ITO, Bangalore V. M/s. Vasavi Credit Co-Operative Society Ltd, Bangalore

ITA 46/BANG/2011

• Counselvise Citation: 4621114 RSA 2011
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-12-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 18-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H SHIVA KUMAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE SHRI N.K SAINI, ACCOUNTANT MEMBER AND SMT. P MADHAVI DEVI, JUDICIAL MEMBER ITA NO.46/BA NG/2011 (ASST. YEAR - 2007-08) THE INCOME-TAX OFFICER, WARD-9(4), BANGALORE. . APPELLANT VS. VASAVI CREDIT CO-OPERATIVE SOCIETY LTD., NO.108/1, SRI KANIKAPARAMESHWARI TEMPLE COMPOUND, MALLESWARAM, 8 TH CROSS, BANGALORE. . RESPONDENT PAN NO.AAAJV0152C. APPELLANT BY : SHRI SATHYA SAI RATH RESPONDENT BY : SHRI H SHIVA KUMAR DATE OF HEARING : 27-12-2011 DATE OF PRONOUNCEMENT : 29-12-2011 O R D E R PER P MADHAVI DEVI, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE REVENUE. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) V AT ITA NO.46/B/11 2 BANGALORE DATED 30.11.2010. THE APPEAL ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME-TAX ACT, 1961. 2. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN ALLOWING THE DEDUCTION U/S 80P(2)(A)(I) O F RS.1,06,65,205/- WHICH IS THE ENTIRE INCOME OF THE ASSESSEE WHICH IN CLUDES DISALLOWANCE OF RS.50,00,305/- U/S 40(A)(IA) OF THE INCOME-TAX ACT, THOUGH THE SAID DISALLOWANCE WAS CONFIRMED BY HIM. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CO-OPERATIVE SOCIETY ENGAGED IN BANKING BUSINESS AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 DECLARING AN INCOME OF RS.56,64,900/- AND CLAIMING THE SAME AS EXEMPT U/S 80P OF THE INCOME-TAX ACT. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3), THE ASSESSING OFFICER OBSERVED THAT IN RESPECT OF PIGMI COMMISSION OF RS.50,00,305/- PAID, TDS WAS NOT DEDUCTED BY ASSESS EE AS PER THE PROVISIONS OF THE ACT AND, THEREFORE, IS TO BE DISA LLOWED U/S 40(A)(IA) OF THE ACT. HE FURTHER OBSERVED THAT SUB. SEC.(4) OF SEC. 80P OF THE INCOME-TAX ACT PROVIDES THAT THE PROVISIONS OF THE SEC. SHALL NOT APPLY IN RELATION TO A CO-OPERATIVE BANK OTHER THAN A PRI MARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTUR AL AND RURAL ITA NO.46/B/11 3 DEVELOPMENT BANK. OBSERVING THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY CARRYING ON BANKING ACTIVITIES, HE HELD THA T THE ASSESSEE IS NOT ENTITLED TO THE DEDUCTION U/S 80P OF THE INCOME-TAX ACT AND BROUGHT THE ENTIRE INCOME FOR TAXATION INCLUDING THE DISALL OWANCE U/S 40(A)(IA) OF THE ACT. 4. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE THE C IT(A) STATING THAT THE ASSESSEE IS NOT A CO-OPERATIVE BANK BUT IS ONLY A CREDIT CO- OPERATIVE SOCIETY. THE CIT(A) ACCEPTED THIS CONTEN TION OF THE ASSESSEE AND HELD THAT THE PROVISIONS OF SUB SEC. ( 4) OF SEC. 80P ARE APPLICABLE TO CO-OPERATIVE BANKS ONLY AND NOT TO CR EDIT CO-OPERATIVE SOCIETIES AND, THEREFORE, THE ASSESSEE IS ENTITLED TO DEDUCTION PROVIDED U/S 80)(2)(A)(I) OF THE INCOME-TAX ACT. HE HOWEVER CONFIRMED THE DISALLOWANCE MADE U/S 40(A)(IA) FOR NON DEDUCTION O F TDS IN RESPECT OF PIGMI COMMISSION. SINCE THE ASSESSEE WAS ENTITL ED TO DEDUCTION U/S 80P(2)(A)(I) OF THE INCOME-TAX ACT FOR THE ENTIRE I NCOME, THE CIT(A) GRANTED RELIEF OF ENTIRE INCOME AS DEDUCTION TO THE ASSESSEE. 5. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. ITA NO.46/B/11 4 6. THE LEARNED DR STRONGLY SUPPORTED THE ORDERS OF THE AO AND BROUGHT TO OUR NOTICE THE PROVISIONS OF THE SUB SEC . (4) OF SEC. 80P(2)(A)(I) OF THE INCOME-TAX ACT TO DEMONSTRATE T HAT THE ASSESSEE BEING IN BANKING ACTIVITIES IS NOT ENTITLED TO DEDU CTION U/S 80P(2)(A)(I) OF THE ACT FOR THE ENTIRE INCOME AND THAT IN SPITE OF CONFIRMING THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT, THE CIT(A) G RANTED RELIEF OF ENTIRE INCOME AS DEDUCTION TO THE ASSESSEE. 7. THE LEANED COUNSEL FOR THE ASSESSEE PLACED RELI ANCE UPON THE ORDERS OF THE CIT(A) AND ALSO SUBMITTED THAT SUB SE C. (4) OF SEC. 80P WAS INTRODUCED BY THE FINANCE ACT OF 2006 W.E.F 1.4 .2007 AND, THEREFORE, THE SAME IS NOT APPLICABLE TO THE ASSESS EE. 8. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS, WE FIND THAT THE SUB. SEC. (4) OF SEC. 80P HAS BEEN INTRODUCED W.E.F 1/4/2007 WHEREBY CO-OPERATIVE BANK S OTHER THAN PRIMARY AGRICULTURAL CREDIT SOCIETY OR PRIMARY CO-O PERATIVE AGRICULTURAL AND RURAL DEVELOPMENTS BANKS HAVE BEEN DENIED THE P ROVISIONS OF SEC. 80P OF THE INCOME-TAX ACT. THE RELEVANT FINANCIAL YEAR OF THE ASSESSEE BEFORE US IS 2006-07 WHICH ENDS ON 31.3.2007. AS TH E PROVISIONS OF SUB SEC. 4 OF SEC. 80P COMES INTO EFFECT FROM 1/4/2 007, IT IS CLEAR THAT ITA NO.46/B/11 5 THE SAID PROVISION IS NOT APPLICABLE TO THE ASSESSE E. IN VIEW OF THE SAME, THE FINDINGS OF THE CIT(A) THOUGH ON A DIFFER ENT FOOTING HAS TO BE UPHELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTI ON U/S 80P ON ITS ENTIRE INCOME. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29TH DEC, 2011. SD/- SD/- (N.K SAINI) (P MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER VMS. BANGALORE DATED : 29/12/2011 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.