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

ITA 414/COCH/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7292 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 14-03-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: C B M WARRIER
• Keywords: Bad and doubtful debts; Competent authority
• Section: 142(1); 56; 144; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : COCHIN BENCH : KOCHI. [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMB ER AND SHRI GEORGE GEORGE. K., JUDICIAL MEMBER] ./I.T.A. NO. 414/COCH/2014 / ASSESSMENT YEAR : 2010-2011. M/S. KODIY ATHUR SERVICE CO - OPERATIVE BANK LTD, PANNIKODE, P.O. KOZHIKODE. [ PAN AAAAK 5312L ] VS. THE INCOME TAX OFFICER, WARD 2(3) KOZHIKODE. ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI. CBM WARRIER, C.A. /RESPONDENT BY : SHRI. A. DHANARAJ, SR. D. R. /DATE OF HEARING : 14 - 03 - 201 7 /DATE OF PRONOUNCEMENT : 15 - 03 - 201 7 !' !' !' !' / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THIS APPEAL IS REMITTED BACK TO THIS TRIBUNAL BY HONBLE JURISDICTIONAL HIGH COURT THROUGH ITS JUDGMENT DATE D 16 TH FEBRUARY, 2016 IN ITA NO.197 OF 2015. 2. ASSESSEE HAVING NOT FILED A RETURN OF INCOME FOR T HE IMPUGNED ASSESSMENT YEAR WITHIN THE TIME ALLOWED UN DER SECTION 139 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), THE LD. ASSESSING ITA NO. 414/COCH/2014 :- 2 -: OFFICER ISSUED A NOTICE UNDER SECTION 142(1) OF THE ACT. SINCE THERE WAS NO COMPLIANCE WITH SUCH NOTICE ALSO, PROCEEDING S WERE INITIATED FOR A BEST JUDGMENT ASSESSMENT UNDER SECTION 144 OF THE ACT. ASSESSEE EVENTUALLY FILED A RETURN ON 25.03.2013, WHEREIN IT CLAIMED DEDUCTION UNDER SECTION U/S.80P(2)(A) (I) OF THE ACT IN RESPECT OF ITS INCOME FROM BANKING. HOWEVER, THIS RETURN WAS CONSI DERED BY THE LD. ASSESSING OFFICER AS AN INVALID ONE, HAVING BEEN FI LED BEYOND THE TIME PRESCRIBED UNDER SECTION 139 AND SECTION 142(1) OF THE ACT. CLAIM OF THE ASSESSEE THAT IT WAS ONLY A PRIMARY AGRICULTURA L CREDIT SOCIETY AND INCOME EARNED BY IT FROM PROVIDING CREDIT FACILITI ES TO ITS MEMBERS WAS EXEMPT UNDER SECTION 80P(2) (A)(I) OF THE ACT WAS D ECLINED BY THE LD. ASSESSING OFFICER, RELYING ON SUB SECTION (4) OF SE C. 80P OF THE ACT AND ALSO CITING A REASON THAT THE RETURN FILED WAS BELA TED AND HIT BY SECTION 80A(5) OF THE ACT. AS PER LD. ASSESSING OFFICER AS SESSEE COULD ONLY BE DEEMED AS A CO-OPERATIVE BANK AND WAS NOT ELIGIBLE FOR SUCH CLAIM. FURTHER, ACCORDING TO LD. ASSESSING OFFICER ASSESSE E HAVING FILED THE RETURN LATE CLAIM UNDER SECTION 80P(2) OF THE ACT C OULD NOT BE CONSIDERED AT ALL. LD. ASSESSING OFFICER ALSO MAD E A DISALLOWANCE UNDER SECTION 36(1) (IV) AND 36(1)(V) OF THE ACT FO R CONTRIBUTION TO UNAPPROVED SUPERANNUATION AND GRATUITY FUNDS FOR E MPLOYEES. 3. ASSESSEES APPEAL BEFORE LD. COMMISSIONER OF INCOM E TAX (APPEALS), WAS LIMITED TO DISALLOWANCE OF THE CLAIM UNDER SECTION ITA NO. 414/COCH/2014 :- 3 -: 80P(2) OF THE ACT, BUT DID NOT MEET WITH ANY SUCCES S. THIS PERSUADED ASSESSEES TO MOVE THIS TRIBUNAL. THIS TRIBUNAL V IDE ITS ORDER DATED 31 ST JULY, 2014 CONFIRMED THE ORDERS OF THE LOWER AUTHO RITIES. THEREUPON ASSESSEES MOVED IN FURTHER APPEAL BEFORE HONBLE JURISDICTIONAL HIGH COURT AND HONBLE JURISDICTIONA L HIGH COURT THROUGH ITS JUDGMENT DATED 15.04.2016 FOLLOWING ITS OWN JUD GMENT IN THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD VS. CIT 384 ITR 490 HELD THAT THE ASSESSEE WAS NOT HIT BY SUB SECTION (4) OF SEC. 80P OF THE ACT, SINCE IT WAS CLASSIFIED AS A PRIMARY AGRICULTU RAL CREDIT SOCIETY BY THE COMPETENT AUTHORITY UNDER THE STATE LAW RELATIN G TO CO-OPERATIVE SOCIETIES. HONBLE JURISDICTIONAL HIGH COURT ALSO H ELD THAT LATE FILING OF RETURN OF INCOME WAS NOT FATAL. WHAT WAS HELD BY T HE HONBLE LORDSHIP IN THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD (SUPRA) AT PARAGRAPHS 9 TO 21 IS APPOSITE AND THIS IS REPRO DUCED HEREUNDER:- 9. SECTION 80P OF THE INCOME-TAX ACT DEALS WITH DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOCI ETIES. SUB-SECTION (1) OF THAT SECTION PROVIDES THAT WHERE , IN THE CASE OF AN ASSESSEE BEING A CO-OPERATIVE SOCIETY, T HE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB- SECTION (2) OF THAT SECTION, THERE SHALL BE DEDUCTE D, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF SE CTION 80P, THE SUMS SPECIFIED IN SUB-SECTION (2) THEREOF, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. SUB-SEC TION (4) OF SECTION 80P PROVIDES THAT THE PROVISIONS OF SECTION 80P SHALL NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOP MENT BANK. THIS PROVISION IN SUB-SECTION (4) OF SECTION 80P MEANS THAT THE PROVISIONS OF SECTION 80P SHALL NOT APPLY TO A PRIMARY AGRICULTURAL CREDIT SOCIETY. HENCE, TH E LEVY OF ITA NO. 414/COCH/2014 :- 4 -: TAX IN TERMS OF THE PROVISIONS OF SECTION 80P DOES NOT APPLY TO A PRIMARY AGRICULTURAL CREDIT SOCIETY. 10. THE TERMS 'CO-OPERATIVE BANK' AND 'PRIMARY AGRICULTURAL CREDIT SOCIETY' FOR THE PURPOSE OF SUB -SECTION (4) OF SECTION 80P OF THE INCOME-TAX ACT, SHALL HAV E THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANKING REGULATION ACT, 1949 ; FOR SHORT ; BR ACT, GOING BY EXPLANATION (A) OCCURRING AFTER SECTION 80P(4) O F THE INCOME-TAX ACT. FOR THE PURPOSE OF THAT SUB-SECTION , 'PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVEL OPMENT BANK' IS DEFINED TO MEAN WHAT IS STATED IN EXPLANAT ION (B) TO SECTION 80P(4) OF THE INCOME-TAX ACT. 11. PART V OF THE BANKING REGULATION ACT CARRIES SE CTION 56 OF THAT ACT, WHICH PRESCRIBES MODIFICATIONS TO T HE PROVISIONS OF THE BANKING REGULATION ACT IN THEIR APPLICATION AND IN RELATION TO CO-OPERATIVE SOCIETI ES. 12. 'CO-OPERATIVE BANK' IS A TERM DEFINED IN SECTION 5(CCI) OF THE BANKING REGULATION ACT TO MEAN, INTER ALIA, A PRIMARY CO-OPERATIVE BANK. A PRIMARY CO-OPERATIVE B ANK IS A CO-OPERATIVE SOCIETY OTHER THAN A PRIMARY AGRI CULTURAL CREDIT SOCIETY, GOING BY CLAUSE (CCV) OF SECTION 5 OF THE BANKING REGULATION ACT. THEREFORE, A PRIMARY AGRICU LTURAL CREDIT SOCIETY IS NOT TO BE TREATED AS A PRIMARY CO - OPERATIVE BANK AND THEREFORE, NOT TO BE RECKONED AS A CO- OPERATIVE BANK. WE STATE THIS HERE AND NOW TO POINT OUT THAT THE APPELLANTS WHICH ARE PRIMARY AGRICULTURAL CREDIT SOCIETIES ARE NOT OF SUCH TYPE THAT THEY WOULD FALL FOR CONSIDERATION AS A CO-OPERATIVE BANK FOR THE PURPOS E OF SUB-SECTION (4) OF SECTION 80P OF THE INCOME-TAX AC T. RESULTANTLY, THE CONSEQUENTIAL LEGAL IMPLICATION IS THAT A PRIMARY AGRICULTURAL CREDIT SOCIETY IS ONE AMONG TH E TWO TYPES OF INSTITUTIONS WHICH GAIN THE BENEFIT OF SUB -SECTION (4) OF SECTION 80P TO EASE THEMSELVES OUT FROM THE COVERAGE OF SECTION 80P. THE ARGUMENT ADVANCED ON BEHALF OF THE REVENUE, TO THE CONTRARY IS REPELLED. ' 13. REVERTING TO SECTION 5(CCIV) OF THE BANKING REGULATION ACT ; 'PRIMARY AGRICULTURAL CREDIT SOCIE TY' MEANS A CO-OPERATIVE SOCIETY, THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHICH IS TO PROVIDE FINANCIAL ACCOMMODATION TO ITS MEMBERS FOR AGRICULTURAL PURPO SES OR FOR PURPOSES CONNECTED WITHAGRICULTURAL ACTIVITI ES INCLUDING THE MARKETING OF CROPS ; AND THE BYE-LAWS OF WHICH DO NOT PERMIT ADMISSION OF ANY OTHER CO-OPERA TIVE SOCIETY AS MEMBER. HOWEVER, THE PROVISIONS IN SUB-C LAUSE (2) OF SECTION 5(CCIV) SHALL NOT APPLY TO THE ADMIS SION OF A CO-OPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO- ITA NO. 414/COCH/2014 :- 5 -: OPERATIVE BANK SUBSCRIBING TO THE SHARE CAPITAL OF SUCH CO- OPERATIVE SOCIETY OUT OF FUNDS PROVIDED BY THE STAT E GOVERNMENT FOR THE PURPOSE. THIS IS THE EFFECT OF T HE PROVISO OCCURRING AFTER SUB-CLAUSE (2) OF SECTION 5 (CCIV) WHICH IS REFERRED TO HEREIN ONLY FOR CONTINUITY, TH OUGH WE ARE NOT REALLY CONCERNED WITH THE EFFECT OF THAT PR OVISO. KEEPING IN MIND THAT 'PRIMARY AGRICULTURAL CREDIT S OCIETY' IS DEFINED WITH REFERENCE TO THE TERM 'CO-OPERATIVE SOCIETY' ; REVERTING TO SECTION 5(CCIIA) OF THE BAN KING REGULATION ACT, IT CAN BE SEEN THAT FOR THE PURPOSE OF THAT ACT, 'CO-OPERATIVE SOCIETY' MEANS A SOCIETY REGISTE RED OR DEEMED TO HAVE BEEN REGISTERED UNDER ANY CENTRAL ACT FOR THE TIME BEING IN FORCE RELATING TO THE MULTI-STATE CO- OPERATIVE SOCIETIES, OR ANY OTHER CENTRAL OR STATE L AW RELATING TO CO- OPERATIVE SOCIETIES FOR THE TIME BE ING IN FORCE. 14. IN ALL THE CLAUSES REFERRED TO ABOVE, THE LEGIS LATIVE TOOL USED IS 'MEANS' ; AND NOT 'INCLUDES'. THEREFOR E, WHEN THE TERM 'CO-OPERATIVE SOCIETY' IS DEFINED TO MEAN, INTER ALIA, A SOCIETY REGISTERED UNDER ANY STATE LA W RELATING TO CO-OPERATIVE SOCIETIES FOR THE TIME BEI NG IN FORCE ; ONE SUCH IS A CO-OPERATIVE SOCIETY FOR THE PURPOSES OF THE BANKING REGULATION ACT AND IF THAT CO- OPERA TIVE SOCIETY SATISFIES THE DEFINITION OF 'PRIMARY AGRICU LTURAL CREDIT SOCIETY', IT WOULD BE ONE TO WHICH THE EXEMP TION AS PER SUB-SECTION (4) OF SECTION 80P OF THE INCOME-TA X ACT WOULD APPLY. 15. APPELLANTS IN THESE DIFFERENT APPEALS ARE INDIS PUTABLY SOCIETIES REGISTERED UNDER THE KERALA CO-OPERATIVE SOCIETIES ACT, 1969, FOR SHORT, KCS 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 AC T. PARLIAMENT, HAVING DEFINED THE TERM 'CO-OPERATIVE SOCIETY' FOR THE PURPOSES OF THE BANKING REGULATION ACT WITH REFERENCE TO, AMONG OTHER THINGS, THE REGISTRA TION OF A SOCIETY UNDER ANY STATE LAW RELATING TO CO-OPERAT IVE SOCIETIES FOR THE TIME BEING ; IT CANNOT BUT BE TAK EN THAT THE PURPOSE OF THE SOCIETIES SO REGISTERED UNDER TH E 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 RECIPROCA TIVE LEGISLATIVE EXERCISE BY PARLIAMENT RECOGNISING THE PREDOMINANCE OF DECISIONS RENDERED UNDER THE RELEVA NT STATE LAW. IN THIS VIEW OF THE MATTER, ALL THE APPE LLANTS HAVING BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CRED IT ITA NO. 414/COCH/2014 :- 6 -: SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE KERA LA CO- OPERATIVE SOCIETIES ACT, IT HAS NECESSARILY TO BE H ELD THAT THE PRINCIPAL OBJECT OF SUCH SOCIETIES IS TO UNDERT AKE AGRICULTURAL CREDIT ACTIVITIES AND TO PROVIDE LOANS AND ADVANCES FOR AGRICULTURAL PURPOSES, THE RATE OF INT EREST ON SUCH LOANS AND ADVANCES TO BE AT THE RATE FIXED BY THE REGISTRAR OF CO-OPERATIVE SOCIETIES UNDER THE KERALA CO- OPERATIVE SOCIETIES ACT AND HAVING ITS AREA OF OPER ATION CONFINED TO A VILLAGE, PANCHAYAT OR A MUNICIPALITY. THIS IS THE CONSEQUENCE OF THE DEFINITION CLAUSE IN SECTION 2(OAA) OF THE KERALA CO-OPERATIVE SOCIETIES ACT. THE AUTHOR ITIES UNDER THE INCOME-TAX ACT CANNOT PROBE INTO ANY ISSU E OR SUCH MATTER RELATING TO SUCH APPLICANTS. 16. THE POSITION OF LAW BEING AS ABOVE WITH REFEREN CE TO THE STATUTORY PROVISIONS, THE APPELLANTS HAD SHOWN TO THE AUTHORITIES AND THE TRIBUNAL THAT THEY ARE PRIMARY AGRICULTURAL CREDIT SOCIETIES IN TERMS OF CLAUSE (C CIV) OF SECTION 5 OF THE BANKING REGULATION ACT, HAVING REG ARD 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 MEMB ER, EXCEPT MAY BE, IN ACCORDANCE WITH THE PROVISO TO SU B- CLAUSE (2) OF SECTION 5(CCIV) OF THE BANKING REGULA TION ACT. THE DIFFERENT ORDERS OF THE TRIBUNAL WHICH ARE IMPEACHED IN THESE APPEALS DO NOT CONTAIN ANY FINDI NG OF FACT TO THE EFFECT THAT THE BYE-LAWS OF ANY OF THE APPELLANT OR ITS CLASSIFICATION BY THE COMPETENT AUTHORITY UN DER THE KERALA CO-OPERATIVE SOCIETIES ACT IS ANYTHING DIFFE RENT FROM WHAT WE HAVE STATED HEREINABOVE. FOR THIS REAS ON, IT CANNOT BUT BE HELD THAT THE APPELLANTS ARE ENTITLED TO EXEMPTION FROM THE PROVISIONS OF SECTION 80P OF THE INCOME-TAX ACT BY VIRTUE OF SUB-SECTION (4) OF THAT SECTION. IN THIS VIEW OF THE MATTER, THE APPEALS SU CCEED. 17. IN THE LIGHT OF THE AFORESAID, WE ANSWER THE SUBSTANTIAL QUESTION 'A' IN FAVOUR OF THE APPELLANT S AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE REGARDING THE ENTITLEMENT OF EXEMPTION UNDER SECTIO N 80P AGAINST THE APPELLANTS. WE HOLD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETIES, REGISTERED AS SUCH U NDER THE KERALA CO-OPERATIVE SOCIETIES ACT ; AND CLASSIFIED S O, UNDER THAT ACT, INCLUDING THE APPELLANTS ARE ENTITL ED TO SUCH EXEMPTION. 18. QUESTIONS B AND C RELATE TO DENIAL OF EXEMPTION ON GROUND REFERABLE TO BELATED FILING OF RETURN, THAT IS TO SAY, RETURNS FILED BEYOND THE PERIOD STIPULATED UNDER SE CTION ITA NO. 414/COCH/2014 :- 7 -: 139(1) OR SECTION 139(4), AS THE CASE MAY BE, AS WE LL AS SECTION 142(1) OR SECTION 148, AS THE CASE MAY BE. THERE ARE NO CASES AMONG THESE APPEALS WHERE RETURNS WERE NOT FILED. THERE ARE CASES WHERE CLAIMS HAVE BEEN MADE ALONG WITH THE RETURNS AND THE RETURNS WERE FILED WITHIN TIME. STILL FURTHER, THERE ARE CASES WHERE RETURNS WERE F ILED BELATEDLY, THAT IS TO SAY, BEYOND THE PERIOD STIPUL ATED UNDER SUB-SECTION (1) OR (4) OF SECTION 139 ; AND, THERE ARE ALSO RETURNS FILED AFTER THE PERIOD WITH REFERE NCE TO SECTIONS 142(1) AND 148 OF THE INCOME-TAX ACT. 19. SECTION 80A(5) PROVIDES THAT WHERE THE ASSESSEE FAILS TO MAKE A CLAIM IN HIS RETURN OF INCOME FOR ANY DED UCTION, INTER ALIA, UNDER ANY PROVISION OF CHAPTER VI-A UNDE R THE HEADING 'C.DEDUCTIONS IN RESPECT OF CERTAIN INCOMES ', NO DEDUCTION SHALL BE ALLOWED TO HIM THEREUNDER. THEREFORE, IN CASES WHERE NO RETURNS HAVE BEEN FILE D FOR A PARTICULAR ASSESSMENT YEAR, NO DEDUCTIONS SHALL BE ALLOWED. THIS EMBARGO IN SECTION 80A(5) WOULD APPLY , THOUGH SECTION 80P IS NOT INCLUDED IN SECTION 80AC. THIS IS SO BECAUSE, THE INHIBITION AGAINST ALLOWING DEDUCTI ON IS WORDED IN QUITE SIMILAR TERMS IN SECTIONS 80A(5) AN D 80AC, OF WHICH SECTION 80A(5) IS A PROVISION INSERT ED THROUGH THE FINANCE ACT 33 OF 2009 WITH EFFECT FROM APRIL 1, 2013, AFTER THE INSERTION OF SECTION 80AC AS PER THE FINANCE ACT OF 2006 WITH EFFECT FROM APRIL 1, 2006. THIS CLEARLY EVIDENCES THE LEGISLATIVE INTENDMENT THAT T HE INHIBITION CONTAINED IN SUB-SECTION (5) OF SECTION 80A WOULD OPERATE BY ITSELF. IN CASES WHERE RETURNS HAV E BEEN FILED, THE QUESTION OF EXEMPTIONS OR DEDUCTIONS REF ERABLE TO SECTION 80P WOULD DEFINITELY HAVE TO BE CONSIDER ED AND GRANTED IF ELIGIBLE. 20. HERE, QUESTIONS WOULD ARISE AS TO WHETHER BELAT ED RETURNS FILED BEYOND THE PERIOD STIPULATED UNDER SE CTION 139(1) OR SECTION 139(4) AS WELL AS FOLLOWING SECTI ONS 142(1) AND 148 PROCEEDINGS COULD BE CONSIDERED FOR EXEMPTION. IF THOSE RETURNS ARE ELIGIBLE TO BE ACCE PTED IN TERMS OF LAW, GOING BY THE PROVISIONS OF THE STATUT E AND THE GOVERNING BINDING PRECEDENTS, IT GOES WITHOUT S AYING THAT THE CLAIM FOR EXEMPTION WILL ALSO STAND EFFECT UATED AS A CLAIM DULY MADE AS PART OF THE RETURNS SO FILED, FOR DUE CONSIDERATION. 21. WHEN A NOTICE UNDER SECTION 142(1) IS ISSUED, T HE PERSON MAY FURNISH THE RETURN AND WHILE DOING SO, C OULD ALSO MAKE CLAIM FOR DEDUCTION REFERABLE TO SECTION 80P. NOT MUCH DIFFERENT IS THE SITUATION WHEN PRE- ASSES SMENT ENQUIRY IS CARRIED FORWARD BY ISSUANCE OF NOTICE UN DER SECTION142(1) OR WHEN NOTICE IS ISSUED ON THE PREMI SE OF ITA NO. 414/COCH/2014 :- 8 -: ESCAPED ASSESSMENT REFERABLE TO SECTION 148 OF THE INCOME-TAX ACT. THIS POSITION NOTWITHSTANDING, WHEN AN ASSESSMENT IS SUBJECTED TO FIRST APPEAL OR FURTHER APPEALS UNDER THE INCOME-TAX ACT OR ALL QUESTIONS GERMANE F OR CONCLUDING THE ASSESSMENT WOULD BE RELEVANT AND CLA IMS WHICH MAY RESULT IN MODIFICATION OF THE RETURNS ALR EADY FILED COULD ALSO BE ENTERTAINED, PARTICULARLY WHEN IT RELATES TO CLAIMS FOR EXEMPTIONS. THIS IS SO BECAUSE THE FI NALITY OF ASSESSMENT WOULD NOT BE ACHIEVED IN ALL SUCH CASES, UNTIL THE TERMINATION OF ALL SUCH APPELLATE REMEDIES. UND ER SUCH CIRCUMSTANCES, THE TRIBUNAL WAS NOT JUSTIFIED IN DE NYING EXEMPTION UNDER SECTION 80P OF THE INCOME-TAX ACT O N THE MERE GROUND OF BELATED FILING OF RETURN BY THE ASSESSEE CONCERNED. A RETURN FILED BY THE ASSESSEE BEYOND THE PERIOD STIPULATED UNDER SECTION 139(1) O R 139(4) OR UNDER SECTION 142(1) OR SECTION 148 CAN A LSO BE ACCEPTED AND ACTED UPON PROVIDED FURTHER PROCEEDING S IN RELATION TO SUCH ASSESSMENTS ARE PENDING IN THE STA TUTORY HIERARCHY OF ADJUDICATION IN TERMS OF THE PROVISION S OF THE INCOME-TAX ACT. IN ALL SUCH SITUATIONS, IT CANNOT B E TREATED THAT A RETURN FILED AT ANY STAGE OF SUCH PROCEEDING S COULD BE TREATED AS NON EST IN LAW AND INVALID FOR THE PU RPOSE OF DECIDING EXEMPTION UNDER SECTION 80P OF THE INCOME- TAX ACT. WE THUS ANSWER SUBSTANTIAL QUESTIONS OF LAW B AND C FORMULATED AND ENUMERATED ABOVE . HONBLE JURISDICTIONAL HIGH COURT HAD THUS REMITTED THIS APPEAL BACK TO THE TRIBUNAL FOR CONSIDERATION AFRESH WITH THE FOLL OWING DIRECTIONS. WITH THE AFORESAID, WE REMIT ALL THESE MATTERS F OR RECONSIDERATION BY THE INCOME TAX APPELLATE TRIBUNA L IN THE LIGHT OF THE ANSWERS RENDERED HEREIN ON SUBSTANTIAL QUESTIONS OF LAW (A), (B) AND (C). THE TRIBUNAL WILL THEREUPON CONSIDER THE ISSUES RELATING TO THE BAD AND DOUBTFUL DEBTS AND T HE CLAIM OF THE ASSESSEE IN THAT REGARD BY TREATING THAT IN AL L CASES WHERE EXEMPTIONS ARE CLAIMED UNDER SECTION 80P AND SUCH M ATTERS WERE PENDING BEFORE THE ASSESSING AUTHORITY OR BEFO RE THE APPELLATE AUTHORITY, INCLUDING IN THESE APPEALS, TH E QUESTION OF EXEMPTION AVAILABLE UNDER SECTION 80P WAS STILL AVA ILABLE FOR DECISION. 4. NOW BEFORE US, LD. COUNSEL FOR THE ASSESSEE, PLACIN G A COPY OF A CERTIFICATE DATED 01.10.2016 ISSUED BY JOINT R EGISTRAR OF CO- ITA NO. 414/COCH/2014 :- 9 -: OPERATIVE SOCIETIES (GENERAL), KOZHIKODE, SUBMITTED THAT ASSESSEE WAS A PRIMARY AGRICULTURAL CREDIT SOCIETY AS DEFINED IN SECTION 2(OA) OF KERALA CO-OPERATIVE SOCIETIES ACT, 1969. FURTHER, ACCORDING TO HIM, ASSESSEE HAD MADE THE CLAIM U/S.80P OF THE ACT IN T HE RETURN OF INCOME FILED, THOUGH BELATEDLY AND THEREFORE WAS E LIGIBLE FOR SUCH DEDUCTION. LD. COUNSEL SUBMITTED THAT HE WAS NOT PR ESSING ANY OF THE OTHER GROUNDS, EXCEPT THOSE RELATING TO DISALLOWANC E OF THE CLAIM UNDER SECTION 80P(2) OF THE ACT. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONGL Y SUPPORTING THE ORDERS OF THE AUTHORITIES BELOW SUBM ITTED THAT THIS TRIBUNAL HAD IN A NUMBER OF CASES HELD SIMILAR SOC IETIES ENGAGED IN THE BUSINESS OF BANKING AS NOT ELIGIBLE FOR DEDUCT ION CLAIMED U/S.80P (2) OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. ASSESSEE HAS PRODU CED CERTIFICATE FROM THE COMPETENT AUTHORITY UNDER KERALA CO-OPERATIVE S OCIETIES ACT, 1969 WHICH CERTIFY THAT IT IS A PRIMARY AGRICULTURAL CR EDIT SOCIETY. THEIR LORDSHIP IN THE CASE OF CHIRAKKAL SERVICE CO-OPERATIVE BANK LTD (SUPRA), PERTINENT PART OF WHICH HAS BEEN REPRODUCED IN THE EARLIER PART OF OUR ORDER, HAS CLEARLY HELD THAT ONCE AN ASSESSEE WAS CLASSIFIED AS A ITA NO. 414/COCH/2014 :- 10 -: PRIMARY AGRICULTURAL CREDIT SOCIETY BY THE COMPETEN T AUTHORITY UNDER KERALA CO-OPERATIVE SOCIETIES ACT, IT NECESSARILY HAD TO BE CONSIDERED AS A SOCIETY HAVING AS ITS PRINCIPLE OBJECT PROVIDI NG AGRICULTURAL CREDIT ACTIVITIES AND PROVIDING LOAN AND ADVANCES FOR AGR ICULTURAL PURPOSES. THEIR LORDSHIP HAD TAKEN THIS VIEW CONSIDERING DEFI NITION OF CLAUSE IN SEC. 2(OA) OF KERALA CO-OPERATIVE SOCIETIES ACT. TH EIR LORDSHIP ALSO HELD THAT BELATED FILING OF RETURN WOULD NOT DEPRIVE AN ASSESSEE, THE BENEFIT UNDER SECTION 80P(2) OF THE ACT, AS LONG AS SUCH CLAIM WAS MADE THOUGH SUCH RETURN. HOWEVER, IN THE CASE BEFOR E US, WE FIND THAT THE CERTIFICATE FROM COMPETENT AUTHORITY REFLECTING ITS NATURE AS A PRIMARY AGRICULTURAL CREDIT SOCIETY WAS NOT PRODUCE D BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES. THE CERTIFICATE IS DA TED 01.10.2016 WHEREAS LD. COMMISSIONER OF INCOME TAX (APPEALS) HA D PASSED THE ORDER ON 23.07.2014. IN THE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE CERTIFICATE PRODUCED BY THE ASSESSEE REQUIRES T O BE VERIFIED BY THE LOWER AUTHORITIES. IF THE SAID CERTIFICATE IS FOUND TO BE GENUINE, THE LD. ASSESSING OFFICER HAS TO GRANT THE DEDUCTION CLAIME D UNDER SECTION 80P(2) OF THE ACT. WE THEREFORE, SET ASIDE THE ORD ERS OF THE LOWER AUTHORITIES AND REMIT THE ISSUE REGARDING CLAIM OF THE ASSESSEE UNDER SECTION 80P(2) OF THE ACT BACK TO THE FILE OF ASSES SING OFFICER FOR THE LIMITED PURPOSE VERIFICATION OF THE CERTIFICATE PR ODUCED BY THE ASSSESSEE. RELATED GROUNDS ARE ALLOWED FOR STATIST ICAL PURPOSES. OTHER ITA NO. 414/COCH/2014 :- 11 -: GROUNDS ARE DISMISSED AS NOT PRESSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREA TED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15-03-2017. SD/- SD/- ( GEORGE GEORGE. K) # # # # !$ !$ !$ !$ / JUDICIAL MEMBER (ABRAHAM P. GEORGE) !$ !$ !$ !$ / ACCOUNTANT MEMBER COCHIN &! / DATED:15TH MARCH, 2017 KV !' ' (' / COPY TO: 1 . M/S. KODIYATHUR SERVICE CO-OPERATIVE BANK, PANNIKOD E, P.O. KOZHIKODE. 2. THE INCOME TAX OFFICER, WARD 2(3), KOZHIKODE. 3. THE COMMISSIONER OF INCOME TAX (APPEALS), KOZHIKODE. 4. THE PRINCIPAL COMMISSIONER OF INCOME TAX (APPEAL S) V KOZHIKODE . 5. D.R. I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE BY ORDER . (ASSISTANT REGISTRAR I.T.A.T., COCHIN.