ITO, Salem V. S-1299, V.Mannarpalayam Primary Agricultural Co-op Credit Society Ltd., Salem

ITA 518/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9372 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 07-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN IRS
• Keywords: Opportunity of being heard; Assessment record
• Section: 260A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! . ! ' # , $ #% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 517/MDS/2016 $ & !'& / ASSESSMENT YEAR : 2012-2013 THE INCOME TAX OFFICER, WARD 2(3), SALEM 636 007. VS. M/S. S-55, KEERIPPATTY PRIMARY AGRICULTURAL CO-OP CREDIT SOCIETY LTD, KEERIPPATTY POST, ATTUR T.K. SALEM 636 107. [PAN AAAAK 5455E] ( / APPELLANT) ( /RESPONDENT) ./ I.T.A. NO. 518/MDS/2016 $ & !'& / ASSESSMENT YEAR : 2012-2013 THE INCOME TAX OFFICER, WARD 2(3), SALEM 636 007. VS. M/S. S-1299, V. MANNARPALAYAM PRIMARY AGRICULTURAL CO-OP. CREDIT SOCIETY LTD, V. MANNARPALAYAM POST, VALAPPADY T.K. SALEM 636 115. [PAN AAEAS 8231N] ( / APPELLANT) ( /RESPONDENT) ./ I.T.A. NO. 519/MDS/2016 $ & !'& / ASSESSMENT YEAR : 2012-2013 THE INCOME TAX OFFICER, WARD 2(3), SALEM 636 007. VS. M/S. S-45, THALAIVASAL PRIMARY AGRICUTLRUAL CO-OP CREDIT SOCIETY LTD, THALAIVASAL POST, ATTUR T.K. SALEM 636 112. [PAN AACAS 2473A] ( / APPELLANT) ( /RESPONDENT) ITA NO.517, 518, 519 & 520/2016. :- 2 -: ./ I.T.A. NO. 520/MDS/2016 $ & !'& / ASSESSMENT YEAR : 2012-2013 THE INCOME TAX OFFICER, WARD 2(3), SALEM 636 007. VS. M/S. S-45, NARASINGAPURAM PRIMARY AGRICULTURAL CO-OP CREDIT SOCIETY LTD, NARASINGAPURAM POST, ATTUR T.K. SALEM 636 112. [PAN AAAAP 3472C] ( / APPELLANT) ( /RESPONDENT) () * + / APPELLANT BY : SHRI. P. RADHAKRISHNAN, IRS, JCIT ,-() * + /RESPONDENT BY : NONE ' ! * . / DATE OF HEARING : 10-05-2016 /0' * . / DATE OF PRONOUNCEMENT : 11-05-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THESE APPEALS FILED BY THE REVENUE ARE DIRECTED A GAINST DIFFERENT ORDERS OF COMMISSIONER OF INCOME-TAX (APP EALS), SALEM FOR THE ASSESSMENT YEAR 2012-2013 PASSED U/S.143(3) AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). SINCE THE ISSUE IN THESE APPEALS IS COMMON IN NATURE, HENCE T HESE APPEALS ARE COMBINED, HEARD TOGETHER, AND DISPOSED OF BY A COMM ON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE U NDER:- 2. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO ITA NO.517, 518, 519 & 520/2016. :- 3 -: HAVE CONSIDERED THAT THE HON'BLE ITAT, PANAJI BENCH IN SHRI CHANDRAPRABHU URBAN CO-OPERATIVE CREDIT SOCIET Y LTD. (2014)(45 TAXMANN 14) CLEARLY BROUGHT OUT THE DEFINITION OF 'BANKING BUSINESS' . 3. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THAT THE ORDER OF HONBLE ITAT B BE NCH, CHENNAI IN THE CASE OF M/S. SL (SPL) 151 KARKUDALPA TTY PACCS LTD VS. ITO HAS NOT BECOME FINAL AS AN APPEAL HAS BEEN FILED U/S.260A BEFORE THE HONBLE MADRAS HIGH COURT 4. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THAT IN THE TAMIL NADU CO-OPERATIVE SOCIETIES ACT, 1983 THE TERM 'MEMBER' IS DEALT IN SECTIONS 4, 5, 6, 8, 13, 14, 15, 20, 21, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 38, 40, 41, 42, 44, 46, 51, 66, 69, 72, 81 AND 85. IN ALL THESE SECTION THE TERM 'MEMBER' MEANS ONLY SHARE HOLDER - MEMBER. HENCE THE INTENTION OF THE LEGISLATURE IS THAT ASSOCIATE MEMB ER WILL NOT BE TREATED AS MEMBER. 5. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE CONSIDERED THAT THE STATUTORY AUDITOR FOR CO- OPERATIVE SOCIETY, IN HIS REPORT, DISCLOSES ONLY SH ARE HOLDER - MEMBERS AS MEMBERS AND DID NOT INCLUDE THE ASSOCIATE MEMBER IN THE REPORT. SINCE THE ISSUE IS COMMON IN ALL APPEALS, WE CONSID ER THE FACTS AS NARRATED IN ITA NO.520/MDS/2016 OF ASSESSMENT YEAR 2012-13 FOR ADJUDICATION. 3. THE BRIEF FACTS OF THE CASE THE ASSESSEE IS A PRIMA RY AGRICULTURAL CO-OPERATIVE BANK LTD, ENGAGED IN BANK ING BUSINESS AND TRADING IN PDS COMMODITIES AND FILED RETURN OF INC OME ON 06.08.2013 AND PROCESSED U/SEC. 143(1) OF THE ACT AND THE CAS E WAS SELECTED FOR SCRUTINY UNDER CASS. FURTHER, NOTICE U/S.143(2) WA S ISSUED TO THE ITA NO.517, 518, 519 & 520/2016. :- 4 -: ASSESSEE. THE LD. ASSESSING OFFICER ON PERUSAL FOUN D THAT ASSESSEE HAS CLAIMED DEDUCTION UNDER THE PROVISIONS OF SECTION 8 0P OF E86,37,596/. IN RESPONSE TO NOTICE, THE LD. AUTHORISED REPRESENT ATIVE OF ASSESSEE APPEARED FROM TIME TO TIME AND PRODUCED BOOKS OF AC COUNT AND OTHER DETAILS. THE LD. ASSESSING OFFICER VERIFIED BOOK S OF ACCOUNTS AND CONSIDERED THE STATEMENTS FOR CLAIM OF DEDUCTION. THE ASSESSING OFFICER ON FURTHER EXAMINATION FOUND THAT THE ASSE SSEE SOCIETY CLAIMED DEDUCTION U/S.80P(2) OF THE ACT IN RESPECT OF BUSI NESS OF BANKING AND PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND COM PLIED STIPULATED CONDITIONS AND ALSO PROVIDING CREDIT FACILITIES TO MEMBERS AND NON MEMBERS AND RUNNING PUBLIC DISTRIBUTION SHOPS FOR COMMODITIES. THE LD. ASSESSING OFFICER OBSERVED THE ENTIRE BUSINESS ACTIVITIES OF SOCIETY AS PROVIDING CREDIT FACILITIES AND TRADING FOR BOT H MEMBERS AND NONMEMBERS AND REJECTED THE DEDUCTION. THE LD. ASSE SSING OFFICER VERIFIED THE CLAIM OF DEDUCTION U/S.80P(2)(D) OF T HE ACT, WERE THE ASSESSEE SOCIETY RECEIVED INTEREST INCOME FROM SAL EM DISTRICT CENTRAL CO-OPERATIVE BANKS AND NOT FROM OTHER CO-OPERATIVE SOCIETY AND PERUSED THE PROVISIONS U/S.80P(2) (D) OF THE ACT AND CONCLUDED THAT DEDUCTION U/S.80P(2)(D) OF THE ACT IS NOT ALLOWED A S ASSESSEE SOCIETY HAS RECEIVED INTEREST RECEIPT FROM DISTRICT CENTRAL CO-OPERATIVE BANK AND RELIED ON JURISDICTIONAL HIGH COURT DECISION I N THE CASE OF CIT VS. ITA NO.517, 518, 519 & 520/2016. :- 5 -: MADRAS AUTO RICKSHAW DRIVER CO-OPERATIVE SOCIETY 14 3 ITR 981 COMPLETED THE ASSESSMENT WITH ASSESSED INCOME OF E4 8,23,835/-. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE REITERATED THE SUBMISSIONS OF ASSE SSMENT PROCEEDINGS. THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) ON PERUSAL OF GROUNDS AND ARGUMENTS, THE ASSESSEE SOC IETY IS WORKING ON THE CONCEPTS OF MUTUALITY, PRINCIPLE BUT THE LD. ASSESSING OFFICER HAS REJECTED SOCIETY, CLAIM OF DEDUCTION UNDER PROVIS IONS OF SEC. 80P OF THE ACT BECAUSE THE ASSESSEE SOCIETY HAS NOT RESTR ICTED ACTIVITIES TO ITS MEMBERS AND ALSO PROVIDED SERVICES ON PAR WITH COM MERCIAL BANKING. THE COMMISSIONER OF INCOME TAX (APPEALS) ON EXAMINA TION OF THE ASSESSMENT RECORDS AND MATERIAL RELIED ON THE CO-O RDINATE BENCH DECISION OF TRIBUNAL IN THE CASE OF M/S. S-1308, AMMAPET PRIMARY AGRICULTURAL CO-OPERATIVE BANK LTD IN ITA NO.825/MD S/2015, DATED 23.09.2015 ALLOWED THE ASSESSEE APPEAL. AGGRIEVED BY THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE REVEN UE HAS ASSAILED AN APPEAL BEFORE THE TRIBUNAL. ITA NO.517, 518, 519 & 520/2016. :- 6 -: 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE REI TERATED THE SUBMISSIONS ON THE GROUNDS OF APPEAL AND CONTE STED THE JUDICIAL DECISIONS RELIED BY THE COMMISSIONER OF INCOME TA X (APPEALS) WERE THE DEPARTMENT HAS FILED AN APPEAL IN JURISDICTIONA L HONBLE HIGH COURT AGAINST ITAT ORDER AND PRAYED FOR SET ASIDE OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 6. NONE APPEARED ON BEHALF OF THE ASSESSEE . WE PROCEED TO DISPOSE OFF THIS APPEAL AFTER HEARING THE LD. DEPAR TMENTAL REPRESENTATIVE AND WE PERUSED THE MATERIAL ON RECOR D AND JUDICIAL DECISIONS. THE LD. DEPARTMENTAL REPRESENTATIVE ARG UED AND SUBMITTED THAT THE DECISION OF ITAT RELIED BY THE COMMISSIONE R OF INCOME TAX (APPEALS) WAS CHALLENGED BY THE REVENUE AND FILLED APPEAL U/SEC. 260A OF THE ACT IN MADRAS HIGH COURT AND THE CASE I S PENDING. WE FIND THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR TO DECISION OF CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF ITO VS. M/S. S-328, KALAPANAICKENPATTI PACCS LTD IN ITA NO.260/MDS/201 6, ASSESSMENT YEAR 2012-2013, DATED 27.04.2016 WERE IT WAS HELD AT PARA 7 AS UNDER:- 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD AND JUDICIAL DECISIONS. THE LD. DEPARTMENT AL REPRESENTATIVE CONTENTION THAT DECISION RELIED BY THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT REACHE D FINALITY AND APPEAL HAS BEEN FILED BEFORE JURISDICTIONAL HIG H COURT AND IS ITA NO.517, 518, 519 & 520/2016. :- 7 -: PENDING AND ALSO URGED THAT ON DEFINITION OF THE ME MBER RELYING ON THE AUDIT REPORT WERE THE MEMBER MEANS SHARE HOLDER AND DOES NOT INCLUDE ASSOCIATE MEMBER. THE LD. AUTHORISED REPRESENTATIVE ARGUED ON MEMBERSHIP OF S OCIETY AND SUPPORTED WITH APEX COURT DECISION OF M/S. U.P. C- OPERATIVE CANE UNION FEDERATION LTD, LUCKNOW VS. CI T (1999) 237 ITR 574(SC) AND DEFINITION OF MEMBER AS THE PRO VISION OF T.N. CO-OPERATIVE SOCIETIES ACT 1983 AND FILED WRIT TEN SUBMISSIONS AND EXPLAINED THAT THERE IS NO CHEQUE F ACILITY IS AVAILABLE TO MEMBERS AND THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND ACTIVITIES OF PRIMARY AGRICULTURE CO- OPERATIVE CREDIT SOCIETY ARE NOT AT PAR WITH CO-OPE RATIVE BANKS AND RELIED ON ITO VS. S-1308, AMMAPET PRIMARY AGRI CULTURAL CO-OPERATIVE BANK LTD IN ITA 825/MDS/2015. WE CONS IDERING THE APPARENT FACTS AND FINDINGS OF THE LOWER AUTHOR ITIES ON THE GROUNDS RAISED BY THE REVENUE AND THE ARGUMENT OF T HE LD. AUTHORISED REPRESENTATIVE. PRIME FACIE THE ASSESSEE IS REGISTERED AS CO-OPERATIVE SOCIETY AND ENGAGED IN BANKING BUSINESS AND TRADING IN CIVIL SUPPLIES GOODS. THE DEPARTMENT HAS DISPUTED ON THE ACTIVITIES OF THE SOCIETY ON PA R WITH ANY COMMERCIAL BANKING. THEREFORE, WE ARE INCLINED TO SET ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) A ND REMIT THE ENTIRE ISSUE TO THE FILE OF THE ASSESSING OFFIC ER TO VERIFY THE FOLLOWING:- (I) LOANS ARE GRANTED TO NON-MEMBERS (II) ANY CURRENT ACCOUNTS ARE OPENED FOR TRADERS. (III) WHETHER THE SOCIETY IS A MEMBER OF CLEARING HOUSE. (IV) WHETHER BANK ISSUED GUARANTEE ON BEHALF OF CUSTOMERS (V) WHETHER DEALT IN FOREIGN EXCHANGE TRANSACTIONS. (VI) VERIFY INSPECTION REPORT OF RBI IF ANY. WITH THESE FINDINGS, THE ASSESSING OFFICER IS DIREC TED TO VERIFY AND PASS THE ORDER ACCORDINGLY AFTER PROVIDING ADEQ UATE OPPORTUNITY OF BEING HEARD. THE GROUNDS OF THE REV ENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. WE RESPECTFULLY FOLLOWING THE DECISION, SETASIDE TH E ORDER OF CIT(A) AND REMIT THE ISSUE IN DISPUTE BACK TO THE FILE OF THE ASSESSING OFFICER ON SIMILAR ITA NO.517, 518, 519 & 520/2016. :- 8 -: DIRECTIONS. THE APPEAL OF THE DEPARTMENT IS ALLOWED FOR STATISTICAL PURPOSE. 7. CONSEQUENTLY, THE APPEALS OF THE REVENUE IN ITA NO S.517, 518 & 519/MDS/2016 ARE ALLOWED FOR STATISTICAL PURP OSE. 8. IN THE RESULT, THE APPEALS OF THE DEPARTMENT IN IT A NOS. 517 TO 520/MDS/2016 ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 11 TH DAY OF MAY, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ' # ) (G. PAVAN KUMAR) / JUDICIAL MEMBER / CHENNAI 2 / DATED:11.05.2016 VENU 3 * ,$.45 65'. / COPY TO: 1 . () / APPELLANT 3. ' 7. () / CIT(A) 5. 5!:; ,$.$ / DR 2. ,-() / RESPONDENT 4. ' 7. / CIT 6. ;<& = / GF