VISHAL JANSEVA SAHAKARI PATSANSTHA LTD, MUMBAI V. ITO 15(3)(3), MUMBAI

ITA 6027/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88654 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 26-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN KU MAR BEERLA
• Assessee Lawyers: C N VAZE

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUM BAI - F BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.6027/MUM/2012, ! ' / ASSESSMENT YEAR-2008-09 VISHAL JANSEVA SAHAKARI PATSANSTHA LTD.,SHOP NO.3, GOLD MIST, THAKUR, COMPLEX, W.E. HIGHWAY, KANDIVALI(E), MUMBAI-400101 PAN: AAATV6308G VS. ITO 15(3)(3), MATRU MANDIR, TARDEO ROAD, MUMBAI. ( #$ / ASSESSEE) ( %&#$ / RESPONDENT) !'( ) /ASSESSEE BY :SHRI C.N. VAZE * ) / REVENUE BY :SHRI PAWAN KUMAR BEERLA ! * (+ / DATE OF HEARING :26- 03 -2015 ,-' * (+ / DATE OF PRONOUNCEMENT :26-03-2015 ! , 1961 * 254(1) (.( / ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT ) ! PER RAJENDRA,A.M. CHALLENGING THE ORDER DT.04.07.2012 OF THE CIT(A)-2 6,MUMBAI,THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: BEING AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) TH IS APPEAL PETITION IS FILED ON THE FOLLOWING GROUNDS: 1. THE LD. CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE THE DEDUCTION AVAILABLE TO CO-OPERATIVE SOCIETY U/S 80P OF THE INCOME TAX A CT, 1961. 2. THE APPELLANTS FURTHER RESERVE THE RIGHTS TO ADD, A MEND OR ALTER THE AFORESAID GROUNDS OF APPEAL AS THEY MAY THINK FIT BY THEMSELV ES OR BY THEIR REPRESENTATIVES. DURING THE COURSE OF HEARING BEFORE US,DEPARTMENTAL REPRESENTATIVE (DR) MADE AN APPLICATION AND SOUGHT AN ADJOURNMENT STATING THAT THE ISSUE RA ISED BY THE ASSESSEE WAS PENDING BEFORE THE SPECIAL BENCH AT AHMADABAD,THAT THE SPECIAL BENCH W AS CONSTITUTED IN 2013.ON ENQUIRY BY THE BENCH,HE COULD NOT TELL US THE STAGE OF HEARING OF THE ISSUE BY THE SPECIAL BENCH.AUTHORISED REPRESENTATIVE(AR)STATED THAT HONBLE GUJARAT HIGH COURT HAD DECIDED TWO CASES IN THE YEAR 2014,WHEREIN IDENTICAL ISSUE WAS INVOLVED.HE REFERR ED TO THE TAX APPEAL NO. 442 & ORS IN THE CASE OF JAFARI MOMIN VIKASH CO-OP. CREDIT SOCIETY L TD. AND SURAT VANKAR SAHKARI SANGH LTD. (TAX APPEAL NO. 1149 OF 2013).HE FURTHER STATED THA T JUDGMENTS OF THE CASES WERE DELIVERED IN THE MONTH OF JANUARY 2014,THAT THE REQUEST MADE BY THE DR FOR ADJOURNING THE MATTER,ON THE GROUND THAT ISSUE WAS PENDING BEFORE THE SPECIAL BENCH,SHO ULD BE REJECTED. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL.WE FIND THAT I SSUE OF DEDUCTION U/S 80P(4) HAS BEEN DECIDED BY THE HONBLE GUJARAT HIGH COURT IN THE ABOVE REFE RRED TWO JUDGEMENTS. THEREFORE, APPLICATION MADE BY THE DR,FOR ADJOURNING THE CASE WAS REJECTED AND MATTER WAS HEARD ACCORDINGLY. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DISALLOWANCE OF DEDUCTION CLAIMED U/S. 80-P OF THE ACT.DURING THE ASSESSMENT PROCEEDING THE AO FOU ND THAT THE WAS COLLECTING DEPOSITS FROM MEMBERS BY WAY OF CORPUS FUNDS AND OTHER DEPOS ITS,THAT IT HAD PROVIDED LOANS TO ITS MEMBERS.VIDE ORDER SHEET NOTING,DT. 30.11.10,THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY 80-P DEDUCTION SHOULD BE ALLOWED IN VIEW OF THE SUB-SECTION (4) OF SECTION 80P READ WITH EXPLANATION (A).THE ASSESSEE VIDE ITS LETTER,DATED 10.12.10,CONTENDED THAT PROVISIONS OF SECTION 80P(4) DID NOT APPLY,THAT IT WAS NOT COVERED UNDER THE DEFINITION OF CO-OPERATIVE BANK. ITA/6027/MUM/2012 AY.2008-09,VJSP 2 HOWEVER, THE SAME WAS NOT ACCEPTED BY THE AO. IT IS OBSERVED BY THE AO THAT THE PAID UP SHARE CAPITAL WAS MORE THAN 1 LAKH,THAT THE BYE-LAWS OF T HE SOCIETY DID NOT PERMIT ADMISSION OF ANY OTHER CO-OPERATIVE SOCIETY AS A MEMBER,THAT ITS BUS INESS WAS OF BANKING,THAT THE ASSESSEE FELL INTO THE CATEGORY OF PRIMARY CO-OPERATIVE BANK,THAT AS PER THE PROVISIONS OF SECTION 80P(4) INSERTED W.E.F. 01.04.2007, THE ASSESSEE WAS A PRI MARY CO-OPERATIVE BANK. ACCORDINGLY, THE DEDUCTION CLAIMED U/S 80P WAS NOT ALLOWED BY THE AO . 3. DURING THE APPEAL PROCEEDING,BEFORE THE FIRST APPEL LATE AUTHORITY(FAA),IT WAS CONTENDED BY THE ASSESSEE THAT IT WAS EXTENDING FACILITIES TO ITS MEMBERS ONLY,THAT IT WAS REGULARLY CLAIM- ING DEDUCTION U/S.80P(2)(A)(I) OF THE ACT, THAT IT WAS NOT CARRYING ON ANY BANKING BUSINESS THAT ITS OPERATIONS WERE NOT OPEN FOR THE PUBLIC AS THE SOCIETY WAS RESTRICTED FOR THE BENEFIT OF THE MEMBERS ONLY,THAT THE PROVISIONS OF SUB-SECTION (4) OF 80P, INSERTED BY FINANCE ACT, 2006, WERE INTRODUCED TO TAX THE CO-OPERATIVE BANKS , THAT THE ASSESSEE DID NOT COME UNDER THE PURVIEW OF THE PROVISION AS OF SECTION 80P(4),T HAT THE AO'S FINDINGS THAT THE ASSESSEE WAS DOING BANKING BUSINESS WAS FACTUALLY INCORRECT, THAT AS PER THE CIRCULAR F.NO.149/ 124/2006 TPL,ISSUED BY THE DEPARTMENT OF REVENUE (C BDT) TAX POLICY AND LEGISLATION DIVISION,WITH REGARD TO THE DEDUCTION OF SECTION 80 P OF THE ACT,THE ASSESSEE WAS ELIGIBLE TO CO- OPERATIVE SOCIETIES. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE ASSESSMENT ORDER,THE FAA REFERRED TO THE PROVISIONS OF SECTION 80P(4) OF THE ACT AND HELD THAT THE ASSESSEE FULFILL -ED ALL THE THREE CONDITIONS OF A PRIMARY CO-OPERAT IVE BANK,THAT THE AO'S VIEW THAT PROVISIONS OF 80P(4)WERE APPLICABLE IN THE INSTANT CASE APPEAR ED TO BE CORRECT.AS REGARDS THE CLARIFICATION OF CBDT CIRCULAR OF 2006,HE HELD THAT THE CIRCULAR WAS NOT RELEVANT,THAT THE AMEND - MENT OF SECTION 80P WAS BROUGHT IN MUCH AFTER THE I SSUE OF SAID CIRCULAR.FINALLY,HE DISMISSED THE APPEAL FILED BY THE ASSESSEE . 4. BEFORE US THE AR CONTENDED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE BY A SERIES OF CASES,THAT IT WAS NOT A CO-OPERATIVE BANK,THAT IT W AS A CO-OPERATIVE SOCIETY,THAT AS PER THE CIRCULAR ISSUED BY THE CBDT IT WAS ENTITLED TO CLAIM U/S.80P OF THE ACT,THAT IT WAS EXTENDING FACILITIES TO THE MEMBERS ONLY.HE RELIED UPON THE CASES OF JAFARI MOMIN VIKASH CO-OP. CREDIT SOCIETY LTD., SURAT VANKAR SAHKARI SANGH LTD. AND BILURU GURUBASA VA PATTINA OF KARNATAKA HIGH COURT.HE ALSO REFERRED TO THE MATTER OF M/S KULSWAMI COOP. CREDIT SOCIETY LTD. (ITA NO. 3223/MUM/2011 & 505/MUM/202 DT.28.03.2014),SAGAR CREDIT COOPERATIVE SOCIETY LTD. (ITA NO. 306/BANG/2014 DATED 04.04.2014). DR SUPPORTED THE ORDER OF THE FA A. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT IN THE CASE OF JAFARI MOMIN VIKASH CO-OP. CREDIT SOCIETY LTD (S UPRA) THE HONBLE GUJARAT HIGH COURT HAS DISCUSSED AT LENGTH THE ISSUE BEFORE US AND AS HELD AS UNDER: 'FROM THE ABOVE CLARIFICATION, IT CAN BE GATHERED T HAT SUB-SECTION(4) OF SECTION 80P WILL NOT APPLY TO AN ASSESSEE WHICH IS NOT A CO-OPERATIVE BANK. IN THE CASE CLARIFIED BY CBDT, DELHI COOP URBAN THRIFT & CREDIT SOCIETY LTD. WAS UNDER CONSIDERATIO N. CIRCULAR CLARIFIED THAT THE SAID ENTITY NOT BEING A CO-OPERATIVE BANK, SECTION 80P(4) OF THE AC T WOULD NOT APPLY TO IT. IN VIEW OF SUCH CLARIFICATION, WE CANNOT ENTERTAIN THE REVENUE'S CO NTENTION THAT SECTION 80P(4) WOULD EXCLUDE NOT ONLY THE CO-OPERATIVE BANKS OTHER THAN THOSE FULFIL LING THE DESCRIPTION CONTAINED THEREIN BUT ALSO CREDIT SOCIETIES, WHICH ARE NOT CO-OPERATIVE BANKS. IN THE PRESENT CASE, RESPONDENT ASSESSEE IS ADMITTEDLY NOT A CREDIT CO-OPERATIVE BANK BUT A CRE DIT CO-OPERATIVE SOCIETY. EXCLUSION CLAUSE OF SUB-SECTION (4) OF SECTION 80P, THEREFORE, WOULD NO T APPLY. IN THE RESULT, TAX APPEALS ARE DISMISSED'. ITA/6027/MUM/2012 AY.2008-09,VJSP 3 SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE KARNATAK A HIGH COURT IN THE CASE OF BILURU GURUBASAVA PATTINA.MUMBAI TRIBUANL HAS IN THE MATTE RS OF M/S KULSWAMI COOP. CREDIT SOCIETY LTD.(SUPRA) AND SAGAR CREDIT COOPERATIVE SOCIETY L TD.(SUPRA)HAS BEEN HELD THAT SECTION 80P (4) WAS NOT APPLICABLE TO COOPERATIVE SOCIETIES AND WAS RESTRICTED ONLY TO COOPERATIVE BANKS WHICH HAD GOT LICENCE TO DO BANKING BUSINESS FROM THE RBI . AS THE ASSESSEE DEALING ONLY WITH ITS MEMBERS,SO IT IS TO BE CONSIDERED A COOPERATIVE SOC IETY ONLY AND NOT A BANK.CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE REVERSING THE ORDER OF THE FAA.EFFECTIVE GROUND OF APPEAL, FILED BY THE ASSESSEE,IS DECIDED IN ITS FAVOUR AS A RESULT,APPEAL FILED BY THE ASSESSE E STANDS ALLOWED. (0 !'( 1 2 * . 3 * ( 45 . ORDER PRONOUNCED IN THE OPEN COURT ON 26TH,MARCH,2 015. / * ,-' 6 7! 26 8 ,2015 - * . 9 SD/- SD/- ( /I P BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, 7! /DATE: 26.03.2015 SK / * %(: ;:'( / COPY OF THE ORDER FORWARDED TO : 1.APPELLANT / #$ 2. RESPONDENT / %&#$ 3.THE CONCERNED CIT(A)/ < = , 4.THE CONCERNED CIT / < = 5.DR L BENCH, ITAT, MUMBAI / :>. %(! , , . . . 6.GUARD FILE/ . &:( %( //TRUE COPY// /! / BY ORDER, ? / 4 DY./ASST. REGISTRAR , /ITAT, MUMBAI.