Melur Service Co-op Bank Ltd, Calicut V. The ITO, Calicut

ITA 541/COCH/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96756 (ITAT-COCHIN)
• Duration Of Justice: 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 26-10-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 22-12-2014
• Court: TRIBUNAL
• Department Lawyers: K P GOPAKUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH C OCHIN BEFORE S/SHRI B.P. JAIN, AM AND GEORGE GEOR GE K., JM I.T.A. NO. 541/COCH/2014 ASSESSMENT YEAR : 2011-12 MELUR SERVICE CO-OPERATIVE BANK LTD., CHELIYA POST, KOYILANDY TALUK, KOZHIKODE-673 306. [PAN:AACAM 3243J] VS. THE INCOME TAX OFFICER, WARD- 2(1), CALICUT. (ASSESSEE -APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY NONE REVENUE BY SHRI K.P. GOPAKUMAR, SR. DR DATE OF HEARING 26/10/2015 DATE OF PRONOUNCEMENT 26/10/2015 O R D E R PER B.P.JAIN, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE ARISES FROM THE ORDER OF THE LD. CIT(A), KOZHIKODE DATED 11/09/2014 FOR THE ASSESSM ENT YEAR 2011-12. 2. THE ASSESSEE HAS RAISED AS MANY AS FIVE GROU NDS OF APPEAL MAINLY ON THE ISSUE OF DENIAL OF CLAIM OF DEDUCTION U/S. 8 0P OF THE ACT. GROUND NOS. 1 AND 5 ARE GENERAL IN NATURE AND DO NOT REQUI RE ADJUDICATION. I.T.A. NO.541/COCH/2014 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A CO-OPERATIVE BANK MAINLY ENGAGED IN THE BANKING BUSINESS. THE ASSESS EE HAD FILED ITS RETURN FOR THE ASSESSMENT YEAR 2011-12 ON 31/03/2013 AFTER CLA IMING DEDUCTION OF RS.11,25,926 U/S. 80P OF THE ACT. IT WAS POINTED O UT TO THE LD. AR BY THE ASSESSING OFFICER THAT AS PER SECTION 80P SUB-SECTI ON (4) INSERTED IN THE FINANCE ACT, 2006 W.E.F. 01/04/2007, THE ASSESSEE I S NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE ACT. THE FINANC E ACT, 2006 HAS ALLOWED DEDUCTION UNDER SECTION 80P OF THE ACT ONLY TO PRIM ARY AGRICULTURAL CREDIT SOCIETY AND PRIMARY CO-OPERATIVE AGRICULTURAL AND R URAL DEVELOPMENT BANK WITH AN INTENTION TO ALLOW TAX BENEFITS ONLY TO THE PRIMARY SOCIETIES WHICH HELP THE AGRICULTURISTS BY PROVIDING AGRICULTURAL C REDITS TO PROMOTE AGRICULTURAL ACTIVITIES IN THE COUNTRY. THE SOCIETIES WHICH PRO VIDE NON AGRICULTURAL CREDITS AND DOING BANKING ACTIVITIES ARE NOT ELIGIBLE FOR A NY DEDUCTION UNDER SECTION 80P OF THE ACT. THE ASSESSING OFFICER ANALYZED THE BYE-LAW AND THE ACTIVITIES OF THE ASSESSEE-BANK IN DETAIL AND FOUND THAT MOR E EMPHASIS WAS GIVEN FOR DOING OTHER NORMAL BANKING ACTIVITIES. THEREFORE, T HE ASSESSING OFFICER HELD THAT THE PRIMARY OBJECT OF THE BANK IS NOT OF PROVI DING AGRICULTURAL LOANS BUT THAT OF NON AGRICULTURAL LOANS ALSO WHICH DO NOT FA LL WITHIN THE AMBIT OF THE DEFINITION OF PRIMARY AGRICULTURAL CREDIT SOCIETY O R PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK AS PER INCO ME TAX ACT. IT WAS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE-BA NK IS DOING TRUE BANKING BUSINESS AND WAS CARRYING OUT THE FOLLOWING ACTIVIT IES: I.T.A. NO.541/COCH/2014 3 1. PROVIDING VARIOUS KINDS OF LOANS (GOLD LOAN, MO RTGAGE LOAN ETC.) 2. ACCEPTING DEPOSITS FROM MEMBERS AS WELL AS NON MEMBERS. 3. MAINTAINING SAVINGS BANK A/C, CURRENT A/C, DAY DEPOSIT ETC. 4. PROVIDING CHEQUE FACILITY, DEMAND DRAFT FACILIT Y ETC. 4. THE EXTRACT OF THE DETAILS OF VARIOUS LOANS PROVIDED BY THE BANK DURING THE IMPUGNED YEAR HAS BEEN REPRODUCED BY THE ASSESS ING OFFICER AT PAGE 5 OF HIS ORDER. FROM THE SAID DETAILS, IT IS EVIDENT THAT AGRICULTURAL LOANS ARE ONLY 9.93% OF THE TOTAL LOANS. ACCORDINGLY, THE ASSESSI NG OFFICER OBSERVED THAT PROVIDING AGRICULTURAL CREDITS IS DEFINITELY NOT IN THE PRINCIPLE BUSINESS OF THE BANK. THE ASSESSEE HAS NOT FULFILLED THE PRINCIPLE OBJECT OF THE PRIMARY AGRICULTURAL CREDIT SOCIETY. FINALLY, THE ASSESSIN G OFFICER OBSERVED THAT AFTER INSERTING SUB-SECTION (4) TO SECTION 80P W.E.F. 01. 04.2007, CO-OPERATIVE BANKS ARE NOT ELIGIBLE FOR ANY DEDUCTION UNDER SECTION 80 P OF THE INCOME TAX ACT, 1961 AND THEREFORE, THE PROFITS AND GAINS IN THE BU SINESS OF BANKING INCLUDING PROVIDING CREDIT FACILITIES CARRIED ON BY THE COOPE RATIVE SOCIETIES WITH THEIR MEMBERS IS ALSO INCLUDED IN THE DEFINITION OF INCOM E. HENCE THE TOTAL PROFIT FROM BUSINESS IS TO BE TREATED AS TAXABLE INCOME OF THE ASSESSEE FOR THE IMPUGNED YEAR. 5. ON AN IDENTICAL ISSUE, THE ITAT, COCHIN BEN CH IN THE CASES OF M/S. KUNNAMANGALAM CO-OPERATIVE BANK VS. INCOME TAX OFFI CER, WARD-2(3), I.T.A. NO.541/COCH/2014 4 CALICUT IN I.T.A. NO. 156/COCH/2014 DATED 25/07/201 4 FOR THE ASSESSMENT YEAR 2009-10 AND M/S. PINARAYI SERVICE CO-OPERATIVE BANK LTD. VS. INCOME TAX OFFICER, WARD-2, KANNUR IN I.T.A. NO. 123/COCH/ 2012 DATED 31/07/2014 FOR THE ASSESSMENT YEAR 2009-10 HAD DISMISSED THE A PPEAL OF THE ASSESSEE AND FOLLOWING THE SAME, THE LD. CIT(A) DISMISSED TH E APPEAL OF THE ASSESSEE. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE INSP ITE OF VALID NOTICE. THEREFORE, WE PROCEED TO DECIDE THE ISSUE IN HAND E X PARTE AFTER HEARING THE LD. DR. THE LD. DR RELIED ON THE ORDER OF BOTH THE AUTHORITIES BELOW AND ARGUED THAT THE ISSUE IS COVERED AGAINST THE ASSESS EE BY THE DECISION OF THE ITAT, COCHIN BENCH IN THE CASES OF M/S. KUNNAMANGA LAM CO-OPERATIVE BANK VS. INCOME TAX OFFICER, WARD-2(3), CALICUT AND M/S. PINARAYI SERVICE CO- OPERATIVE BANK LTD. VS. INCOME TAX OFFICER, WARD-2, KANNUR (SUPRA) 7. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE THE ISSUE IN THE PRESENT APPEAL IS ID ENTICAL TO THE ISSUE DECIDED BY THE ITAT, COCHIN BENCH IN THE CASES OF M/S. KUNN AMANGALAM CO-OPERATIVE BANK VS. INCOME TAX OFFICER, WARD-2(3), CALICUT AND M/S. PINARAYI SERVICE CO- OPERATIVE BANK LTD. VS. INCOME TAX OFFICER, WARD-2, KANNUR (SUPRA), THEREFORE, FOLLOWING THE SAME, WE DO NOT FIND ANY I NFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS RIGHTLY CONFIRMED THE ACTION OF THE ASSESSING OFFICER. I.T.A. NO.541/COCH/2014 5 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IN I.T.A. NO. 541/COCH/2014 IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 26 -10-2015. SD/- SD/- (GEORGE GEORGE K.) (B.P. JAIN) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 26TH OCTOBER, 2015 GJ COPY TO: 1. MELUR SERVICE CO-OPERATIVE BANK LTD., CHELIYA PO ST, KOYILANDY TALUK, KOZHIKODE-673 306. 2. THE INCOME TAX OFFICER, WARD-2(1), KOZHIKODE. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE. 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T.,COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN