ITO, Ward 3(4), Latur V. Shri Sai Gramin Bigar Sheti Sah. Pat Sanstha Ltd., Osmanabad

ITA 43/PUN/2013

• Counselvise Citation: 4324514 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 04-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: C V CHITALE
• Section: 143(3); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 43 /PN/20 1 3 ASSESSMENT YEAR : 200 9 - 10 INCOME TAX OFFICER, WARD - 3(4), LATUR VS. SHRI SAI GRAMIN BIGAR SHETI SAH. PAT SANSTHA LTD., A/P - KALLAM, DISTT. - OSMANABAD (APPELLANT) (RESPONDENT) PAN NO. AACAS1756Q APPELLANT BY: SHRI S.P. WALIMBE RESPONDENT BY: SHRI C.V. CHITALE DATE OF HEARING : 0 4 - 02 - 2014 DATE OF PRONOUNC EMENT : 21 - 0 2 - 2014 ORDER P ER R.S. PADVEKAR , JM : - IN THIS APPEAL , THE REVENUE HAS CHALLENGED T HE IMPUGNED ORDER OF THE LD. CIT(A) , AURANGABAD DATED 15 - 10 - 2012 FOR THE A.Y. 200 9 - 10. THE REVENUE HAS TAKEN THE MULTIPLE GROUNDS WHICH ARE MOSTLY ARGUMENTA TIVE BUT THE SOLITARY ISSUE IS WHETHER THE ASSESSEE SOCIETY IS ELIGIBLE FOR THE DEDUCTION U/S. 80P(2)(A)(I) OF THE INCOME - TAX ACT. 2. THE BRIEFLY STATED FACTS ARE AS UNDER. THE ASSESSEE IS A CO - OPERATIVE SOCIETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 2009 - 10 WHICH WAS SELECTED FOR SCRUTINY AND ASSESSMENT HAS BEEN COMPLETED U/S. 143(3) OF THE INCOME - TAX ACT. THE ASSESSEE HAD CLAIMED THE DEDUCTION IN RESPECT OF INCOME FROM ITS ACTIVITI ES U/S. 80P(2)(A)(I) OF THE INCOME - TAX ACT DECLARING NIL INCOME. THE ASSESSING OFFICER WAS OF THE OPINION THAT AFTER INSERTION OF SUB - SEC. ( 4 ) TO SEC. 80P, THE ASSESSEE IS NOT ELIGIBLE TO CLAIM THE DEDUCTION. H E, ACCORDINGLY, DENIED THE DEDUCTION TO THE ASSESSEE. 2 ITA NO. 43 /PN/2013, SHRI SAI GRAMIN BIGAR SHETI SAH. PAT SANSTHA LTD., OSMANABAD THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD. CIT(A) AND LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE ITAT, PUNE IN THE CASE OF ITO VS. JANKALYAN NAGRI SAHAKARI PAT S A NSTHA LTD. (2012) 54 SOT 60 (PUNE) (URO). NO W THE REVENUE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE PARTIES. WE FIND THAT IN THE ASSESSEES OWN CASE IN THE A.Y. 2007 - 08 , THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLOWING THE DECISION IN THE CASE OF ITO VS. JANKALYAN NAGRI SAHAKARI PAT SANSTHA LTD. (SUPRA). THE OPERATIVE PART OF THE FINDINGS OF THE TRIBUNAL IS AS UNDER: 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORDS. IN THIS CASE, AS PER THE FACTS ON RECORD, THE ASSESSEE IS A CO - OPERATIVE CREDIT SOC IETY. SECTION 80P HAS UNDERGONE AN AMENDMENT W.E.F. 1.4.2007 BY INSERTION OF SUB - SEC. (4) WHICH READS AS UNDER : (4) THE PROVISIONS OF THIS SECTION 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 DEVELOPMENT BANK. EXPLANATION FOR THE PURPOSE OF THIS SUB - SECTION, - (A) CO - OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDIT SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANKIN G REGULATION ACT, 1949 (10 OF 1949); (B) PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG - TERM CREDIT FOR AGRICULTURAL AND R URAL DEVELOPMENT ACTIVITIES. 5. IT IS TO BE MENTION HERE THAT UP TO A.Y. 2006 - 07, ANY CO - OPERATIVE SOCIETY WHICH WAS ENGAGED IN THE BUSINESS OF CARRYING ON BANKING WAS ELIGIBLE FOR DEDUCTION IN RESPECT OF THE WHOLE OF THE AMOUNT OF PROFIT ATTRIBUTABLE TO ITS BANKING ACTIVITIES. FOR THE BENEFIT OF DECIDING THE PRESENT ISSUE, IT IS NECESSARY TO CONSIDER THE LEGAL POSITION AS APPLICABLE UP - TO THE A.Y. 2006 - 07, MORE PARTICULARLY IN VIEW OF SUB - SECTION (2) OF SEC. 80 - P. SECTION 80 P (2) READS AS UNDER : - 80P. (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO - OPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME REFERRED TO IN SUB - SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUM S SPECIFIED IN SUB - SECTION(2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB - SECTION (1) SHALL BE THE FOLLOWING, 3 ITA NO. 43 /PN/2013, SHRI SAI GRAMIN BIGAR SHETI SAH. PAT SANSTHA LTD., OSMANABAD NAMELY : - (A) IN THE CASE OF A CO - OPERATIVE SOCIETY ENGAGED IN - (I) CARRYING ON THE BUSINESS OF BANKING OR P ROVIDING CREDIT FACILITIES TO ITS MEMBERS, OR (II) A COTTAGE INDUSTRY, OR (III) THE MARKETING OF AGRICULTURAL PRODUCE GROWN BY ITS MEMBERS, OR (IV) THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS, LIVESTOCK OR OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PURPOS E OF SUPPLYING THEM TO ITS MEMBERS, OR (V) .. (VI) .. 6. SUB - SECTION (4) WAS INTRODUCED FOR WITHDRAWING THE DEDUCTION TO THE CO - OPERATIVE BANK OTHER THAN PRIMARY AGRICULTURE CREDIT SOCIETY OR PRIMARY CO - OPERATIVE AGRICULTURE AND RURAL DEVELOPMENT BANK. I N VIEW OF EXPLANATION BELOW SUB - SEC.(4) OF SEC. 80P, THE DEFINITION OF THE CO - OPERATIVE BANK AS ASSIGNED IN PARA 5 OF THE BANKING REGULATION ACT IS TO BE CONSIDERED. IN THE OPINION OF THE A.O, AS THE NATURE OF THE ACTIVITIES OF THE ASSESSEE CREDIT SOCIET Y ARE ANALOGOUS TO THE BANKING ACTIVITIES, WHICH ARE MORE SPECIFICALLY DESCRIBE IN THE BANKING REGULATION ACT AND HENCE, ASSESSEE PARTAKES THE CHARACTER OF PRIMARY CO - OPERATIVE BANK AS DEFINED IN CLAUSE (CCII ) OF THE BANKING REGULATION ACT 1949. C LAUSE (CCI ) OF SEC 5 OF BR ACT DEFINES THE CO - OPERATIVE BANK MEANS STATE CO - OPERATIVE BANK, CENTRAL CO - OPERATIVE BANK AND PRIMARY CO - OPERATIVE BANK. 7. THE PRIMARY CO - OPERATIVE BANK IS TREATED AS CO - OPERATIVE BANK IN VIEW OF CL. (CCI) OF SEC 5 OF THE B. R. ACT, 1949. DEFINITION OF PRIMARY CO - OPERATIVE BANK IS GIVEN IN CL. (CCV) OF SEC. 5 OF B. R. ACT, 1949, WHICH READS AS UNDER; PRIMARY CO - OPERATIVE BANK MEANS A CO - OPERATIVE SOCIETY OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY (I) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHICH IS THE TRANSACTIONS OF BANKING BUSINESS; (II) THE PAID - UP SHARE CAPITAL AND RESERVES OF WHICH ARE NOT LESS THAN ONE LACK OF RUPEES; AND A. THE BY - LAWS OF WHICH DO NOT PERMIT ADMISSION OF ANY OTHER CO - OPERATIVE SOC IETY AS A MEMBER: PROVIDED THAT THIS SUB - CLAUSE SHALL NOT APPLY TO THE ADMISSION OF CO - OPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO - OPERATIVE BANK SUBSCRIBING TO SHARE CAPITAL OF SUCH CO - OPERATIVE SOCIETY OUT OF FUNDS PROVIDED BY STATE GOVERNMENT FOR TH E PURPOSE. 4 ITA NO. 43 /PN/2013, SHRI SAI GRAMIN BIGAR SHETI SAH. PAT SANSTHA LTD., OSMANABAD ON CAREFUL PERUSAL OF ABOVE DEFINITION IT IS SEEN THAT BASIC MANDATE ANY CO - OPERATIVE SOCIETY TO COVER IN DEFINITION OF PRIMARY CO - OPERATIVE BANK IS THAT ITS PRIMARY OBJECT OR PRINCIPAL BUSINESS SHOULD BE TRANSACTIONS OF BANKING BUSINESS. THE TERM BANKING IS DEFINED IN B. R. ACT AND AS PER SAID DEFINITION THERE IS NO RESTRICTION THAT DEPOSITOR SHOULD BE MEMBER OF SAID SOCIETY BUT IT IS PUBLIC AT LARGE WITH WHOM BUSINESS TRANSACTIONS CAN BE CARRIED OUT. OTHER TWO CONDITIONS AS MENTIONED IN CLS.(II) &(III) ARE ON FULFILLING FIRST CONDITION GIVEN IN CL.(I). IN PRESENT CASE NOTHING IS ON RECORD TO SUGGEST THAT ALL THREE CONDITIONS ARE FULFILLED TO HOLD THAT ASSESSEE WHICH IS A CO - OPERATIVE SOCIETY IS A PRIMARY CO - OPERATIVE BANK 8. IT IS PERTINENT TO NOTE HERE THAT THE DEFINITION OF THE CO - OPERATIVE CREDIT SOCIETY IS GIVEN IN CLAUSE (CCII) OF SEC. 5 WHICH READS AS UNDER : CO - OPERATIVE CREDIT SOCIETY MEANS A CO - OPERATIVE SOCIETY, THE PRIMARY OBJECT OF WHICH IS TO PROVIDE FINANCIAL ACCOMMODATION TO ITS MEMBERS AND INCLUDES A CO - OPERATIVE LAND MORTGAGE BANK; 9. THE BANKING REGULATION ACT, 1949 DEFINES OF CO - OPERATIVE BANK IN CL.(CCI) OF SEC. 5 (AS INSERTED BY SEC. 56 OF THE SAID ACT) AND CO - OPERATIVE CREDIT SOCIETY IS NOT INCLUDED BUT ITS IDENTITY IS KEPT SEPARATE BY WAY OF INDEPENDENT DEFINITION IN VIEW OF CLAUSE (CCII) OF SEC. 5 OF THE BANKING REGULATION ACT WHICH DEFINES WHAT IS MEANING OF CREDIT CO - OPERATIVE SOCIETY. ON PLAIN READING OF THE BANKING REGULATION ACT , 1949, NOWHERE IT IS SUGGESTED THAT THE TERM CO - OPERATIVE BANK ALSO INCLUDES CO - OPERATIVE CREDIT SOCIETY ALSO. MEANING OF ANY TERM OR EXPRESSION IS TO BE ASCERTAINED IN THE CONTEXT OF PROVISIONS OF REFERRED ACT. AS PER SUB - SEC. (4) OF SEC. 80P OF THE I. T. ACT, CO - OPERATIVE BANK MEANS STATE CO - OPERATIVE BANK, A CENTRAL CO - OPERATIVE BANK AND A PRIMARY CO - OPERATIVE BANK. IT IS SEEN THAT CO - OPERATIVE BANK IS DEPRIVED OF THE BENEFIT OF THE DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. AS PER THE INTERPRETATION GIVEN BY THE AO, ASSESSEE CO - OPERATIVE CREDIT SOCIETY PARTAKES THE CHARACTER OF THE PRIMARY CO - OPERATIVE BANK AND AS THE PRIMARY CO - OPERATIVE BANK IS INCLUDED IN THE DEFINITION OF THE CO - OPERATIVE BANK AND HENCE, IS NOT ENTITLED TO THE BENEFITS OF SEC. 80P (2)(A)(I) OF I. T. ACT. IN OUR OPINION, THIS IS NOT THE CORRECT INTERPRETATION. IT IS WELL SETTLED PRINCIPLE IN THE INTERPRETATION OF THE TAXING PROVISIONS THAT THE SAME ARE TO BE STRICTLY CONSTRUED AND THERE IS N ROOM FOR ANY INTENDMENT. THERE IS NO PRESUMPTION AS TO TAX.NOTHING IS TO BE READ OR NOTHING IS TO BE IMPLIED. ONE HAS TO FAIRLY LOOK INTO LANGUAGE USED BY THE PARLIAMENT. THE PARLIAMENT HAS ADOPTED THE DEFINITION OF THE CO - OPERATIVE BANK BY REFERING THE SAME AS GIVEN IN THE BANKING REGULATI ON ACT, 1949. IT IS CALLED LEGISLATION BY REFERENCE AND WE HAVE TO GIVE THE STRICT INTERPRETATION WHILE INTERPRETING THE EFFECT OF SUB - SEC. (4) TO SEC. 80 P. IN OUR OPINION, CO - OPERATIVE CREDIT SOCIETY IS DISTINCT AND SEPARATE FROM THE CO - OPERATIVE BA NK NOR IT CAN BE 5 ITA NO. 43 /PN/2013, SHRI SAI GRAMIN BIGAR SHETI SAH. PAT SANSTHA LTD., OSMANABAD SAID AS A PRIMARY CO - OPERATIVE BANK WITHIN THE MEANING OF BANKING REGULATION ACT, 1949. HENCE, THE ASSESSEEEE BEING A CO - OPERATIVE CREDIT SOCIETY IS ENTITLED FOR DEDUCTION U/S. 80 P(2)(A)(I) OF THE ACT. WE ACCORDINGLY UPHOLD THE ORDER O F THE LD CIT(A). WE, THEREFORE, FIND NO REASON TO TAKE THE DIFFERENT VIEW, BUT SUPPORT THE ORDER OF THE CIT(A). WE, ACCORDINGLY, CONFIRM THE ORDER OF CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 4. WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT( A) BY FOLLOWING THE DECISION IN THE ASSESSEES OWN CASE FOR THE A.Y. 2007 - 08. 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21 - 0 2 - 201 4 SD/ - SD/ - ( R.K. PANDA ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIA L MEMBER RK /PS PUNE , DATED : 21 ST FEBRUARY, 2014 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 THE CIT(A) , AURANGABAD 4 THE CIT, AURANGABAD 5 THE DR, ITAT, B BENCH, PUNE . 6 GUARD FILE. //TRUE COPY// BY O RDER PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE