Vividha Urban Co-operative Credit Society Limited, Sankhlim, Bicholim, Goa V. Income Tax Officer, Ward-2(3), Panaji

ITA 55/PAN/2019

AI Insights

The case involves Vividha Urban Cooperative Credit Society appealing against the order of the Commissioner of Income Tax (Appeals), which had remanded the matter back to the Assessing Officer with conditions regarding the society's status and membership criteria. The primary legal issues revolved around the eligibility of the society for deductions under section 80P(4) and the applicability of section 40(a)(ia) concerning TDS on interest payments. The Tribunal examined whether the society should be treated as a cooperative bank and the implications of having nominal members, ultimately siding with the assessee's position that it is a cooperative society and not a bank, thus not subject to the conditions imposed by the CIT(A).

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136838 (ITAT-PANAJI)
• Duration Of Justice: 4 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 10-03-2019
• Other Referred Cases: Mavilayi Service Co-operative Bank Ltd. vs. CIT [2021] 431 ITR 1 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 40(a)(ia); 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI (THROUGH VIRTUAL HEARING) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI G.D. PADMAHSHALI, ACCOUNTANT MEMBER ITA.No.55/PAN./2019 Assessment Year 2014-2015 Vividha Urban Cooperative Credit Society, Navelim, Sanquelim, Bicholim, Goa – 403 405. PAN AAAAV2508F vs. The Income Tax Officer, Ward – 2 (3), Aaykar Bhavan, Pato Plaza, Panaji, Goa – 403 001. (Appellant) (Respondent) For Assessee : Shri Sham Kamat For Revenue : Shri Prabhakar Anand DJ Date of Hearing : 11.07.2023 Date of Pronouncement : 19.07.2023 ORDER PER SATBEER SINGH GODARA, J.M. : This assessee’s appeal for assessment year 2014- 2015, arises against the CIT(A) Panaji-1, Panaji’s order dated 10.01.2019, in case no.ITA.No. CIT(A), PNJ-1/10283/2016-17, in proceedings u/sec.143(3) of the Income Tax Act, 1961 (in short "the Act"). Heard both the parties. Case file perused. 2. The assessee pleads the following grounds in the instant appeal : 1. “In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has no jurisdiction 2 ITA.No.55/PAN./2019 u/s 251 for remanding to AO or directing the AO to decide, subject to conditions, in accordance with directions; and accordingly the remarks be expunged in Para 8 of the impugned order that "Subject to satisfying the AO that it does not have nominal members by producing a certificate from the appellant itself to this effect, and also a certificate from the auditor stating that it does not have nominal members” while allowing the ground-1 after already holding “that the appellant is not a co-operative bank but a co-operative society. 2. In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has no jurisdiction u/s 251 for remanding to AO or directing the AO to decide, subject to conditions, in accordance with directions; and accordingly the remarks be expunged in Para 9 of the impugned order that "subject to the condition that the nominal members criteria be fulfilled i.e. the appellant should not have nominal members. Accordingly, as a result of verification by the AO, if the society is found to be a co-operative bank, then the provisions of section 40(a)(ia) will apply and the claim of assessee will fail. Alternatively, if it is found that the appellant is not having nominal members, then this ground will succeed. The AO may verify and give effect to the order accordingly.” while allowing ground-1. 3. In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred in not considering, while deciding that the appellant is not a co- operative bank, the fact that the appellant cannot and does not have the facility; that "the mode by which the withdrawal of the deposit can be effected is by the issue of 3 ITA.No.55/PAN./2019 cheques, drafts, orders or otherwise, that is, by like methods", which is a sine qua non to constitute BANKING as held by the Apex Court and accordingly banking is not the primary object or principal business of the appellant.” 3. Learned D.R. next invited our attention to the CIT(A)'s detailed discussion reading as under : 4 ITA.No.55/PAN./2019 4. We find no merit in the Revenue’s stand supporting the learned lower authorities action denying sec.80P(4) deduction to the assessee. It is also come on record that this assessee has all along been functioning as a co-operative society, duly registered under the state law(s) as well as the Banking Regulations Act, 1949. That being the case, we quote hon’ble apex court’s recent landmark decision in Mavilayi Service Co-operative Bank Ltd. vs. CIT [2021] 431 ITR 1 (SC), that the impugned deduction could not be denied either by treating a cooperative society as a cooperative bank nor taking into consideration the alleged nominal members. We accordingly accept it’s impugned deduction claim of sec.80P representing interest income of Rs.49,34,008/-. 5. Next comes sec.40(a)(ia) disallowance issue of Rs.70,07,948/- regarding non-deduction of TDS on interest payments involving term deposits exceeding Rs.10,000/-. Suffice to say, the CBDT’s land mark circular no.37/2016 dated 02.11.2016 has already made the position clear that no such disallowance is liable to be sustained in case an assessee has been held eligible for various deductions under Chapter-VI of the Act since consequential effect is enhancement of it’s business income only. We thus accept the assessee’s argument regarding this second issue as well. No other ground or argument has been pressed before us. 5 ITA.No.55/PAN./2019 6. This assessee’s appeal is allowed in above terms. Order pronounced in the open court on 19.07.2023. Sd/- Sd/- [G.D. PADMAHSHALI] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 19 th July, 2023 VBP/- Copy to 1. The appellant 2. The respondent 3. The Ld. CIT(A), Panaji-1, Goa. 4. The Pr. CIT, Panaji. 5. D.R. ITAT, Panaji Bench, Panaji 6. Guard File. //By Order// Assistant Registrar, ITAT, Pune Benches, Pune.