ITO 20(3)(5), MUMBAI V. VISHWABHARATI SAHAKARI PATSANSTHA LTD., MUMBAI

ITA 4974/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8503 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 01-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 04-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SINGLADR
• Assessee Lawyers: GAUTAM V GOKHALE
• Section: 142(1)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.4974/MUM/2016 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER-20(3)(5), ROOM NO.205, 02 ND FLOOR, PIRAMAL CHAMBER, PAREL, MUMBAI-400012 / VS. VISHWABHARATI SAHAKARI PATSANSTHA LTD. 2/26, KANCH BUILDING, D.P. WADI, GHODAODEV, MUMBAI-400033 ( / REVENUE) ( !'# $ /ASSESSEE) PAN. NO . AAAAV6647D C.O. NO.04/MUM/2017 (ARISING OUT OF ITA NO.4974/MUM/2016) ASSESSMENT YEAR: 2012-13 VISHWABHARATI SAHAKARI PATSANSTHA LTD. A/04, VIGNAHAR CO-OP. HSG, D.P. WADI, GHODAPDEV, MUMBAI-400033 / VS. INCOME TAX OFFICER-20(3)(5), ROOM NO.205, 02 ND FLOOR, PIRAMAL CHAMBER, PAREL, MUMBAI-400012 ( !'# $ /ASSESSEE) ( / REVENUE) PAN. NO . AAAAV6647D / REVENUE BY MISS. ANUPAMA SINGLA-DR !'# $ / ASSESSEE BY SHRI GAUTAM V.GOKHALE ITA NO.4974/MUM/2016 & C.O. NO.04/MUM/2017 VISHWABHARATI SAHAKARI PATSANSTHA LTD. 2 % & $ ' / DATE OF HEARING : 01/02/2017 & $ ' / DATE OF ORDER: 01/02/2017 / O R D E R PER JOGINDER SINGH(JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 18/05/2016 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI AND THE ASSESSEE HAS PREFERRED CROSS OBJECTION DEFENDIN G THE IMPUGNED ORDER. 2. DURING HEARING, THE LD. DR, MS. ANUPAMA SINGLA, DEFENDED THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND, THE ASSESSEE IS DOING BANKING BUSINESS AND ALSO OTHER BUSINESS, THEREFORE, DEDUCTION U/S 80P OF THE INCOM E TAX ACT, 1961 (HEREINAFTER THE ACT) IS NOT AVAILABLE TO THE ASSESSEE AND FURTHER THE LD. COMMISSIONER OF INCOME TAX (APPEAL) DID NOT CONSIDER SECTION 80P(4), SUB-CLAUSE (VIIA) TO SECTI ON 2(24) INTRODUCED BY FINANCE ACT, 2006 W.E.F. 01/04/2007. 2.1. ON THE OTHER HAND, SHRI GAUTAM V. GOKHLE, THE LD. COUNSEL FOR THE ASSESSEE, DEFENDED THE IMPUGNED ORD ER BY CONTENDING THAT REASONABLY A POSSIBLE VIEW HAS BEEN TAKEN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AS THE ASSESSEE IS A COOPERATIVE SOCIETY TRANSACTING WITH MEMBERS O NLY. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ITA NO.4974/MUM/2016 & C.O. NO.04/MUM/2017 VISHWABHARATI SAHAKARI PATSANSTHA LTD. 3 ARE THAT THE ASSESSEE SOCIETY PROVIDES FINANCIAL AS SISTANCE TO ITS MEMBERS AS PER RULES AND REGULATIONS AND OPERAT ES ON THE PRINCIPLE OF COOPERATION, DECLARED NIL INCOME IN IT S RETURN, SHOWING TOTAL INCOME OF RS.35,06,492/- AFTER CLAIMI NG DEDUCTION OF THE SAME AMOUNT U/S 80P OF THE ACT. TH E CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS, THEREFORE, NOTICE U/S 143(2) AND 142(1) ALONG WITH QUESTIONNAI RE WAS SERVED UPON THE ASSESSEE TO WHICH THE ASSESSEE ATTE NDED FROM TIME TO TIME AND FILED NECESSARY DETAILS/SUBMISSION S. THE CASE OF THE REVENUE IS THAT THE ASSESSEE IS A COOPERATIV E BANK BY RELYING UPON SUB-CLAUSE (VIIA) INSERTED IN CLAUSE ( 24) OF SECTION 2 OF THE ACT, INTRODUCED BY FINANCE ACT, 2006. THE LD. ASSESSING OFFICER CONCLUDED THAT PROVISIONS OF SECT ION 80P(4) APPLIES TO COOPERATIVE SOCIETY CARRYING ON BANKING BUSINESS INCLUDING PROVIDING OF CREDIT FACILITIES TO ITS MEM BERS, THUS, THE LD. ASSESSING OFFICER HELD THAT THE CLAIMED DED UCTION U/S 80P OF THE ACT IS NOT APPLICABLE/ALLOWABLE TO THE A SSESSEE. 2.3. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEAL), THE FACTUAL MATRIX WAS CONSIDERED IN THE LIGHT OF VARIOUS JUDICIAL PRONOUNCEMENTS AND THE IMPUGNED AD DITION WAS DELETED. THE REVENUE IS AGGRIEVED AND IS IN APP EAL BEFORE THIS TRIBUNAL 2.4. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN ITA NO.4974/MUM/2016 & C.O. NO.04/MUM/2017 VISHWABHARATI SAHAKARI PATSANSTHA LTD. 4 JUXTAPOSITION AND ANALYZED, IT IS NOTED THAT THE M AIN OBJECT OF THE ASSESSEE SOCIETY IS TO PROVIDE FINANCIAL ASSIST ANCE ONLY TO ITS MEMBERS. ADMITTEDLY, THE ASSESSEE SOCIETY IS NO T A BANK AS PER BANKING REGULATION ACT, 1949 SO THAT IT MAY ATT RACT SUB- SECTION (4) OF SECTION 80P OF THE ACT. THE ISSUE WA S DELIBERATED UPON IN INCOME TAX OFFICER VS JANKALYAN NAGRI SAHAK ARI SANSTHAN LTD. BY THE PUNE BENCH OF THE TRIBUNAL. I T IS ALSO NOTED THAT IDENTICAL DEDUCTION WAS DISALLOWED BY TH E ASSESSING OFFICER FOR ASSESSMENT YEAR 2011-12 IN THE CASE OF MUMBAI TELEWORKERS CO-OP. CREDIT SOCIETY LTD. IN ITA NO. 6527/MUM/2014, ORDER DATED 02/11/2016 AND THE TRIBU NAL GRANTED RELIEF TO THE ASSESSEE BY AFFIRMING THE ORD ER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). NO CONTRARY DE CISION WAS BROUGHT TO OUR NOTICE. THE RATIO LAID DOWN IN C IT VS JAFARI MOMIN VIKAS COOPERATIVE CREDIT SOCIETY LTD. (TAX AP PEAL NO.442, 443 AND 863 OF 2013) ORDER DATED 15/01/2014 , SUPPORTS THE CASE OF THE ASSESSEE. WHILE COMING TO THIS CONCLUSION, THE HON'BLE HIGH COURT DULY CONSIDERED CBDT CIRCULAR NO.133 OF 2007 DATED 09/05/2007 CLARIFYING THAT SUB-SECTION 4 OF SECTION 80P OF THE ACT WILL NOT AP PLY TO AN ASSESSEE WHICH IS NOT A COOPERATIVE BANK. 2.5. IN THIS CONNECTION, IT IS PERTINENT TO MENTIO N THAT THE LETTER OF THE CBDT BEARING NO. F. NO. 133/06/20 07-TPL DATED 09/05/2008 ADDRESSED TO THE DELHI URBAN T&C S OCIETY LTD., STATING THAT FOR THE PURPOSES OF SUBSECTION 4 OF SECTION 80P, COOPERATIVE BANK SHALL HAVE THE SAME MEANING AS ITA NO.4974/MUM/2016 & C.O. NO.04/MUM/2017 VISHWABHARATI SAHAKARI PATSANSTHA LTD. 5 ASSIGNED TO IT IN PART V OF THE BANKING REGULATION ACT 1949, ACCORDING TO WHICH COOPERATIVE BANKS MEANS A STAT E CO- OPERATIVE BANK, A CENTRAL CO-OPERATIVE BANK AND PRI MARY CO- OPERATIVE BANK. THOUGH THE SAID CLARIFICATION IS GI VEN BY THE CBDT IN CONNECTION WITH SOME OTHER ASSESSEE, THE CR UX OF THE MATTER PERTAINS TO THE CLARIFICATION OF CO-OPERATI VE BANK FOR THE PURPOSE OF SUBSECTION 4 OF SECTION 80P. IT IS O BSERVED THAT THE SAID CLARIFICATION HAS ALSO BEEN RELIED BY THE TRIBUNAL IN MANY CASES. THEREFORE, COOPERATIVE BANKS MENTIONE D IN THE SAID SUB-SECTION INDICATES ONLY THE STATE, CENTRAL AND PRIMARY CO-OPERATIVE BANKS ONLY. MOREOVER, FOR COMMENCING A BANKING BUSINESS BY THE CO-OPERATIVE SOCIETY, DUE LICENSE H AS TO BE OBTAINED FROM THE RESERVE BANK OF INDIA AND IN THE ASSESSEES CASE, THERE IS NO SUCH LICENSE OBTAINED FOR COMMENC ING ANY BANKING BUSINESS. THE MERE FACT THAT THE ASSESSEE H AS BEEN PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND THER EBY EARNS SOME INCOME CANNOT MAKE THE SOCIETY INTO A BANK FOR THE PURPOSES OF SECTION 80P(4) OF THE ACT. IF THE INTEN TION OF THE LEGISLATURE WAS NOT TO GRANT DEDUCTION TO COOPERATI VE SOCIETIES CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILI TIES TO ITS MEMBERS, THEN NOTHING PREVENTED THE LEGISLATURE TO MAKE A SPECIFIC PROVISION/LEGISLATION AND TO INCLUDE COOPE RATIVE SOCIETIES UNDER THE SPHERE OF BANKING BUSINESS. TH IS PROPOSITION IS SUPPORTED BY VARIOUS DECISIONS INCLU DING THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF C IT VS. JAFARI MOMIN VIKAS COOPERATIVE CREDIT SOCIETY LTD AND THE DECISION OF THE TRIBUNAL IN THE CASE OF DCIT VS. JAYALAKSHMI MAHILA ITA NO.4974/MUM/2016 & C.O. NO.04/MUM/2017 VISHWABHARATI SAHAKARI PATSANSTHA LTD. 6 VIVIDODESHAGALA SOUHARDA SAHAKARI LTD. [2012] 137 I TD 163. CONSIDERING THE TOTALITY OF FACTS, WE FIND NO INFIR MITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). IT IS AFFIRMED. 3. SO FAR AS, THE CROSS OBJECTION NO.04/MUM/2017 (ARISING OUT OF ITA NO.4974/MUM/2016) IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT IT IS MEREL Y IN SUPPORT OF THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL). SINCE, WE HAVE AFFIRMED THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL), THEREFORE, AS AGREED BY THE LD. COUNSEL FOR THE ASSESSEE, THE CROSS OBJECTI ON HAS REMAINED FOR ACADEMIC INTEREST ONLY. THE CROSS OBJE CTION OF THE ASSESSEE IS, THEREFORE, DISMISSED AS IN-FRUCTUOUS. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS IN- FRUCTUOUS. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 01/02/2017. SD/- SD/- ( MANOJ KUMAR AGGARWAL ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# /JUDICIAL MEMBER % MUMBAI; ) DATED : 01/02/2017 F{X~{T? P.S/. . . ITA NO.4974/MUM/2016 & C.O. NO.04/MUM/2017 VISHWABHARATI SAHAKARI PATSANSTHA LTD. 7 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,- / THE APPELLANT (RESPECTIVE ASSESSEE) 2. ./,- / THE RESPONDENT. 3. 0 0 1$ ( + ) / THE CIT, MUMBAI. 4. 0 0 1$ / CIT(A)- , MUMBAI, 5. 34 .$! , 0 +' ! 5 , % / DR, ITAT, MUMBAI 6. 6' 7% / GUARD FILE. / BY ORDER, /3+$ .$ //TRUE COPY// / (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI