The Income Tax Officer, Ward-1(5), Belgaum., Belgaum V. The Ramdurg Taluka Primary Teachers Co-op. Society Ltd., Ramdurg

ITA 61/PAN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2029 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 11-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANAND SHANKAR MARATHE
• Keywords: Benefit of exemption
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 61 / PAN /201 6 (ASST. YEAR : 2012 - 13 ) ITO, WARD - 1(5), BELGAUM. VS. THE RAMDURG TALUKA PRIMARY TEACHERS COOPERATIVE SOCIETY LTD., MLBC ROAD, RAMDURG, DIST. BELGAUM. PAN NO. AACFR 9222 R (APPELLANT) (RESPONDENT) C.O.NO.53/PAN/2016 ( ITA NO. 61 / PAN /201 6) (ASST. YEAR : 2012 - 13 ) THE RAMDURG TALUKA PRIMARY TEACHERS COOPERATIVE SOCIETY LTD., MLBC ROAD, RAMDURG, DIST. BELGAUM. VS. ITO, WARD - 1(5), BELGAUM. PAN NO. AACFR 9222 R (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE . DEPARTMENT BY : S HRI ANAND SHANKAR MARATHE - DR DATE OF HEARING : 19 /0 7 /201 6 . DATE OF PRONOUNCEMENT : 19 / 07 /201 6 . O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), BELAGAVI IN APPEAL NO. 260/BGM/2014 - 15, DATED 15 /0 2 /201 6 FOR THE ASSESSMENT YEAR 20 12 - 13. 2 ITA NO. 61 /P A N/201 6 C.O.NO.53/PAN/2016 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS TH AT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING DEDUCTION TO THE ASSESSEE UNDER SEC. 80P(2)(A)(I) OF THE INCOME TAX ACT, 1961. 3 . THE FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME AT NIL AFTER CLAIMING DEDUCT ION UNDER SEC. 80P(2)(A)(I) OF THE ACT FOR 37,83,918/ - FOR THE ASSESSMENT YEAR 20 12 - 1 3 ON 29/09/2012. IT WAS CLAIMED THAT THE SOCIETY IS ENTITLED TO DEDUCTION UNDER SEC. 80P(2)(A)(I) AS IT WAS A COOPERATIVE SOCIETY CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. HOWEVER, THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SEC. 80P(2)(A)(I) WAS REJECTED BY THE ASSESSING OFFICER IN THE ORDER PASSED UNDER SEC. 143(3) OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS A COOPERATIVE B ANK, AND HENCE, NOT ENTITLED TO CLAIM DEDUCTION BY VIRTUE OF SEC. 80P(4). 4. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER: - 9. THE FACT THAT THE APPELLANT IS A COOPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA COOPERATIVE SOCIETIES ACT, 1959 ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS HAS BEEN CLEARLY MENTIONED BY THE ASSESSING OFFICER IN THE AFORESAID ASSESSMENT ORDER. T HE APPELLANT IN ITS SUBMISSIONS DATED 16/02/2016 AND THOUGH AN AFFIDAVIT DATED 16/02/2016 HAS CLEARLY STATED THAT THE APPELLANT IS A COOPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA COOPERATIVE SOCIETIES ACT, 1959 ENGAGED IN PROVIDING CREDIT FACILITIES O NLY TO ITS MEMBER AND IT DOES NOT POSSESS ANY BANKING LICENCE FROM THE RBI. IT IS THEREFORE, CLEAR THAT THE APPELLANTS CASE IS SQUARELY COVERED BY THE AFORESAID DECISIONS OF THE JURISDICTIONAL HIGH COURT OF KARNATAKA AS FACTS ARE SIMILAR AND ISSUE INVOLV ED IS IDENTICAL. IT APPEARS SLP FILED BY THE DEPARTMENT BEFORE THE HONBLE SUPREME COURT ON THE SIMILAR ISSUE IS PENDING. UNLESS THE DECISION OF THE JURISDICTIONAL HIGH COURT IS REVERSED BY THE HONBLE SUPREME COURT, THE POSITION OF THE LAW IS CLEAR THAT THE APPELLANTS CASE IS NOT COVERED BY THE SECTION 80P(4) AS IT IS NOT A COOPERATIVE BANK AND IT IS ENTITLED TO DEDUCTION UNDER 3 ITA NO. 61 /P A N/201 6 C.O.NO.53/PAN/2016 SECTION 80P(2)(A)(I). HENCE, THE APPEAL FILED BY THE APPELLANT IS ALLOWED. THE APPELLANT GETS THE RELIEF OF 37,83,918/ - U NDER SECTION 80P(2)(A)(I) OF THE INCOME TAX ACT. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF NOTICE BEING ISSUED TO THE ASSESSEE. 6 . ON THE OTHER HAND, DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 7. WE FIND TH AT THE ISSUE IS NOW COVERED BY THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN FAVOUR OF THE ASSESSEE IN THE CASE OF CIT VS. SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA , BAGALKOT , IN ITA NO.5006/2013 DATED 05 - 02 - 2014, WHICH WAS FOLLOWED IN THE CASES OF GENERAL INSURANCE EMPLOYEES CO - OPERATIVE CREDIT SOCIETY LTD. AND IN THE CASE OF VASAVI MULTIPURPOSE SOUHARDA SAHAKARI NIYAMITHA, WHEREIN THE HONBLE HIGH COURT HAS CLEARLY HELD THAT A CO - OPERATIVE SOCIETY REGISTERED AS CO - OPERATIVE SOCIETY, PROVIDING CREDIT FACILITIES TO ITS MEMBERS AND NOT REGISTERED WITH THE RBI CANNOT BE DENIED THE EXEMPTION UNDER SECTION 80P(1) OF THE IT ACT. THE OPERATIVE PART O F THE JUDGMENT READS AS FOLLOWS: - THEREFORE, THE INTENTION OF THE LEGISLATURE IS CLEAR, IF A CO - OPERATIVE BANK IS EXCLUSIVELY CARRYING ON BANKING BUSINESS, THEN THE INCOME DERIVED FROM THE SAID BUSINESS CANNOT BE DEDUCTED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. THE SAID INCOME IS L IABLE FOR TAX. A CO - OPERATIVE BANK AS DEFINED UNDER THE BANKING REGULATION ACT INCLUDES THE PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THE LEGISLATURE DID NOT WANT TO DENY THE SAID BENEFITS TO A PRIMARY AGRICULTURAL CREDIT SOCIETY OR A PRIMARY CO - OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK. THEY DID NOT WANT TO EXTEND THE SAID BENEFIT TO A CO - OPERATIVE BANK WHICH IS EXCLUSIVELY CARRYING ON BANKING BUSINESS I.E THE ITA NO.1149/BANG/2015 SHRI HOLEHUCHESHWAR CO - OP CREDIT SOCIETY LTD. PAGE 4 OF 6 PURPOSE OF THIS AMENDMENT. THEREFORE, AS THE ASSESSEE IS NOT A CO - OPERATIVE BANK CARRYING ON EXCLUSIVELY BANKING BUSINESS AND AS IT DOES NO POSSESS A LICENCE FROM RESERVE BANK OF INDIA TO CARRY ON BUSINESS, IT IS NOT A CO - OPERATIVE BANK. IT IS A CO - OPERATIVE SOCIETY WHICH ALSO CARRIES ON THE BUSINESS OF LENDING MONEY TO ITS MEMBERS WHICH IS 4 ITA NO. 61 /P A N/201 6 C.O.NO.53/PAN/2016 COVERED UNDER SECTION 80P(2)(A)(I) I.E CARRYING ON THE BUSINESS OF BANKING FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE OBJECT OF THE AFORESAID AMENDMENT IS NOT TO EXCLUDE THE BENEFIT EXTENDED UNDER SECTION 80P(1) TO SUCH SOCIETY. I N THE INSTANT CASE, WHEN THE STATUS OF THE ASSESSEE IS A CO - OPERATIVE SOCIETY AND IS NOT A CO - OPERATIVE B ANK, THE ORDER PASSED BY THE ASSESSING AUTHORITY EXTENDING THE BENEFIT OF EXEMPTION FROM PAYMENT OF TAX UNDER SECTION 80P(2)(A)(I) OF THE ACT IS CORRECT. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THAT THE ASSESSEE IS A COOPERATIVE SOCIETY AND NOT A CO OPERATIVE BANK AND, THEREFORE, ENTITLED TO DEDUCTION UNDER SEC. 80P OF THE ACT. WE, THEREFORE, DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), WHICH IS HEREBY CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 8. CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). AS WE HAVE ALREADY CONFIRMED THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE CROSS OBJECTION STANDS DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT AT TH E CLOSE OF THE HEARING ON TUESDAY , THE 19 TH DAY OF JULY , 201 6 AT GOA . S D / - S D / - (N.S.SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER D ATED : 19 TH JULY , 201 6 . VR/ - 5 ITA NO. 61 /P A N/201 6 C.O.NO.53/PAN/2016 COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI .