The Njeezhoor Service Co-op Bank Ltd, Kottayam V. TheITO, Kottayam

ITA 595/COCH/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3951 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 29-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 26-12-2014
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: IYPE JOHN
• Keywords: Question of law; Competent authority; Benefit of exemption
• Section: 260A

Judgement Text

ITA N.O. 595/C/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH (SMC) KOCHI BEFORE SHRI GEORGE GEORGE K, JM ITA NO 595/COCH/2014 (ASST YEAR 2011-12 ) THE NJEEZHOOR SERVICE COOP BANK LTD NO. 136 THIRUVAMPADY PO NJEEZHOOR KOTTAYAM VS THE INCOME TAX OFFICER WARD 4 KOTTAYAM ( APPELLANT) (RESPONDENT) PAN NO. AAAAN1663M ASSESSEE BY SHRI IYPE JOHN, CA REVENUE BY SHRI A DHANARAJ, SR DR DATE OF HEARING 29 TH MARCH 2017 DATE OF PRONOUNCEMENT 04 - 04 - 2017 ORDER THIS APPEAL IS RESTORED TO THE TRIBUNAL BY THE JUD GMENT OF THE HONBLE KERALA HIGH COURT DATED 26 TH SEPT 2016 IN ITA NO. 4 OF 2016. 2 BRIEF FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A COOPERATIVE BANK REGISTERED AS A PRIMARY AGRICULTURAL CREDIT SOCIETY UNDER THE KERALA COOPERATIVE SOCIETIES ACT, 1969. THE CLAIM OF DEDUCTION U/S 80P(2) WAS DENIED BY THE ASSESSING OFFICER FOR THE REASON THAT THE ASSESSEE IS PRIMARILY ENGAGED IN THE BUSINESS OF BANKING AND IN VIEW OF S ECTION 80P(4) OF THE ACT, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80P(2) O F THE ACT. ITA N.O. 595/C/2014 2 3 AGGRIEVED BY THE ASSESSMENT, THE ASSESSEE PREFERR ED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) CONFIRMED THE ASSES SMENT ORDER. 4 AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSE E PREFERRED APPEAL TO THE TRIBUNAL. THE TRIBUNAL VIDE ITS ORDER DATED 3 RD NOV 2015 DISPOSED OFF THE APPEAL HOLDING THAT THE ASSESSEE WAS NOT ENTITLED TO THE B ENEFIT OF DEDUCTION U/S 80P OF THE ACT. 5 AGGRIEVED BY THE ORDER OF THE TRIBUNAL, THE ASSES SEE PREFERRED FURTHER APPEAL BEFORE THE HONBLE KERALA HIGH COURT, U/S 260A OF T HE ACT. THE HONBLE HIGH COURT VIDE JUDGMENT DATED 26 TH SEPT 2016 IN ITA NO. 4 OF 2016, RESTORED THE ISSUE S TO THE TRIBUNAL. IT IS IN THIS CONTEXT, THE CASE WAS HEAR D ON 29 TH MARCH 2017. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE HONBLE HIGH COURT IN THE CASE OF CHIRAKKAL SERVIC E CO-OP BANK LTD VS CIT REPORTED IN 384 ITR 490 HAD HELD THAT THE TRIBUNAL WAS NOT JUS TIFIED IN DENYING THE BENEFIT OF EXEMPTION U/S 80P OF THE ACT. THE HONBLE HIGH COUR T WAS CONSIDERING THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION, THE TRIBUNAL IS CORRECT IN LAW IN DE CIDING AGAINST THE ASSESSEE, THE ISSUE REGARDING ENTITLEMENT FOR EXEMPTION UNDER SEC TION 80P, IGNORING THE FACT THAT THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY? 6.1 IN CONSIDERING THE ABOVE SUBSTANTIAL QUESTION O F LAW, THE HONBLE HIGH COURT RENDERED THE FOLLOWING FINDINGS: ITA N.O. 595/C/2014 3 15. APPELLANTS IN THESE DIFFERENT APPEALS ARE INDI SPUTABLY SOCIETIES REGISTERED UNDER THE KERALA CO- OPERATIVE SOCIETIES ACT, 1969, FOR SORT, KCS ACT AN D THE BYE-LAWS OF EACH OF THEM, AS MADE AVAILABLE TO THIS COURT AS PART OF THE PAPER BOOKS, CLEARLY SHOW THAT THEY HAVE BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPET ENT AUTHORITY UNDER THE PROVISIONS OF THAT ACT. THE PARLIAMENT, HAVING DEFINED THE TERM 'CO-OPERATI VE SOCIETY' FOR THE PURPOSES OF THE BR ACT WI TH REFERENCE TO, AMONG OTHER THINGS, THE REGISTRATION OF A SOCIETY U N DER ANY STATE LAW RELATING TO CO-OPERATIVE SOCIETIES FOR THE TIME BEING; IT CANN OT BUT BE TAKEN THAT THE PURPOSE OF THE SOCIETIES SO REGISTERED UNDER THE STATE LAW AND ITS OBJECTS H AVE TO BE UNDERSTOOD AS THOSE WHICH HAVE BEEN APPROVED BY THE COMPETENT AUTHORITY UNDER SUCH STAT E LAW. THIS, WE VISUALISE AS DUE RECIPROCATIVE LEGISLATIVE EXERCISE BY THE PARLIAMENT RECOGN I SING THE PREDOMINANCE OF DECISIONS RENDERED UNDER THE RELEVANT STATE LAW. IN TH I S VIEW OF THE MATTER, ALL THE APPELLANTS HAV I NG BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CRED I T SOC I ET I ES B Y THE COMPETENT AUTHOR I TY UNDE R TH E KCS ACT , I T HAS NECESSAR IL Y TO BE HELD THAT THE PRINCIPAL OBJECT OF SUCH SOCI ETIES IS TO UNDERTAKE AGR I CULTURAL CREDIT ACTIVITIES AND TO PROVIDE LOANS AND ADVANCES FOR A GRICULTURAL PURPOSES , THE RATE ' OF INTEREST ON SUCH LOANS AND ADVANCES TO BE AT THE RATE FIXED BY THE R EGISTRAR OF CO - OPERATIVE SOCIETIES UNDER THE KCS ACT AND HAV I NG I TS AREA OF OPERATION CONFINED TO A VILLAGE, PANCHAYAT OR A MUNICIPALITY. THIS IS THE CONSEQUENCE OF THE DEFINI TION CLAUSE IN SECTION 2(OAA) OF THE KCS ACT. THE AUTHORITIES UNDER THE IT ACT CANNOT PROBE INTO ANY ISSUE OR SUCH MATTER RELATING TO SUCH APPLICANT S. 16. THE POSITION OF 1 AW BEING AS ABOVE WITH REFERENCE TO THE STATUTORY PROVISIONS, THE APPELLANTS HAD SHOWN TO THE AUTHORI TIES AND THE TRIBUNAL THAT THEY ARE PRIMARY AGRICULTURA L CREDIT SOCIETIES IN TERMS OF CLAUSE (CCIV) OF SECTION 5 OF THE BR ACT, HAVING REGARD TO THE PRIMARY OBJECT OR PRINCIP AL BUSINESS OF EACH OF THE APPELLANTS. IT IS ALSO CLEA R FROM THE MATERIALS ON RECORD THAT THE BYE-LAWS OF EACH OF THE APPELLANTS DO . NOT PERMIT ADMISSION OF ANY OTHER CO-OPERATIVE SOCIETY AS MEMB ER, EXCEPT MAY BE, IN ACCORDANCE WITH THE PROVISO TO SUB - CLAUSE 2 OF SECTION 5(CCIV) OF THE BR ACT. THE DIFFERENT ORDERS OF THE TRIBUNAL WHICH ARE IMPEACHED IN THESE APPEALS DO NOT CONTAIN ANY FINDING OF FACT TO THE E FFECT THAT THE BYE- 1AWS OF ANY OF THE APPELLANT OR ITS CLASS I FICATION BY THE COMPETENT AUTHORITY UNDER THE KCS ACT LS ANYTHING DIFFERENT FROM WHAT WE HAVE STATED HEREIN ABOVE. FOR THIS REASON, IT CANNOT BUT BE HELD THAT THE APPELLANTS ARE ENTITLED TO EXEMPTION FROM THE PROVISIONS OF SECTION 80P OF THE IT ACT BY VIRTUE OF SUB- SECTION 4 OF THAT SECT; ON. IN THIS VIEW OF THE MATTER, THE APPEALS SUCCEED. 17. IN THE LIGHT OF THE AFORESAID, WE ANSWER SUBSTAN TIA 1 QUESTION 'A' IN FAVOUR OF THE APPELLANTS AND ITA N.O. 595/C/2014 4 HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE REGARDING THE ENTITLEMENT OF EXEMPTION UNDER SECTION 80P AGAINST THE APPELLANTS. WE HOLD TH AT THE PRIMARY AGRICULTURAL CREDIT SOCIETIES, REGISTERED AS SUCH UNDER THE KCS ACT; AND CLASSIFIE D SO, UNDER THAT ACT, INCLUDING THE APPELLANTS ARE ENTITLED TO SUCH EXEMPTION. 6.2 IN THE INSTANT CASE, THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES A CT, 1969. THE CERTIFICATE HAS BEEN ISSUED BY THE REGISTRAR OF COOPERATIVE SOCIETIES TO THE ABOVE SAID EFFECT AND THE SAME IS ON RECORD. THE HONBLE HIGH COURT, IN ASSESSEES OWN CASE AND OTHER BATCH OF CASES, HAD HELD THAT PRIMARY AGRICULTURAL CREDIT SOCIETY, REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT, 1969, IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2). SINCE THERE IS A CERTIFICATE ISSUED BY THE REGISTRA R OF COOPERATIVE SOCIETIES, STATING THAT THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIE TY, I HOLD THAT THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2) OF THE ACT. 7 NO OTHER ISSUES WERE ARGUED BY THE LD COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARING OF THIS APPEAL. 8 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF APRIL 2017. SD/- (GEORGE GEORGE K) JUDICIAL MEMBER COCHIN: DATED 4-4-2017 RAJ* COPY TO: ITA N.O. 595/C/2014 5 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT, 5. DR 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN