M/s Sri Visakha Grameena Bank, Srikakulam V. The Addl CIT, Range-4, Visakhapatnam

ITA 426/VIZ/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0721 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-05-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 26-10-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Assessee Lawyers: C V S MURTHY
• Keywords: Rule of consistency
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.426/VIZAG/2006 ASSESSMENT YEAR : 2003-04 VISAKHA GRAMEENA BANK SRIKAKULAM ADDL. CIT, RANGE-4 VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO. APPELLANT BY: SHRI C.V.S. MURTHY, CA RESPONDENT BY: SHRI SUBRATA SARKAR, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON FOLLOWING GROUNDS:- 1) THE ORDER OF THE CIT(A)-II, VISAKHAPATNAM IS CONTRAR Y TO LAW AND FACTS OF THE CASE. 2) THE CIT(A)-II, VISAKHAPATNAM IS NOT JUSTIFIED IN DI SMISSING THE APPEAL FILED BY THE APPELLANT BANK WITHOUT APPRECIATING IT S CLAIM THAT THE APPELLANT IS NOT A COMPANY SO AS TO APPLY THE PROVI SIONS U/S 115JB OF THE I.T. ACT. AS THE APPELLANT IS ONLY A RURAL GRA MEENA BANK, THE STATUS OF THE APPELLANT IS AOP (COOPERATIVE SOCIE TY). IT IS ONLY FOR THE FIRST TIME THE ASSESSING AUTHORITY HAD TAKEN A DIFF ERENT VIEW AND TREATED THE ASSESSEE BANK AS A LIMITED COMPANY SO AS TO APPLY THE PROVISIONS U/S 115JB OF THE I.T. ACT, EVEN THOUGH TH E APPELLANT HAD SUBSTANTIATED ITS CONTENTION THAT IT IS NOT A LIMIT ED COMPANY AS THE SAME WAS NOT COVERED BY THE PROVISIONS DEFINING THE COMPANY UNDER THE STATUTE. THE APPELLANT ALSO STATED THAT AS PER THE CIRCULAR NO.319, ISSUED BY THE CBDT, AND AS PER THE PROVISIONS OF SE CTION 22 OF THE RRB ACT, A RURAL BANK IS A COOPERATIVE SOCIETY AND IT I S NOT A LIMITED COMPANY AND THEREFORE, IT WAS GIVEN DEDUCTION U/S 8 0P OF THE I.T. ACT. THE APPELLATE AUTHORITY DID NOT FIND FAVOUR WITH SU CH SUBMISSION AND DISMISSED THE APPEAL FILED BY THE APPELLANT BY CONF IRMING THE DECISION TAKEN BY THE ASSESSING AUTHORITY. AS THE LD. CIT(A ), WAS ALSO NOT JUSTIFIED IN COMING TO SUCH CONCLUSION AS THAT THE PROVISIONS U/S 115JB ARE APPLICABLE EVEN IN THE APPELLANTS CASE, THE AP PELLANT PRAYS FOR RELIEF. 2 2. THOUGH VARIOUS GROUNDS ARE RAISED BY THE ASSESSE E BUT THEY ALL RELATE TO THE APPLICABILITY OF THE PROVISIONS OF SECTION 1 15JB TO THE ASSESSEE WHICH IS A CO-OPERATIVE SOCIETY IN THE NAME OF RURAL GRAMEEN A BANK AND WAS ASSESSED AS AN AOP SINCE MANY YEARS UNDER THE SAME STATUS. THE FACTS RELATING TO THE IMPUGNED ISSUE BORNE OUT FROM THE R ECORD ARE THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY AND WAS REGISTER ED WITH THE REGISTRAR OF CO-OPERATIVE SOCIETIES IN THE NAME OF RURAL GRAMEEN A BANK AND WAS ENJOYING DEDUCTION U/S 80P OF THE I.T. ACT. THE ASSESSING OF FICER TREATED THE ASSESSEE SOCIETY AS A COMPANY AND INVOKED THE PROVISIONS OF 115JB OF THE I.T. ACT AND DETERMINED THE PROFIT U/S 115JB OF THE ACT. 3. THE APPEAL WAS FILED BEFORE THE CIT(A) WITH THE SUBMISSION THAT ASSESSEE IS A CO-OPERATIVE SOCIETY AND IS NOT A COM PANY REGISTERED UNDER THE COMPANIES ACT, THEREFORE, THE PROVISIONS OF SECTION 115JB CANNOT BE APPLIED TO THE ASSESSEES. IT WAS ALSO CONTENDED THAT ASSESS EE WAS NOT REQUIRED TO PREPARE AND FILE ANY RETURNS INCLUDING ANNUAL RETUR N PRESCRIBED UNDER THE COMPANIES ACT TO REGISTRAR OF COMPANIES. ASSESSEE WAS ALSO NOT REQUIRED TO PREPARE THE BALANCE SHEET AND ANNUAL STATEMENT AS P RESCRIBED UNDER SCHEDULE VI OF THE COMPANIES ACT, SINCE THE OTHER S TATUTORY REQUIREMENTS UNDER THE COMPANIES ACT ARE NOT APPLICABLE TO THE A SSESSEE. ASSESSEE IS NOT AN INSTITUTION TO WHICH PROVISIONS OF SECTION 115JB OF THE I.T. ACT WOULD APPLY FOR COMPUTING THE PROFIT. THE ASSESSEE DID NOT FIN D FAVOUR WITH THE CIT(A) AND HE CONFIRMED THE ORDER OF THE ASSESSING OFFICER . 4. ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND REITERATED ITS CONTENTIONS AND DURING THE COURSE OF HEARING, HE IN VITED OUR ATTENTION THAT IN SUCCEEDING YEAR I.E. 2004-05, THE SIMILAR ARGUMENT WAS RAISED BEFORE THE CIT(A) AND CIT(A) ACCEPTED THE SAME AND HELD THAT P ROVISIONS OF SECTION 115JB WOULD NOT BE APPLICABLE IN THE CASE OF THE AS SESSEES. HE HAS ALSO INVITED OUR ATTENTION TO THE CIRCULAR NO.319 DATED 11.1.1982 IN WHICH IT HAS BEEN CLARIFIED THAT FOR THE PURPOSE OF INCOME TAX A CT OR ANY OTHER ENACTMENT, FOR THE TIME BEING ANY FORCE RELATING TO ANNUAL TAX ON INCOME, PROFITS OR GAINS REGIONAL RURAL BANK SHALL BE DEEME D TO BE THE CO-OPERATIVE SOCIETY. SINCE THE ASSESSEE SOCIETY IS GOVERNED BY THE REGIONAL RURAL BANK 3 ACT, 1976, THE ASSESSEE CANNOT BE HELD TO BE THE CO MPANY FOR THE PURPOSE OF 115JB OF THE ACT. THE. LD. D.R. PLACED A RELIANCE UPON THE ORDER OF THE CIT(A). 5. HAVING GONE THROUGH THE ORDERS OF THE LOWER AUTH ORITIES IN THE LIGHT OF RIVAL SUBMISSIONS AND FROM PERUSAL OF THE DOCUMENTS PLACED ON RECORD, WE FIND THAT CBDT HAS CLARIFIED THROUGH ITS CIRCULAR N O.319 DATED 11.1.1982 THAT THE REGIONAL RURAL BANK SHALL BE DEEMED TO BE THE C O-OPERATIVE SOCIETY AND PROVISIONS OF SECTION 80P OF THE ACT WOULD BE APPLI CABLE TO THEM. ASSESSEE IS A GRAMEENA BANK AND IS GOVERNED UNDER THE REGIONAL RURAL BANK ACT, 1976 AND IS ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT. IT IS ALSO A FACT THAT ASSESSEE WAS NOT REQUIRED TO MAINTAIN ITS ACCOUNTS AS PER SC HEDULE VI OF THE COMPANIES ACT AND ALSO NOT TO FILE RETURN WITH THE REGISTRAR OF COMPANIES. WE HAVE ALSO GONE THROUGH THE ORDER OF THE CIT(A) F OR SUCCEEDING ASSESSMENT YEARS I.E. 2004-05 AND WE FIND THAT IN T HAT YEAR THE IDENTICAL ISSUE WAS RAISED AND CIT(A) WAS CONVINCED THAT PROV ISIONS OF SECTION 115JB WOULD NOT APPLY TO THE ASSESSEES. THIS ORDER OF TH E CIT(A) WAS ACCEPTED BY THE REVENUE. MEANING THEREBY, IT ATTAINED THE FINA LITY. NOTHING CONTRARY IS BROUGHT ON RECORD BY THE REVENUE. WE THEREFORE, FI ND FORCE IN THE CONTENTION OF THE ASSESSEES AND IN ORDER TO MAINTAIN THE RULE OF CONSISTENCY, WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE A.O. TO TR EAT THE ASSESSEES AS A CO- OPERATIVE SOCIETY. SINCE THE PROVISIONS OF SECTION 115JB ARE NOT APPLICABLE TO THE ASSESSEES CASE, A.O. IS DIRECTED TO RECOMPUTE THE TOTAL INCOME AS PER PROVISIONS OF LAW. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED. PRONOUNCED IN THE OPEN COURT ON 4.6.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 4 TH JUNE, 2010 4 COPY TO 1 SRI VISAKHA GRAMEENA BANK, SARASWATHI COMPLEX, SR IKAKULAM 2 ADDL. CIT, RANGE-4, VISAKHAPATNAM 3 THE CIT, VISAKHAPATNAM 4 THE CIT(A)-II, VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM