2018 2 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER HOLDI NG THAT ASSESSEE IS CARRYING ON BANKING BUSINESS AND IS A COOPERATIVE BANK NOT ENTI TLED TO DEDUCTION U/S 80P(2) (A)(2) OF THE ACT. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) WHILE CONFIRMING THE DISALLOWANCE OF DEDUCTION CLAIMED U/S 80P OF TH E ACT HAS RELIED UPON JUDGMENT OF HONOURABLE SUPREME COURT IN THE CASE OF THE CITIZENS COOPERATIVE SOCIETY LTD. VS ACIT, HYDERABAD CIVIL APPEAL NO. 10 245 OF 2017. JUDGMENT OF HONBLE SUPREME COURT IS NOT APPLICABLE TO THE FACT S OF THE ASSESSEE SINCE JUDGMENT OF HONBLE SUPREME COURT IS IN RESPECT OF MULTISTATE COOPERATIVE CREDIT SOCIETIES WHEREAS ASSESSEE IS A SMALL COOPERATIVE S OCIETY HAVING GEOGRAPHICAL AREA OF THREE VILLAGES ONLY. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS GROSSLY ERRED IN CONCLUDING THAT ASSESSEE HAS INDULGED IN BUSINES S WITH NOMINAL MEMBERS AND NON MEMBERS WITHOUT ANY APPROVAL OF REGISTRAR OF SO CIETIES AND PRINCIPLES OF MUTUALITY ARE MISSING IN THE CASE. CONCLUSIONS DRAW N BY CIT(A) ARE ILLEGAL AND BAD IN LAW. 6. THAT LEARNED CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE ASSESSEE SOCIETY DEAL WITH GENERAL PUBLIC. THE SOCI ETY JURISDICTION IS RESTRICTED TO THREE VILLAGES ONLY NAMELY DOLRON, HAVELI AND MAHIL PUR OF DISTT. HOSHIARPUR. THE SOCIETY DOES NOT DEAL WITH THE PUBLIC AT ALL. 7. THAT ORDER PASSED BY LEARNED CIT(A) IS OPPOSED T O JUDGMENT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF SHRI BASAWESHWAR COOPERATVE CREDIT SOCIETY (ITA NO. 100092 OF 2014) WHEREIN IT HAS BEEN HELD THAT THE DECISION OF RESERVE BANK OF INDIA TO THE EFFECT THAT WHETHER COOPERATIVE SOCIETY IS A BANK OR NOT SHALL BE FINAL. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) HAS GROSSLY ERRED IN HOLDING THAT ASSESSEE IS CARRYING ON BANKING BUS INESS AND IS A COOPERATIVE BANK THOUGH NEITHER IN THE PAST ASSESSMENT YEARS NO R IN THE FUTURE ASSESSMENT YEARS IN ASSESSMENT ORDERS PASSED U/S 143(3) OF THE ACT, COOPERATIVE SOCIETY HAS BEEN TREATED AS COOPERATIVE BANK. ORDER PASSED BY C IT(A) IS OPPOSED TO THE PRINCIPLES OF CONSISTENCY. 9. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, L EARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN CONFIRMING ADDIT ION OF RS. 389677/- BEING ADDITION MADE BY LEARNED ASSESSING OFFICER U/S 40(A )(IA) OF THE ACT. I.T.A NO. 384/ASR/2018 3 10. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, LEARNED COMMISSIONER OF INCOME TAX (APPEALS)HAS GROSSLY ERRED IN CONFIRMING ADDITI ON OF RS.11251/- BEING DEDUCTION CLAIMED FOR TAXES PAID TO LOCAL AUTHORITI ES. 11. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OFF. 3. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE FIN DINGS RECORDED BY THE LD. CIT(A) AS WELL AS THE ASSESSING OFFICER WERE PREMIS ED ON THE DECISION OF HONBLE SUPREME COURT IN THE MATTER OF THE CITIZENS COOPER ATIVE SOCIETY LTD. IN ITA 10245 OF 2017. IT WAS SUBMITTED THAT THE HONBLE SU PREME COURT IN THE SUBSEQUENT DECISION HAS CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF MAVILAYI SERVICE COOPERATIVE BANK LTD. & ORS V. CIT IN PARAGRAPH 45 HAD HELD AS UNDER: 45. TO SUM UP, THEREFORE, THE RATIODECIDENDI OF CI TIZEN COOPERATIVE SOCIETY LTD. (SUPRA), MUST BE GIVEN EFFECT TO. SECTION 80P OF THE IT ACT, BEING A BENEVOLENT PROVISION ENACTED BY PARLIAMENT TO ENCOURAGE AND PROMOTE THE CREDIT O F THE CO-OPERATIVE SECTOR IN GENERAL MUST BE READ LIBERALLY AND REASONABLY, AND IF THERE IS AMBIGUITY, IN FAVOUR OF THE ASSESSEE. A DEDUCTION THAT IS GIVEN WITHOUT ANY REF ERENCE TO ANY RESTRICTION OR LIMITATION CANNOT BE RESTRICTED OR LIMITED BY IMPLICATION, AS IS SOUGHT TO BE DONE BY THE REVENUE IN THE PRESENT CASE BY ADDING THE WORD 'AGRICULTURE' I NTO SECTION 80P(2)(A)(I) WHEN IT IS NOT THERE. FURTHER, SECTION 80P(4) IS TO BE READ AS A P ROVISO, WHICH PROVISO NOW SPECIFICALLY EXCLUDES CO-OPERATIVE BANKS WHICH ARE CO-OPERATIVE SOCIETIES ENGAGED IN BANKING BUSINESS I.E. ENGAGED IN LENDING MONEY TO MEMBERS O F THE PUBLIC, WHICH HAVE A LICENCE IN THIS BEHALF FROM THE RBI. JUDGED BY THIS TOUCHSTONE , IT IS CLEAR THAT THE IMPUGNED FULL BENCH JUDGMENT IS WHOLLY INCORRECT IN ITS READING O F CITIZEN COOPERATIVE SOCIETY LTD. (SUPRA). CLEARLY, THEREFORE, ONCE SECTION 80P(4) IS OUT OF HARM'S WAY, ALL THE ASSESSEES IN THE PRESENT CASE ARE ENTITLED TO THE BENEFIT OF THE DEDUCTION CONTAINED IN SECTION 80P(2)(A)(I), NOTWITHSTANDING THAT THEY MAY ALSO BE GIVING LOANS TO THEIR MEMBERS WHICH ARE NOT RELATED TO AGRICULTURE. ALSO, IN CASE IT IS FOUND THAT THERE ARE INSTANCES OF LOANS BEING GIVEN TO NON-MEMBERS, PROFITS ATTRIBUTABLE TO SUCH LOANS OBVIOUSLY CANNOT BE DEDUCTED. I.T.A NO. 384/ASR/2018 4 IN VIEW OF THE ABOVE, IT WAS SUBMITTED THAT THE ASS ESSEE IS ENTITLED TO THE RELIEF CLAIMED IN THE PRESENT APPEAL. 4. PER CONTRA, THE LD. DR HAD SUBMITTED THAT THE DE CISION OF THE SUPRME COURT WAS BASED ON APPRECIATION OF VARIOUS ACT INCLUDING ANDHRA PRADESH ACT, KERALA ACT AND U.P. COOPERATIVE CANE UNIONS FEDERATION LTD . AND OTHERS. DR SUBMITTED THAT IN THE PRESENT CASE THE ASSESSEE WAS REGISTERE D AS A SOCIETY UNDER THE CIRCLE REGISTRAR COOPERATIVE SOCIETY, HOSHIARPUR( PUNJAB), AND IT IS NECESSARY TO EXAMINE RULES AND REGULATION OF THE SOCIETY AS WELL AS OF RELVANT SOCIETY ACT OF PUNJAB , BY THE LOWER AUTHORITIES TO FIND OUT WHETHER DEFINITIO N OF MEMBERSAND NOMINAL MEMBERS ETC . FURTHER ASSESSEE WAS DENYING DOING TH E LENDING BUSINESS AFTER TAKING THE APPROVAL FROM THE RBI, THIS FACT WAS ALOS REQUI RED TO BER VERIFIED . LASTLY IT IS NECESSARY TO FIND OUT WHETHER THE ASSESSEE WAS DOIN G LENDING ACTIVITIES WITH MEMBERS AND NON MEMBERS OR NOT . 4.1 IN REBUTTAL THE LD. AR HAD SUBMITTD THAT THE MATTER MAY BE REMANDED BACK FOR EXAMINING ABOVE FACTS AS MENTIONED BY DR . 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAIBALE ON RECORD. AS THE FOUNDATION FACTS ARE REQUIRED TO BE ASCERTAINED BY THE LOWER AUTHORITIES LIKE DEFINITION OF MEMBERS, NOMINAL MEM BERS AND NON MEMBERS , WHETHER THE ASSESSEE WAS CARRING ON BANKING ACTIVI TIES FOR THE MEMBERS ONLY OR FOR NON MEMBERS AND WHETHER THE ASSESSEE WAS HAVING THE APPROVAL FROM RESERVE BANK OF INDIA FOR DOING BANKING ACTIVITIES. I.T.A NO. 384/ASR/2018 5 6. IN THE LIGHT OF, WE REMAND BACK APPEAL TO THE FI LE OF LD. CIT(A) FOR DENAVO PASSING OF THE APPELLATE ORDER WITH THE FOLLOWING D IRECTIONS A. THAT THE LD. CIT(A) SHALL DECIDE THE APPEAL ON THE BASIS OF THE FINDINGS RECORDED BY THE HONBLE SUPREME COURT MORE PARTICUL ARY IN PARAGRAPH 45 IN 197 DTR 0361 IN THE MATTER OF MAVILAYI SERVICE COOP ERATIVE BANK LTD. V. CIT. B. WHILE DECIDING THE ISSUE ON THE BASIS OF THE ABOVE SAID JUDGMENT, THE LD. CIT(A) SHALL EXAMINE THE RULES OF ASSESSEE-SOCIETY AS WELL AS THE ACT UNDER WHICH THE SOCIETY WAS FORMED. C. FOR THE PURPOSE OF ASCERTAINING THE SCOPE OF THE AC TIVITIES OF THE ASSESSEE,THE CIT(A) SHALL EXAMINE WHETHER ITS ACTIVITIES WERE RE STRICTED TO MEMBERS OR NON MEMBERS OR BOTH D. WHETHER THE ASSESSEE WAS HAVING ANY LICENSE FOR CAR RYING OUT THE BANKING ACTIVITES FOR THE MEMBERS AND NON MEMBERS. E. BASED ON THE ABOVE SAID FACTUAL FINDINGS THE CIT(A) SHALL DECIDE THE MATTER AFTER FINDING OPPORTUNITY OF HEARING TO THE ASSESSE E AS WELL AS TO THE ASSESSING OFFICER AND PASSED A REASONED AND SPEAKIN G ORDER. F. NEEDLESS TO SAY THE ASSESSEE HAD LIBERTY TO FILE AN Y OTHER DOCUMENT WHICH IT DEEM NECESSARY FOR DUE DISPOSAL OF THE APPEAL AND M AY RELY UPON ANY OF THE JUDGEMENT REFERRED BEFORE US. NEEDLESS TO SAY IN CA SE THE ASSESSEE FILES ANY I.T.A NO. 384/ASR/2018 6 DOCUMENT, THE CIT(A) SHALL CALL FOR REMAND REPORT A ND/OR GRANT HEARING TO THE ASSESSING OFFICER ALSO. 7. IN THE LIGHT OF ABOVE, THE APPEAL OF THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22/09/2021. SD/- SD/- (DR. M.L. MEENA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICI ALMEMBER DATED 22/09/2021 *GP/SR. P.S.* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY BY ORDER