ITO, JODHPUR V. M/s. Pushtikar Sakh Sahakari Samiti Ltd., JODHPUR

ITA 428/JODH/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1952 (ITAT-JODHPUR)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 02-05-2017
• Assessment Year: 2014-2015
• Appeal Filed On: 21-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALKA R JAIN
• Keywords: Benefit of exemption
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, JODHPUR BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NOS.428/JODH/2016 ASSESSMENT YEAR: 2014-15 THE ITO VS. M/S. PUSHTIKAR SAKH SAHAKARI SAMITI LTD., WARD-1(5) ERSTWHILE KNOWN AS M/S PUSHTIKAR LAGH U JODHPUR VYAPARIK PRATISHTHAN BACHAT EVAM SAKH SAHAKARI SAMITI. LTD. 4-F-41, NEW POWER HOUSE ROAD JODHPUR PAN NO. AADAP0396G (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SMT. ALKA R. JAIN DATE OF HEARING : 02/05/2017 DATE OF PRONOUNCEMENT : 05/05/2017 ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE ASSAILI NG THE CORRECTNESS OF THE ORDER DT. 21/10/2016 OF CIT(A)-1, JODHPUR PERTAINI NG TO 2014-15 ASSESSMENT YEAR ON THE FOLLOWING GROUND: 1. THE FACTS AND IN LAW IN DELETING THE ADDITION O F RS. 4,93,48,760/- HOLDING THAT IT IS A COOPERATIVE SOCIETY WHICH ALSO CARRIES ON BUSINESS OF LENDING MONEY TO ITS MEMBERS WHICH IS COVERED UNDER SECTION 80P(2)(A)(I) IGNORING THE FACT THAT THE ASSESSEE IS A CO-OPERATIVE BANK AS PER PART V OF THE BANKING REGULATION ACT AN D IS NOT ENTITLED TO ANY DEDUCTION U/S 80P, AS PER SEC. 80P(4). 2. NO ONE WAS PRESENT ON BEHALF OF THE ASSESSEE AT THE TIME OF HEARING. THE ASSESSEE HAS FILED WRITTEN SUBMISSION DT. 25/02/2017 CLAIMING THAT THE ISSUE IS COVERED IN HIS FAVOUR BY VIRTUE OF THE ORDER DT. 15/03/2016 IN IT A NO. 146 TO 149/JODHPUR/2015, PERTAINING TO 2007-08 & 2009-10 TO 2011-12 ASSESSMENT YEAR. ACCORDINGLY AFTER HEARING 2 THE LD. CIT, DR IT WAS CONSIDERED APPROPRIATE TO PROC EED WITH THE PRESENT APPEAL EXPARTE QUA THE ASSESSEE APPELLANT ON MERITS. 3. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE DECLARED NIL INCOME BY WAY OF FILING HIS RETURN ON29/11/2014. THE SAID RETURN WAS P ICKED UP FOR SCRUTINY AND AFTER ISSUING OF NOTICE UNDER SECTION 143(2) ETC. THE ASSESS ING OFFICER DENIED THE DEDUCTION CLAIMED UNDER SECTION 80 P OF THE ACT ON THE REASONING W HICH IS GIVEN AS UNDER: (VIII) FROM THE ABOVE DISCUSSIONS IT IS CLEARLY P ROVED THAT THE ASSESSEE IS REGISTERED UNDER THE COOPERATIVE SOCIETIES ACT, AS WELL AS REGISTERE D BY THE CENTRAL REGISTRAR OF COOPERATIVE SOCIETIES AS MULTI-STATE COOPERATIVE SOCIETY, UNDER SECTION 22 OF THE MULTI-STATE COOPERATIVE SOCIETIES ACT, 2002, THEREFORE IS A COO PERATIVE SOCIETY. IT IS DOING BANKING AND ONLY THE BANKING BUSINESS. THEREFORE, THE ASSESSEE SOCIETY DOING THE BANKING BUSINESS IS COVERED UNDER THE DEFINITION OF A COOPERATIVE BANK AS DEFINED IN PART V OF THE BRA. AS THE ASSESSEE IS COVERED UNDER THE DEFINITION OF A COOPE RATIVE BANK AS REQUIRED UNDER SECTION 80P(4), THEREFORE, THE PROVISION OF SECTION 80P ARE APPLICABLE IN THIS CASE AND DEDUCTION OF SECTION 80P IS NOT APPLICABLE IN THIS CASE AND THE ASSESSEE SOCIETY IS NOT ELIGIBLE FOR DEDUCTION U/S 80P. IN VIEW OF THE ABOVE FINDINGS THE DEDUCTION OF RS. 4,39,30,690/- CLAIMED BY THE ASSESSEE UNDER SECTION 80P OF THE INCOME TAX ACT, 1961 IS LI ABLE TO BE DISALLOWED AND ACCORDINGLY, DISALLOWED AND ADDED IN THE TOTAL INCOME OF THE ASS ESSEE. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ARE I NITIATED SEPARATELY FOR CONCEALMENT OF INCOME BY FURNISHING INACCURATE PARTICULARS OF INCO ME. IN VIEW OF THE ABOVE, THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER: RETURN INCOME RS. NIL ADD: I) DISALLOWANCE OF DEDUCTION U/S 80P RS. 4,93, 48,761/- AS DISCUSSED ABOVE ASSESSED TOTAL INCOME RS. 4,93,48,760/- ASSESSED AT RS. 4,93,48,760/- UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. INTEREST CHARGED UNDER SECTION 234A, 234B, 234D AND 244A(3) AS APPLICABLE. DEMAND NOTICE AND CHALLAN ARE ISSUED ACCORDINGLY. PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 ARE INITIATED BY ISSUE OF NOTI CE UNDER SECTION 274(1) OF THE INCOME TAX ACT, 1961 AS DISCUSSED ABOVE. 4. THE ASSESSEE CAME IN APPEAL BEFORE THE FIRST APPELL ATE AUTHORITY AND MADE THE FOLLOWING SUBMISSIONS: 5. THE APPELLANT HAS VEHEMENTLY CONTESTED THE DIS ALLOWANCE MADE BY THE AO. THE CRUX OF THE APPELLANTS SUBMISSIONS IS THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY REGISTERED UNDER THE CO-OPERATIVE SOCIETIES ACT. IT IS NOT A B ANK AS IT ONLY ACCEPTS DEPOSITS FROM MEMBERS AND GRANTS LOANS ONLY TO MEMBERS. THE SOCIE TY IS NEITHER GRANTING LOANS NOR ACCEPTING ANY DEPOSITS FROM PERSONS WHO ARE NOT MEM BERS OF THE SOCIETY. THE OBJECT OF THE SOCIETY IS TO CARRY OUT THE BANKING BUSINESS BU T BY MERELY HAVING THE OBJECT OF CARRYING OUT BANKING BUSINESS THE STATUS OF SOCIETY CANNOT B E CHANGED FROM THAT OF SOCIETY TO A CO- OPERATIVE BANK. THE ASSESSEE SOCIETY IS NEITHER A C ENTRAL OR STATE OR A PRIMARY CO-OPERATIVE BANK AND HAS THE STATUS OF SOCIETY ONLY. THE APPELL ANT SOCIETY DOES NOT FALL UNDER THE DEFINITION OF BANK AS PER BANKING REGULATION ACT AS NO LICENSE FROM RBI IS ISSUED TO IT. THE APPELLANT SOCIETY BY PRODUCING ITS BYE-LAW TRIED TO FORTIFY ITS CLAIM THAT IT IS ONLY CO- OPERATIVE SOCIETY AND ELIGIBLE FOR DEDUCTION U/S 80 P(2)(A)(I). THE APPELLANT HAS ALSO 3 REFERRED TO VARIOUS JUDICIAL DECISIONS IN SUPPORT O F ITS CONTENTIONS. IT WAS POINTED OUT BY THE AR THAT SIMILAR ISSUE WAS DECIDED AGAINST THE ASSES SEE SOCIETY BY THE CIT(A), JODHPUR FOR A.YRS. 2007-08 TO 2011-12, AGAINST WHICH THE APPELL ANT WENT IN APPEAL BEFORE THE HONBLE ITAT. IT WAS FURTHER SUBMITTED BY THE LD. AR THAT T HE HONBLE ITAT VIDE THEIR COMMON ORDER DATED 15/03/2016 IN ITA NOS. 146 TO 149/JODHPUR/201 5 FOR A.Y. 2007-08 & 2009-10 TO 2011- 12, DECIDED THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80P IN FAVOUR OF THE APPELLANT SOCIETY. THE APPELLANT FURNISHED A COPY OF THE ORDE R OF HONBLE ITAT DATED 15/03/2016 IN AFORESAID ITA NOS. AND REQUESTED THAT THE ISSUE MAY BE DECIDED IN FAVOUR OF THE APPELLANT. 5. CONSIDERING THE SUBMISSIONS THE CIT(A) ALLOWED THE A PPEAL BY HOLDING AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE AOS ORDER AND S UBMISSIONS OF THE APPELLANT. I FIND THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVE RED IN FAVOUR OF THE APPELLANT BY THE ORDER OF THE HONBLE JURISDICTIONAL ITAT IN APPELLA NTS OWN CASE IN ITA NOS. 146 TO 149/JODH/2015 FOR AY 2007-08 & 2009-10 TO 2011-12 DATED 15-03-2016. THE OPERATIVE PART OF THE HONBLE ITATS ORDER IS REPRODUCED AS BELOW: - '7. WE FIND THAT THE ISSUE IS NOW COVERED BY THE DE CISION OF THE HON'BLE KARNATAKA HIGH COURT IN FAVOUR OF THE ASSESSEE IN THE CASE OF CIT VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGALKOT, IN ITA NO.5006 /2013 DATED 05-02-2014, WHICH WAS FOLLOWED IN THE CASES OF GENERAL INSURANCE EMPLOYEE S CO-OPERATIVE CREDIT SOCIETY LTD. AND IN THE CASE OF VASAVI MULTIPURPOSE SOUHARDA SAH AKARI NIYAMITHA, ITA NO.505/2013 DATED 27/06/2014, HAS CLEARLY HELD THAT A CO-OPERAT IVE SOCIETY REGISTERED AS CO- OPERATIVE SOCIETY, PROVIDING CREDIT FACILITIES TO M EMBERS AND NOT REGISTERED WITH THE RBI CANNOT BE DENIED THE EXEMPTION UNDER SECTION 80P(1) OF THE IT ACT. THE OPERATIVE PART OF THE JUDGMENT READS AS FOLLOWS:- THEREFORE, THE INTENTION OF THE LEGISLATURE IS CLE AR, IF A COOPERATIVE BANK IS EXCLUSIVELY CARRYING ON BANKING BUSINESS, THEN THE INCOME DERIV ED FROM THE SAID BUSINESS CANNOT BE DEDUCTED IN , COMPUTING THE TOTAL INCOME OF THE ASS ESSEE. THE SAID INCOME IS LIABLE FOR TAX. A CO-OPERATIVE BANK AS DEFINED UNDER THE BANKING RE GULATION ACT INCLUDES THE PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATI VE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THE LEGISLATURE DID NOT WANT TO DENY THE SAID BENEFITS TO A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THEY DID NOT WANT TO EXTEND THE SAID BENEFIT TO A CO-OPERATIVE B ANK WHICH IS EXCLUSIVELY CARRYING ON BANKING BUSINESS I.E THE ITA NO.LL49/BANG/2015 SHRI HOLEHUCHESHWAR CO-OP CREDIT SOCIETY LTD. PAGE 4 OF 6 PURPOSE OF THIS AMENDMENT. THEREFO RE, AS THE ASSESSEE IS NOT A CO- OPERATIVE BANK CARRYING ON EXCLUSIVELY BANKING BUSI NESS AND AS IT DOES NO POSSESS A LICENCE FROM RESERVE BANK OF INDIA TO CARRY ON BUSINESS, IT IS NOT A CO-OPERATIVE BANK. IT IS A CO- OPERATIVE SOCIETY WHICH ALSO CARRIES ON THE BUSINES S OF LENDING MONEY TO ITS MEMBERS WHICH IS COVERED UNDER SECTION 80P(2)(A)(I) I.E CARRYING ON THE BUSINESS OF ' BANKING FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE OBJECT OF THE AFORESAID AMENDMENT IS NOT TO EXCLUDE THE BENEFIT EXTENDED UNDER SECTION 80P(1) TO SUCH SOCIE TY IN THE INSTANT CASE, WHEN THE STATUS OF THE ASSESSEE IS A CO-OPERATIVE S OCIETY AND IS NOT A CO-OPERATIVE BANK, THE ORDER PASSED BY THE ASSESSING AUTHORITY EXTENDI NG THE BENEFIT OF EXEMPTION FROM PAYMENT OF TAX UNDER SECTION 80P(2)(A)(I) OF THE AC T IS CORRECT. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THAT THE ASSESSEE IS A COOPERATIVE SOCIETY AND NOT A COOPERATIVE BANK AND, THEREFORE, ENTITLED TO DEDUCTION UNDER SEC. 80P OF THE ACT. WE THEREFORE, SET ASIDE THE ORDERS OF THE LOWER AUTHOR ITIES AND DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SEC. 80P OF THE ACT TO THE AS SESSEE. RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE ITA T, JODHPUR BENCH, IT IS HELD THAT THE APPELLANT SOCIETY IS ENTITLED TO DEDUCTION U/S. 80P . THIS ISSUE IS DECIDED IN FAVOUR OF THE APPELLANT AND THE ADDITION MADE AT RS. 4,93,48,761/ - IS DIRECTED TO BE DELETED. THIS GROUND IS ALLOWED. 4 6. AGAINST THE RELIEF GIVEN THE REVENUE IS IN APPEAL. T HE LD. CIT, DR THOUGH RELIES UPON THE ASSESSMENT ORDER HOWEVER FAIRLY SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE ON GOING THROUGH THE COPY OF WRITTEN SUBMI SSIONS AVAILABLE WITH THE REVENUE. ACCORDINGLY IN THE ABSENCE OF ANY ARGUMENT AS SAILING THE IMPUGNED ORDER WHEREIN NO CHANGE EITHER ON FACTS OR IN THE LEGAL POSITION CONSIDERED HAS BEEN BROUGHT TO OUR NOTICE WE ARE OF THE VIEW THAT THERE IS NO MERIT IN THE APPEAL FILED. BEING SATISFIED BY THE REASONING AND FINDINGS RECORDED BY THE COORDINATE B ENCH WHICH HAVE BEEN FOLLOWED BY THE LD. CIT(A) THE DEPARTMENTAL GROUND IS DISMISSED. SAID ORDER WAS PRONOUNCED ON THE DATE OF HEARING ITSELF. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DIS MISSED. THE ORDER IS PRONOUNCED ON 05/05/2017 IN THE OPEN C OURT. SD/- SD/- (B.C. MEENA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBE R AG COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DEPARTMENTAL REPRESENTATIVE