Menasi Seemeya Group, Sirsi V. CIT, Hubli

ITA 609/BANG/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8672 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FARHAT HUSSAIN QURESHI CITII
• Assessee Lawyers: RAMASUBRAMANIAN
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE A BENCH, BANGALORE BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NOS.609 & 610(BNG.)/2014 (ASSESSMENT YEARS : 2009-10 & 2010-11) MENASI SEEMEYA GROUP GRAMAGALA SEVA SAHAKARI SANGA NIYAMITHA, VANALLI, SIRSI PAN NO.AAALM0003D APPELLANT VS THE COMMISSIONER OF INCOME-TAX, HUBLI RESPONDENT ASSESSEE BY : SHRI RAMASUBRAMANIAN, CA REVENUE BY : SHRI FARHAT HUSSAIN QURESHI, CIT-II DATE OF HEARING : 21-0 1-2015 DATE OF PRONOUNCEMENT : 06-02-2015 O R D E R PER SHRI ABRAHAM P GEORGE, AM; ASSESSEE, IN THESE APPEALS ASSAILS THE ORDERS OF T HE CIT UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961 ( IN SHORT THE ACT) WHEREBY HE HELD THE ASSESSMENTS DONE ON THE ASSESSEE UNDER SEC TION 143(3) OF THE ACT, TO BE ERRONEOUS IN SO FAR AS IT WAS PREJUDICIA L TO THE INTEREST OF REVENUE. 2. REASON FOR WHICH THE CIT INVOKED HIS REVISIONAR Y POWERS UNDER SECTION 263 OF THE ACT, WAS THAT ASSESSEE HAD CLAIM ED DEDUCTION UNDER 2 ITA NOS. 609 & 610(B)/14 SECTION 80P(2)(D) ON INTEREST RECEIVED BY IT ON ITS DEPOSITS WITH CO- OPERATIVE BANKS. AS FOR THE LEARNED CIT THIS CLAIM OUGHT NOT HAVE BEEN ACCEPTED. LEARNED CIT HELD THAT SECTION 80P(2)(D) COULD NOT BE SO LIBERALLY INTERPRETED SO AS TO CONSTRUE A CO-OPERAT IVE BANK ALSO AS A CO- OPERATIVE SOCIETY. THOUGH THE ASSESSEE ARGUED THA T M/S KANARA DISTRICT CO-OPERATIVE BANK, WHEREIN IT HAD PLACED ITS DEPOSI TS WAS REGISTERED AS A CO-OPERATIVE SOCIETY UNDER SECTION 9 OF THE CO-OPER ATIVE SOCIETIES ACT, 1912 (ACT NO.2 OF 1912) IT DID NOT FIND FAVOUR WITH THE CIT. HE HELD THE ASSESSMENTS DONE TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, ON THIS COUNT. 3. NOW WHEN THE MATTER CAME UP BEFORE US, LEARNED COUNSEL FOR THE ASSESSEE, SUBMITTED THAT THE TRIBUNAL IN THE CASE O F BAGALKOT DISTRICT CENTRAL CO-OPERATIVE BANK VS JCIT (ITA NO.1572/BANG /2013 DATED 30- 05-2014) HAD UNEQUIVOCALLY HELD THAT IT WAS NOT POS SIBLE TO EXCLUDE A CO- OPERATIVE SOCIETY ENGAGED IN BUSINESS OF BANKING FR OM BEING CONSIDERED AS A CO-OPERATIVE SOCIETY, PERSE. AS PER THE LEAR NED AR, THOUGH THE SAID DECISION WAS GIVEN IN THE CONTEXT OF SECTION 194A(3 )(V) IT WOULD SQUARELY APPLY HERE ALSO. RELIANCE WAS ALSO PLACED ON JUDGM ENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF TUMKUR MER CHANTSS SOUHARDA 3 ITA NOS. 609 & 610(B)/14 CREDIT CO-OPERATIVE SOCIETY VS ITO (ITA NO.307(B)/2 014 DATED 28-10- 2014) 4. PER CONTRA, LEARNED DR STRONGLY SUPPORTED THE O RDER OF THE CIT AND ALSO SUBMITTED THAT THE AO HAD NOT APPLIED OR C ONSIDERED SECTION 80P(2)(D), IN ACCORDANCE WITH THE WORDINGS OF THE S AID SECTION. HENCE, ACCORDING TO HIM THERE WAS AN ERROR WHICH WAS PREJU DICIAL TO THE INTEREST OF THE REVENUE. 5. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. A READING OF THE COMPUTATION PART OF THE ASSESSMENT, DO SHOW THAT AO HAD CONSIDERED THE CLAIM OF DEDUCTION MADE BY THE ASSES SEE U/S 80P(2)(D) OF THE ACT. OUT OF THE TOTAL CLAIM OF RS.9,77,821/- AO HAD DISALLOWED RS.4,770/- BEING INTEREST OF TDS FOR THE ASSESSMENT YEAR 2009-10. THEREFORE, IT IS NOT A CASE WHERE AO FAILED TO APPL Y HIS MIND AT ALL. 6. NOW COMING TO THE QUESTION AS TO WHETHER THE IN TEREST ON DEPOSITS EARNED BY A CO-OPERATIVE SOCIETY, WHERE SU CH DEPOSITS WERE WITH A CO-OPERATIVE BANK, WE ARE OF THE OPINION THAT RES TRICTIVE INTERPRETATION GIVEN BY THE LEARNED CIT(A) TO SECTION 80P(2)(D) WA S NOT WARRANTED BY IT WORDINGS. SECTION 80P(2)(D) IS REPRODUCED HEREUND ER: 4 ITA NOS. 609 & 610(B)/14 IN RESPECT OF ANY INCOME BY WAY OF INTEREST OR DIVIDENDS DERIVED BY THE C-OPERATIVE SOCIETY FROM I TS INVESTMENTS WITH ANY OTHER CO-OPERATIVE SOCIETY, TH E WHOLE OF SUCH INCOME. THIS TRIBUNAL IN THE CASE OF BAGALKOT DISTRICT CENT RAL CO-OPERATIVE BANK HAD HELD THAT A CO-OPERATIVE BANK WHICH IS ALSO A C O-OPERATIVE SOCIETY CANNOT BE EXCLUDED FROM THE PURVIEW OF BENEFITS AVA ILABLE TO A CO- OPERATIVE SOCIETY , UNLESS THE PROVISIONS OF THE AC T SO STIPULATE. NO DOUBT IN THE SAID DECISION, THE TRIBUNAL WAS CONSIDERING THE APPLICATION OF SECTION 194A(3)(V) OF THE ACT, WHEREIN IT WAS MANDA TED THAT A CO- OPERATIVE SOCIETY WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE IF THE INTEREST CREDIT WERE PAID TO ANY CO-OPERATIVE SOCIETY. IT H AD UNEQUIVOCALLY HELD THAT THE SAID PROVISION APPLIED TO ALL CO-OPERATIVE SOCIETY INCLUDING A CO- OPERATIVE SOCIETY ENGAGED IN THE BUSINESS OF THE BA NK OR IN OTHER WORDS, A CO-OPERATIVE BANK. THEREFORE, THE VIEW TAKEN BY TH E AO THAT INCOME BY WAY OF INTEREST OR DIVIDENDS EARNED BY THE ASSESSEE SOCIETY FROM THE CO- OPERATIVE BANK NAMELY KANARA DIST.CENTRAL CO-OPERAT IVE BANK WHICH WAS ALSO A CO-OPERATIVE SOCIETY WAS ELIGIBLE FOR DEDUCT ION CANNOT BE FAULTED. WE CANNOT SAY THAT THE ORDER OF THE AO WAS ERRONEOU S AND PREJUDICIAL TO 5 ITA NOS. 609 & 610(B)/14 THE INTEREST OF THE REVENUE. ORDER OF THE LEARNED CIT, THEREFORE, STAND QUASHED AND APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE (N.V.VASUDEVAN ) ( ABRAHAM P GEORGE ) JUD I CIAL MEMER ACCOUNTANT MEMBER BANGALORE: D A T E D : 06-02-2015 AM COPY TO : APPELLANT RESPONDENT CIT(A)-IV, BANGALORE. CIT DR, ITAT, BANGALORE. GUARD FILE (1+1) ASST. REGISTRAR ITAT, BANGALORE