The Belgaum Manufacturers Co=op. Industrial Estate Ltd., Bangalore V. Commissioner of Income Tax,., Belagavi

ITA 49/PAN/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93560 (ITAT-PANAJI)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 04-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND SHANKAR MARATHE
• Keywords: Benefit of exemption
• Section: 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 49 /PNJ/201 5 (ASST. YEAR : 20 1 0 - 1 1 ) THE BELGAUM MANUFACTURERS CO - OP INDUSTRIAL ESTATE LTD. , UDYAMBAG, BELAGAVI. VS. CIT, BEL A GA VI . PAN NO. AAAAT 7254 J (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE . DEPARTMENT BY : SHRI ANAND SHANKAR MARATHE - D R DATE OF HEARING : 1 6 / 0 7 /2015 . DATE OF PRONOUNCEMENT : 16 / 0 7 /201 5 . O R D E R PER N.S. SAINI , ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX , BEL AGAVI , DATED 0 3 / 11 /201 4 . 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION UNDER SEC. 80P(2)(D) OF THE ACT IN RESPECT OF THE INTEREST EARNED OF RS. 16,81,880/ - FROM INV ESTMENTS WITH BDCC BANK, MAHAVEER COOPERATIVE BANK AND SARASWAT COOPERATIVE BANK. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER ALLOWED DEDUCTION UNDER SEC. 80P(2)(D) OF THE ACT ON INTEREST INCOME OF RS. 16,81,880/ - EARNED BY THE ASSESSEE FROM INVESTMENT S WITH BDCC 2 ITA NO. 4 9 /PNJ/201 5 BANK, MAHAVEER COOPERATIVE BANK AND SARASWAT COOPERATIVE BANK , A S T H E INTEREST R E C E I V E D F R O M C O O P E R A T I V E S O C I E T Y , T H E S A M E W A S A L L O W A B L E . 4 . A C C O R D I N G T O T H E COMMISSIONER OF INCOME TAX , A S P E R T H E P R O V I S I O N S O F S E C . 8 0 P ( 2 ) ( D ) , D E D U C T I O N I S A D M I S S I B L E I N C A S E O F C O O P E R A T I V E S O C I E T Y W H E R E T H E INCOME E A R N E D I S B Y W A Y O F INTEREST O R D I V I D E N D S D E R I V E D B Y A C O O P E R A T I V E S O C I E T Y F R O M I T S I N V E S T M E N T S W I T H A N Y O T H E R C O O P E R A T I V E S O C I E T Y . T H E P R O V I S I O N S O F S E C . 8 0 P ( 2 ) ( D ) S H A L L N O T A P P L Y I N R E L A T I O N T O A N Y C O O P E R A T I V E B A N K . H E O B S E R V E D T H A T T H E A B O V E M E N T I O N E D B A N K S A R E H A V I N G B A N K I N G L I C E N C E F R O M R B I A N D T H E Y C A R R Y O N B A N K I N G BUSINESS W I T H O U T A N Y R E S T R I C T I O N . T H E B D C C A N D O T H E R B A N K S A R E D E A L I N G W I T H P U B L I C B Y ACCEPTING D E P O S I T S , G R A N T I N G L O A N S E T C . A N D T H E R E I S N O R E S T R I C T I O N T O G E N E R A L P U B L I C A S I N T H E C A S E O F C O O P E R A T I V E S O C I E T Y I . E . T O B E C O M E M E M B E R O F T H E B A N K F O R T H E P U R P O S E O F O B T A I N I N G L O A N O R K E E P I N G D E P O S I T S E T C . T HEREFORE , A C C O R D I N G T O T H E COMMISSIONER OF INCOME TAX , T H E INTEREST R E C E I V E D F R O M B D C C A N D O T H E R B A N K S O F RS. 1 6 , 8 1 , 8 8 0 / - I S N O T A D M I S S I B L E UNDER SEC. 8 0 P ( 2 ) ( D ) O F T H E ACT . I N V I E W O F T H E O V E R R I D I N G PROVISION S O F S E C . 8 0 P ( 4 ) , D E D U C T I O N UNDER SEC. 8 0 P I S N O T AVAILABLE T O T H O S E B A N K S A N D F O R T H A T R E A S O N , T H E ASSESSEE I S N O T E N T I T L E D T O A N Y D E D U C T I O N O F INTEREST INCOME F R O M I T S G R O S S T O T A L INCOME UNDER SEC. 8 0 P ( 2 ) ( D ) . T HEREFORE , T H E R E W A S A F A I L U R E O N T H E P A R T O F ASSESSING OFFICER T O A L L O W T H E C L A I M O F T H E ASSESSEE UNDER SEC. 8 0 P ( 2 ) ( D ) O F RS. 1 6 , 8 1 , 8 8 0 / - A N D ACCORDINGLY , T H E O R D E R P A S S E D B Y T H E ASSESSING OFFICER W A S E R R O N E O U S A N D P R E J U D I C I A L T O T H E INTEREST O F T H E R E V E N U E O N T H I S ACCOUNT . H E , THEREFORE , S E T A S I D E T H E O R D E R O F T H E ASSESSING OFFICER A N D E N H A N C E D T H E ASSESSMENT O R D E R P A S S E D UNDER SEC. 1 4 3 ( 3 ) F O R ASSESSMENT Y E A R 2 0 1 0 - 1 1 O N 3 1 / 1 0 / 2 0 1 2 B Y T H E INTEREST INCOME O F RS. 1 6 , 8 1 , 8 8 0 / - . 5. B E I N G A G G R I E V E D B Y T H E S A I D O R D E R O F T H E COMMISSIONER OF INCOME TAX , T H E ASSESSEE I S I N A P P E A L B E F O R E U S . 3 ITA NO. 4 9 /PNJ/201 5 6. N O N E W A S P R E S E N T O N B E H A L F O F T H E ASSESSEE W H E N T H E C A S E W A S C A L L E D F O R H E A R I N G . N O T I C E W A S S E N T T O T H E ASSESSEE B Y REGISTERED P O S T W I T H A C K N O W L E D G M E N T D U E O N 0 1 / 0 7 / 2 0 1 5 W H I C H W A S S E R V E D O N T H E ASSESSEE O N 0 4 / 0 3 / 2 0 1 5 . T HEREFORE , T H E B E N C H P R O C E E D E D T O D I S P O S E O F T H E APPEAL O F T H E ASSESSEE B Y C O N S I D E R I N G T H E SUBMISSIONS O F T H E DEPARTMENTAL REPRESENTATIVE A N D T H E M A T E R I A L S A V A I L A B L E O N R E C O R D . 7. T H E DEPARTMENTAL REPRESENTATIVE R E L I E D O N T H E O R D E R O F T H E COMMISSIONER OF INCOME TAX . 8. W E F I N D T H A T T H E I S S U E A T H A N D I S N O W S Q U A R E L Y C O V E R E D B Y T H E D E C I S I O N O F T H E HONBLE K A R N A T A K A HIGH COURT I N T H E C A S E O F CIT VS. SRI B I L U R U G U R U B A S A V A P A T T I N A S A H A K A R I S A N G H A N I Y A M I T H A , B A G A L K O T I N I . T . A . N O . 5 0 0 6 / 1 3 O R D E R D A T E D 0 5 / 0 2 / 2 0 1 4 , WHEREIN I T W A S H E L D A S U N D E R : - 'THEREFORE, THE INTENTION OF THE LEGISLATURE IS CLEAR. IF A CO - OPERATIVE BANK IS EXCLUSIVELY CAR RYING ON BANKING BUSINESS, THEN THE INCOME DERIVED FROM THE SAID BUSINESS CANNOT BE DEDUCTED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. THE SAID INCOME IS LIABLE FOR TAX. A CO - OPERATIVE BANK AS DEFINED UNDER THE BANKING REGULATION ACT INCLUDES THE PRIM ARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE 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 BANK WHICH IS EXCLUSIVELY CARRYING ON BANKING BUSINESS I.E. THE PURPORT OF THIS AMENDMENT. THEREFORE, AS THE ASSESSEE IS NOT A COOPERATIVE BANK CARRYING ON EXCLUSIVELY BANKING BUSINESS A ND AS IT DOES NOT 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 BUSINESS OF LENDING MONEY TO ITS MEMBERS WHI CH 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 4 ITA NO. 4 9 /PNJ/201 5 SOCIETY .......................... . ....... IN THE INSTANT CASE, WHEN THE STATUS OF THE ASSESSEE IS A CO - OPERATIVE SOCIETY AND IS NOT A CO - OPERATIVE BANK, THE ORDER PASSED BY THE ASSESSING AUTHORITY EXTENDING THE BENEFIT OF EXEMPTION FROM PAYMENT OF TAX UNDER SECTION 80P(2)(A)(I) OF T HE ACT IS CORRECT. ' 9. I N T H E I N S T A N T C A S E A L S O , ASSESSEE I S A S O C I E T Y E N G A G E D I N D E V E L O P I N G I N D U S T R I A L L A Y O U T S F O R I T S M E M B E R S A S P E R T H E O R D E R O F T H E ASSESSING OFFICER . F U R T H E R , A D M I T T E D L Y , T H E INTEREST INCOME O F RS. 1 6 , 8 1 , 8 8 0 / - E A R N E D B Y T H E ASSESSEE I S F R O M O T H E R C O O P E R A T I V E S O C I E T I E S F R O M I T S I N V E S T M E N T MADE W I T H T H E M B Y T H E ASSESSEE . N O M A T E R I A L W A S B R O U G H T O N R E C O R D B Y T H E CO MMISSIONER OF IN COME TAX T O S H O W T H A T T H E C O O P E R A T I V E S O C I E T I E S I N W H I C H T H E ASSESSEE M A D E I N V E S T M E N T S A N D E A R N E D INTEREST T H E R E O N , W E R E C O O P E R A T I V E B A N K S . I N A B S E N C E O F T H E S A M E , I N O U R C O N S I D E R E D V I E W , H E W A S N O T J U S T I F I E D I N D I S A L L O W I N G T H E C L A I M , INTEREST R E C E I V E D F R O M T H E C O O P E R A T I V E S O C I E T I E S A S D E D U C T I O N UNDER SEC. 8 0 P ( 2 ) ( D ) . T HEREFORE , T H E INTEREST INCOME O F RS. 1 6 , 8 1 , 8 8 0 / - E A R N E D B Y T H E ASSESSEE I S E L I G I B L E F O R D E D U C T I O N UNDER SEC. 8 0 P ( 2 ) ( D ) O F T H E ACT . T H U S , T H E V I E W A D O P T E D B Y T H E ASSESSING OFFICER W A S A P L A U S I B L E V I E W I N V I E W O F T H E D E C I S I O N O F T H E HONBLE K A R N A T A K A HIGH COURT I N T H E C A S E O F SRI B I L U R U G U R U B A S A V A P A T T I N A S A H A K A R I S A N G H A N I Y A M I T H A , B A G A L K O T (SUPRA) . T HEREFORE , I N O U R C O N S I D E R E D O P I N I O N , T H E COMMISSIONER OF INCOME TAX W A S N O T J U S T I F I E D I N I N V O K I N G T H E P R O V I S I O N S O F S E C . 2 6 3 O F T H E ACT A N D S E T A S I D E T H E O R D E R O F T H E ASSESSING OFFICER A N D D I R E C T I N G H I M T O M A K E T H E ADDITION O F INTEREST INCOME O F RS. 1 6 , 8 1 , 8 8 0 / - T O T H E ASSESSEE W H I L E C O M P U T I N G T H E INCOME O F T H E ASSESSEE F O R T H E YEAR UNDER CONSIDERATION . H E N C E , W E C A N C E L T H E O R D E R O F T H E COM MISSIONER OF INCOME TAX D A T E D 0 3 / 1 1 / 2 0 1 4 P A S S E D UNDER SEC. 2 6 3 O F T H E ACT A N D A L L O W T H E APPEAL O F T H E ASSESSEE . 5 ITA NO. 4 9 /PNJ/201 5 10. IN THE RESULT, APPEAL OF THE ASSESSEE I S A L L O W E D . ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON T H U R S D A Y , THE 1 6 TH DAY OF JULY , 201 5 AT GOA . S D / - S D / - (GEORGE MATHAN) (N.S.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER D ATED : 1 6 TH JU LY , 201 5 . VR/ - COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 6 ITA NO. 4 9 /PNJ/201 5 DATE INITIAL ORIGINAL DICTATION PAD IS ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 1 6 .0 7 .2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 1 7 .07 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 1 7 /07 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 1 7 /0 7 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 1 7 /07 /2015 SR.PS 6. DATE OF PRONOUNCEMENT 1 6 /0 7 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 1 7 /07 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER