ITO 22(1)(3), NAVI MUMBAI V. KALBHAIRAVNATH SAHAKARI PATSANSTHA LTD, MUMBAI

ITA 5830/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2988 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 15-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 5830/MUM/2014 (ASSESSMENT YEAR : 2009-10) INCOME TAX OFFICER 22(1)(3), R.NO.406, 4 TH FLOOR, TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI 400703 ... APPELLANT VS. M/S. KALBHAIRAVNATH SAHAKARI PATSANSTHA LTD., 1, KALBHAIRAVNATH SOCIETY, KAJU PADA, R.B.KADAM MARG, BHATWADI, GHATKOPAR, MUMBAI 400 084 PAN : AAAAK 5684K .... RESPONDENT APPELLANT BY : SHRI SUNIL KUMAR AGARWAL RESPONDENT BY : NONE DATE OF HEARING : 20/10/2015 DATE OF PRONOUNCEMENT : 20/10/2015 ORDER PER G.S. PANNU,AM: THE CAPTIONED APPEAL IS PREFERRED BY THE REVEN UE AND IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 27/06/ 2014 OF CIT(A)-7, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2009-10, WHICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICE R DATED 07/12/2011 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961( I N SHORT THE ACT). 2 ITA NO. 5830/MUM/2014 (ASSESSMENT YEAR : 2009-10) 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE NEW SUB-C LAUSE (VIIA) TO CLAUSE 24 OF SECTION 2 OF THE ACT CLEARLY INDICATE THAT INCOME O F A CO-OPERATIVE SOCIETY PROVIDING CREDIT FACILITIES TO IS MEMBERS IS NOT EX EMPT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE PRINCIPAL BUSINESS OF ASSESSEE IS BANKING AND ITS SHARE CAPITAL AND RESERVES EXCEEDS RS.ONE LAKH, HE NCE, IT SQUARELY FALLS WITHIN THE DEFINITION OF CO-OPERATIVE BANK U/S.5(CC I) OF BANKING REGULATION ACT, 1949. 3. IN THIS CASE, THE RESPONDENT ASSESSEE FILED A R ETURN OF INCOME, WHEREIN THE GROSS TOTAL INCOME WAS DECLARED AT RS.1 1,56,234/-, WHICH WAS CLAIMED AS EXEMPT UNDER SECTION 80P OF THE ACT AND ACCORDINGLY, THE TAXABLE INCOME WAS DECLARED AT NIL. THE ASSE SSING OFFICER SHOW- CAUSED THE ASSESSEE AS TO WHY THE DEDUCTION CLAIMED UNDER SECTION 80P OF THE ACT SHOULD NOT BE DISALLOWED IN VIEW OF THE PROVISIONS OF SECTION 80P(4) OF THE ACT. SECTION 80P(4) OF THE ACT WAS INSERTED BY THE FINANCE ACT, 2006 W.E.F. 1/4/2001, WHICH PRESCRIBE THAT THE PROVISIONS OF SECTION 80P SHALL NOT APPLY IN RELATION TO ANY CO-OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO- OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THE CASE MADE OUT BY THE ASSESSING OFFICER WAS THAT THE ASSESSEE WAS A CO-OPERATIVE SOCIETY WHOSE PRINCIPLE BUSINESS WAS THE BANKING B USINESS AND THEREFORE, IT WAS TO BE UNDERSTOOD AS CO-OPERATIV E BANK FOR THE PURPOSES OF SECTION 80P(4) OF THE ACT. ON THIS BAS IS, THE ASSESSING OFFICER DENIED THE CLAIM FOR EXEMPTION UNDER SECTIO N 80P OF THE ACT AND ACCORDINGLY, ASSESSED THE TOTAL INCOME AT RS.11,56, 230/-. 3 ITA NO. 5830/MUM/2014 (ASSESSMENT YEAR : 2009-10) 4. ON APPEAL BY THE ASSESSEE, THE CIT(A) HAS DISAGR EED WITH THE ASSESSING OFFICER AND ALLOWED THE CLAIM OF EXEMPTIO N UNDER SECTION 80P OF THE ACT. AS PER CIT(A), RESPONDENT-ASSESSEE WAS A CO-OPERATIVE SOCIETY CARRYING ON THE BUSINESS OF PROVIDING CRED IT FACILITIES TO ITS MEMBERS AND , THEREFORE, IT WAS NOT TO BE UNDERSTO OD AS CO-OPERATIVE BANK FOR THE PURPOSES OF SECTION 80P(4) OF THE ACT . IN COMING TO SUCH DECISION HE HAS RELIED UPON DECISIONS OF VARIOUS B ENCHES OF ITAT, NAMELY:- (I) VARDHMAN NAGRI SAHAKARI PAT.. VS. DEPT. OF INC OME TAX (ITAT PUNE) DATED 22/11/2012. (II) ITO VS. JAN KALYAN NAGARI SAHAKARI PATSANSTHA LTD., (2012) 24 TAXMANN.COM 127 (PUNE-TRIB). (II) ITO VS. JAN KALYAN NAGARI SAHAKARI PATSANSTHA LTD, ITA NO.1029/PN/2011, A.Y.2008-09. AGAINST THE AFORESAID DECISION, REVENUE IS IN APPEA L BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING, LD. DEPARTMENTAL REPRESE NTATIVE APPEARED FOR THE APPELLANT REVENUE, WHILE NONE APPE ARED ON BEHALF OF THE RESPONDENT ASSESSEE INSPITE OF NOTICE OF HEARIN G. THEREFORE, IN ACCORDANCE WITH RULE-25 OF INCOME TAX (APPELLATE TR IBUNAL) RULES, 1963, THE APPEAL IS BEING DISPOSED OF EX-PARTE QUA THE RESPONDENT AFTER HEARING THE APPELLANT-REVENUE ON MERITS. 6. THOUGH THE LD. DEPARTMENTAL REPRESENTATIVE HAS R EITERATED THE REASONING ADOPTED BY THE ASSESSING OFFICER TO DENY EXEMPTION UNDER SECTION 80P(2)(A)(I) OF THE ACT, SO HOWEVER, IT IS QUITE CLEAR THAT THE RESTRICTION PLACED UNDER SECTION 80P(4) OF THE ACT DOES NOT ENTITLE THE 4 ITA NO. 5830/MUM/2014 (ASSESSMENT YEAR : 2009-10) CAPTIONED ASSESSEE FROM THE EXEMPTION STIPULATED UN DER SECTION 80P(2)(A)(I) OF THE ACT. QUITE CLEARLY, THE RESTR ICTION PLACED IN SECTION 80P(4) OF THE ACT, IN THE PRESENT CONTEXT, OPERATES IN RELATION TO A CO- OPERATIVE BANK, WHICH IS TO BE UNDERSTOOD IN TERMS OF THE PROVISIONS OF THE BANKING REGULATIONS ACT, 1949(10 OF 1949). THE FINDING OF THE CIT(A) IS THAT THE RESPONDENT- ASSESSEE IS A CREDI T CO-OPERATIVE SOCIETY, WHICH IS ENGAGED IN THE BUSINESS OF PROVIDING CREDI T FACILITIES TO ITS MEMBERS AND DOES NOT ENJOY ANY BANKING LICENCE FROM RESERVE BANK OF INDIA. AS A CONSEQUENCE, THE STATUS OF THE ASSESSE E CANNOT BE UNDERSTOOD AS A CO-OPERATIVE BANK WITHIN THE MEANIN G OF BANKING REGULATION ACT, 1949. FACTUALLY SPEAKING, THE AFOR ESAID FINDING OF THE CIT(A) HAS NOT BEEN ASSAILED BY THE REVENUE BEFORE ME AND THERE IS NO MATERIAL ON RECORD TO NEGATE THE SAME ALSO. MOREO VER, I FIND THAT THE CIT(A) HAS RELIED UPON THE VARIOUS DECISIONS OF THE TRIBUNAL, WHEREIN A CO-OPERATIVE CREDIT SOCIETY ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS HAS BEEN HELD TO BE NOT COVERED BY THE EXPRESSION CO-OPERATIVE BANK FOR THE PURPOSES OF SECTION 80P(4) OF THE ACT. THERE IS NO DECISION TO THE CONTRARY BROU GHT OUT BY THE REVENUE BEFORE ME. 7. AS A CONSEQUENCE, I FIND NO MERIT IN THE APPEAL OF THE REVENUE WHICH IS HEREBY DISMISSED. THE ABOVE DECISION WAS PRONOUNCED IN THE OPEN COURT AT THE CONCLUSION OF THE HEARING ON 20/10/2015. SD/- (G.S. PANNU) ACCOUN TANT MEMBER MUMBAI, DATED 20/10/2015 5 ITA NO. 5830/MUM/2014 (ASSESSMENT YEAR : 2009-10) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI VM , SR. PS