The Payyannur Service Co-op Rural Bank Ltd, Payyannur V. The ITO, Kannur

ITA 538/COCH/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96765 (ITAT-COCHIN)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-10-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 22-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR
• Section: 260A; 37

Judgement Text

ITA NO S 5 37 & 538/C/2014 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH , COCHIN BEFORE S/SH RI B P JAIN , A M & G EORGE GEORGE.K , J M ITA NO . 537 & 538/COCH/201 4 (ASST YEAR S 2009 - 10 & 2 011 - 12 ) THE PAYYANUR COOPERATIVE RURAL BANK LTD KANNUR VS THE INCOME TAX OFF ICER WARD 4 KANNUR 670 006 ( APPELLANT) (RESPONDENT) PAN NO. AAAAP3220E ASSESSEE BY SHRI ARUN RAJ REVENUE BY SH K P GOPAKUMAR, SR DR DATE OF HEARING 28TH OCT 2015 DATE OF PRONOUNC EMENT 29 TH , OCT 2015 OR D ER PER GEORGE GEORGE. K. J M: TH ESE APPEAL S PREFERRED BY THE ASSESSEE ARE DIRECTED AGAINST THE CONSOLIDATED ORDER OF THE CIT(A) DATED 30.9.2014. THE RELEVANT ASSESSMENT YEARS ARE 2009 - 10 AND 2011 - 12. 2 SINCE COMMON ISSUES ARE INVOLVED IN TH ESE APPEAL S , THEY WERE HEARD TOGETHER AND DISPO SE OFF BY THIS CONSOLIDATED ORDER. 3 BRIEFLY STATED FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A COOPERATIVE BANK . IT IS MAINLY EN GAGED IN BANKING BUSINESS . FOR THE AY S 2009 - 10 AND 2011 - 12 THE SCRUTINY ASSESSMENT W ERE COMP LETED BY ITA NO S 5 37 & 538/C/2014 2 DENYING THE BENEFIT OF DEDUCTION U/S 80P OF THE ACT. THE REASON ING OF THE AO FOR DENYING THE BENEFIT OF SECTION 80P DEDUCTION WAS THAT THE ASSESSEE IS A COOPERATIVE BANK ENGAGED IN THE BUSINESS OF BANKING AND IN VIEW OF INSERTION OF SUB.SEC (4) OF SEC. 80P W.E.F 1.4.2 007 COOPERATIVE BANKS WERE NOT ENTITLED TO GET THE BENEFIT OF DEDUCTION U/S 80P (2)( I )(A) OF THE I T ACT. 4 AGGRIEVED BY THE DENIAL OF DEDUCTION U/S 80P , THE ASSESSEE PREFERRED APPEALS BEFORE THE FIRST APPELLATE AUTHORITY. THE CIT(A) CONFIRMED THE ASSESSMENT ORDERS FOR THE RESPECTIVE ASSESSMENT YEARS. THE CIT(A) FOLLOWED VARIOUS ORDER S OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF M/S KU NNAMANGALAM COOPERATIVE BANK VS ITO AND IN THE CASE OF M/S PINARAYI SERV ICE COOPERATIVE BANK LTD VS ITO AND DENIED THE BENEFIT OF DEDUCTION U/S 80P OF THE ACT. THE RELEVANT FINDINGS OF THE CIT(A) READS AS UNDER: 5 THE FIRST COMMON GROUND OF APPEAL IS AGAINST DISALLOWANCE OF DEDUCTION CLAIMED U/S 80P OF THE ACT . I HAVE CONSIDERED THE SUBMISSION OF THE LD COUNSEL. THE ISSUE RAISED BY THE APPELLANT WITH REGARD TO DISALLOWANCE OF DEDUCTION U/S 80P O F THE ACT HAS BEEN CONSIDERED BY THE HONBLE ITAT, COCHIN BENCH IN THE CASES OF M/S KUNNAMANGALAM CO - OPERATIVE BANK VS INCOME TAX OFFICER, WARD 2(3) CALICUT IN ITA NO. 156/COCH/20124 DATED 25.7.2014 FOR THE ASSESSMENT YEAR 2009 - 10 AND M/S PINARAYI SERVICE CO - OPERATIVE BANK LTD VS INCOME TAX OFFICER, WARD 2, KANNUR IN ITA NO. 123/COCH/2012 DATED 31.7.2014 FOR THE AY 2009 - 10. RESPECTFULLY FOLLOWING THE SAID ORDER, I DISMISS THIS GROUND OF APPEAL OF THE APPELLANT IN THESE CASES ALSO AS THE FACTUAL MATRIX IS SA ME IN ALL THE CASES . 5 THE ASSESSEE BEING A GGRIEVED IS IN APPEAL BEFORE US ON THIS ISSUE. THE LD DR, AT THE VERY OUTSET , SUBMITTED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED BY THE VARIOUS ORDERS OF THE TRIBUNAL REFERRED IN THE IMPUGNED CIT(A)S ORDER. T HE LD ITA NO S 5 37 & 538/C/2014 3 AR OF THE ASSESSEE SUBMITTED THAT THE HONBLE KARNATAKA HIGH COURT IN THE RECENT JUDGMENT IN THE CASE OF LAXMI CREDIT S OUHARD SAHAKARI LTD (COPY OF GIST OF THE JUDGMENT WITHOUT ANY CITATION WAS ON RECORD) HAS HELD THAT DETERMINATION WHETHER IT IS A CO - OPERATIVE BANK OR CO - OPERATIVE SOCIETY REST S WITH THE RBI CERTIFICAT ION AND IN THE ABSENCE OF RBI CERTIFICATE, THE ASSESSEE SHOULD BE HELD TO BE A COOPERATIVE SOCIETY , ENTITLED TO GET THE BENEFIT OF SECTION 80P OF THE I T ACT. 6 WE HAVE HEARD T HE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE CIT(A) HAS FOLLOWED THE VARIOUS ORDERS OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASES OF M/S KUNNAMANGALAM CO - OPERATIVE BANK VS INCOME TAX OFFICER, WARD 2(3) CALICUT IN IT A NO. 156/COCH/20124 DATED 25.7.2014 FOR THE ASSESSMENT YEAR 2009 - 10 AND M/S PINARAYI SERVICE CO - OPERATIVE BANK LTD VS INCOME TAX OFFICER, WARD 2, KANNUR IN ITA NO. 123/COCH/2012 DATED 31.7.2014 FOR THE AY 2009 - 10. SINCE THE COCHIN BENCH OF THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE ON IDENTICAL SET OF FACTS, WE DEEM IT APPROPR IATE TO FOLLOW THE COORDINATE BENCH ORDER, FOR THE SAKE OF CONSISTENCY , WHICH IS SUBJECT MATTER OF APPEAL U/S 260A BEFORE THE HON BLE JURISDICTIONAL HIGH COURT . TH EREFORE , WE UPHOLD THE ORDER OF THE C IT ( A) ON THIS ISSUE . 7 THE SECOND ISSUE , THAT IS RAISED FOR THE AY 200 9 - 10 IS WITH REGARD TO DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF TAX FROM INTEREST PAID TO NON MEMBERS. T HE ASSESSEE PLACED RELIANCE ON THE JUDGMENT ITA NO S 5 37 & 538/C/2014 4 OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS VECTOR SHIPPING SERVICES P LTD REPORTED IN 357 ITR 642 (ALL). THE LD AR CONTENDED BEFORE THE AUTHORITIES BELOW W AS THAT THE PROVISIONS OF SEC 40(A)(IA) CAN ONLY BE INVOKED ON THE AMOUNTS PAYABLE / OUTSTANDING AT THE END OF THE FINANCIAL YEAR AND NOT ON THE AMOUNTS ALREADY PAID DURING THE YEAR. THIS CONTENTION OF THE ASSESSEE IS DEVO ID O F MERITS , IN VIEW OF THE RECENT JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT IN ITA 278 OF 2014 (JUDGMENT DATED 3,7.2015) WHEREIN IT HAS BEEN HELD THAT SECTION 40(A)(IA) DISALLOWANCE IS APPLICABLE ALSO FOR THE AMOUNTS WHICH ARE PAID BEFORE THE END OF THE FINANCIAL YEAR. THE RELEVANT FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA) READ AS FOLLOWS: 17.ANOTHER CONTENTION THAT WAS PRESSED INTO SERVICE WAS THAT THE APPELLANTS HAD ALREADY PAID THE AMOUNT AND THEREFORE, THE PROVI SIONS OF SECTION 40(A)(IA),APPLICABLE ONLY IN RESPECT OF THE AMOUNT WHICH ITA.278/14 & CON CASES REMAINS TO BE PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR, IS NOT ATTRACTED. THEREFORE, ACCORDING TO THE APPELLANTS, DISALLOWANCE CANNOT BE SUSTAINED. THIS C ONTENTION WAS SOUGHT TO BE SUBSTANTIATED BY RELYING ON THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN COMMISSIONER OF INCOME TAX V. VECTOR SHIPPING SERVICES (P)[(2013) 3S7 ITR 642(ALL)] . PRIMARILY, THIS CONTENTION SHOULD BE ANSWERED WITH REFERENCE TO THE LANG UAGE USED IN THE STATUTORY PROVISION. SECTION 40(A)(IA) MAKES IT C L EAR THAT THE CONSEQUENCE OF DISALLOWANCE IS ATTRACTED WHEN AN INDIVIDUAL, WHO IS L I ABLE TO DEDUCT TAX ON ANY INTEREST PAYABLE TO A RESIDENT ON WHICH TAX IS DEDUCTIBLE AT SOURCE, COMMITS DEF AULT . THE . LANGUAGE OF THE SECTION DOES NOT WARRANT AN INTERPRETATION THAT IT IS ATTRACTED ONLY IF THE INTEREST REMAINS PAYABLE ON THE LAST DAY OF THE FINANCIAL YEAR. IF THIS CONTENTION IS TO BE ACCEPTED, THIS COURT WILL HAVE TO ALTER THE LANGUAGE OF SECT ION 40(A) (IA) AND SUCH AN INTERPRETATION IS NOT PERMISSIBLE. THIS VIEW THAT WE HAVE TAKEN IS SUPPORTED BY JUDGMENTS OF THE CALCUTTA H I GH COURT IN CRESCENT EXPORTS SYNDICATE AND ANOTHER [ITAT 20 OF ITA . 278/14 & CON CASES 2013] AND THE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V . SIKANDADARKHAN N TUNVAR [ITA NOS . 905 OF 2012 & CONNECTED CASES], WHICH HAVE BEEN RELIED ON BY THE TRIBUNAL. ITA NO S 5 37 & 538/C/2014 5 RESULTANTLY, WE DO NOT FIND ANY MERIT IN THE CONTENTIONS AND QUESTIONS OF LAW ARE ANSWERED AGAINST T H E ASSESSEES. APPEALS ARE ONLY TO BE DISMISSED AND WE DO SO. 8 IN THE LIGHT OF THE JUDGMENT OF THE HON BLE JURISDICTI ONAL HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT CITED SUPRA , WE REJECT THE SECOND ISSUE RAISED BY THE ASSESSEE FOR THE AY 2009 - 10 . 9 IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29TH , DAY OF OCT 2015 . SD/ - SD/ - ( B P JAIN ) ( GEORGE GEORGE K ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN: DATED 29 TH , OCT 2015 RAJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN