ITO,Wd.-3(3), Latur V. Sri Sai Gramin Bigar Sheti Sah. Sanstha Ltd., Osmanabad

ITA 648/PUN/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9814 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 18-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKSHAY BHANDARI
• Assessee Lawyers: VINITA MENON
• Section: 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 648/PN/2011 (ASSTT. YEAR : 2 007-08) INCOME TAX OFFICER, WARD 3(3), APPELLANT LATUR V. SRI SAI GRAMIN BIGAR SHETI RESPONDENT SAHKARI SANSTHA LIMITED, A/P RANJANI TQ. KALLAM DIST. OSMANABAD PAN : AACAS 1756 Q APPELLANT BY : SHRI. AKSHAY BHANDARI RESPONDENT BY : SMT. VI NITA MENON DATE OF HEARING : 21/11/ 12 DATE OF PRONOUNCEMENT : 23-11-12 O R D E R PER R.S. PADVEKAR, JM THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT(A), AURANGABAD DATED 15/02/ 2011 FOR THE A.Y. 2007-08. 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS IN THE A PPEAL : THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDI TION MADE BY THE AO AT RS. 27,48,279/- ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S. 80P(2)(A)(I) OF THE I.T. ACT, 1961. 2) THE LEARNED CIT(A0 HAS ERRED IN NOT CONSIDERING THE FACT THAT AS PER INSERTION OF CLAUSE (VIIA) TO SEC. 2(24) W.E.F.01.0 4.2007, THE PROFITS AND GAINS OF ANY BANKING BUSINESS (INCLUDING PROVIDING OF CREDIT FACILITIES) CARRIED ON BY A COOPERATIVE SOCIETY WITH ITS MEMBER S IS INCLUDED IN THE DEFINITION OF INCOME. 3) THE LEARNED CIT(A) HAS NOT APPRECIATED THE FACT THAT AS PER THE PROVISIONS OF SUB SEC. 4 OF SEC. 80P DEDUCTION SHAL L NOT BE AVAILABLE TO ANY COOPERATIVE BANK OTHER THAN A COOPERATIVE AGRICULT URAL CREDIT SOCIETY OR A PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPM ENT BANK. IN THE INSTANT CASE THE ASSESSEE IS NOT A COOPERATIVE AGRI CULTURAL CREDIT SOCIETY OR A PRIMARY COOPERATIVE AGRICULTURAL CREDIT SOCIE TY OR A PRIMARY COOPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK AND AS SUCH NOT ELIGIBLE FOR DEDUCTION U/S. 80P(2)(A)(I). 2 ITA NO. 648/PN/2011 SRI SAI GRAMIN BIGAR SHETI SAHAKARI SANSTHA A.Y.2007-08 4. THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THE FACT THAT CLAUSE (CCI) OF SEC. 5 OF THE BANKING REGULATION ACT DEFIN ES A COOPERATIVE BANK TO INCLUDE A PRIMARY COOPERATIVE BANK AND CLAUSE (CCII ) DEFINES A COOPERATIVE CREDIT SOCIETY TO MEAN A COOPERATIVE SOCIETY THE PR IMARY OBJECT OF WHICH IS TO PROVIDE FINANCIAL ACCOMMODATION T ITS MEMBERS, C LAUSE (CCV) DEFINES A PRIMARY COOPERATIVE BANK AS A COOPERATIVE SOCIETY W HOSE PRIMARY OBJECT OR PRINCIPAL BUSINESS IN TRANSACTING IN A BANKING BUSINESS WHOSE PAID UP CAPITAL AND RESERVE IS MORE THAN RS. 1,00,000/-. I N THE PRESENT CASE THE SAME EXCEEDS THIS LIMIT AND AS SUCH THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S. 80P(2)(A)(I). 3. THE FACTS WHICH ARE EMERGED FROM THE ORDERS OF T HE AUTHORITIES BELOW AS UNDER. THE ASSESSEE IS A CO-OPERATIVE SOC IETY ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE AS SESSEE FILED RETURN OF INCOME DECLARING THE TOTAL INCOME AT RS. NIL FOR THE A.Y. 2007-08 AND CLAIMED THE DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT TO THE EXTENT OF RS.27,48,279/-. THE A.O. DENIED THE DEDUCTION TO T HE ASSESSEE SOCIETY BY APPLYING SUB-SEC. (4) TO SEC. 80P. THE A.O. HAS ALSO TAKEN PAINS TO WRITE REASONED ORDER FOR DECLINING THE ASSESSEES C LAIM OF DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. THE ASSESSEE CHALLENGED T HE ORDER OF A.O. BEFORE THE LD CIT(A) WHO ALLOWED THE CLAIM OF THE ASSESSEE BY HOLDING THAT CO- OPERATIVE SOCIETY IS NOT A CO-OPERATIVE BANK AND T HE PROVISIONS OF SUB- SEC.(4) OF SEC. 80P ARE NOT APPLICABLE AND THE ASS ESSEE CREDIT SOCIETY IS ENTITLED TO DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. NOW, THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES. WE FIND THAT THE ISS UE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE IT AT, B BENCH, PUNE IN THE CASE OF JAN KALYAN NAGARI SAHAKARI PAT SANSTHA LTD., ITA NO. 598/PN/2011,ORDER DATED 26 TH JUNE 2012. THE TRIBUNAL HAS IN DETAIL EXAMINED THE IMPLICATION OF SUB-SEC. (4) TO SEC. 8 0P ON THE CO-OPERATIVE CREDIT SOCIETIES. THE TRIBUNAL HAS ALSO EXAMINED T HE PROVISIONS OF THE BANKING REGULATION ACT WHICH REFERENCE IS ALSO MADE IN THE SAID PROVISION. IN THE CASE OF JAN KALYAN NAGARI SAHAKA RI PAT SANSTHA LTD. (SUPRA), THE TRIBUNAL HAS HELD AS UNDER : 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS. IN THIS CASE, AS PER THE FACTS ON RECORD, THE ASSESSEE IS A CO- OPERATIVE CREDIT SOCIETY. SECTION 80P HAS UNDERGON E AN AMENDMENT W.E.F. 1.4.2007 BY INSERTION OF SUB-SEC. (4) WHICH READS A S UNDER : (4) THE PROVISIONS OF THIS SECTION SHALL NOT APPLY IN RELATION TO ANY CO- OPERATIVE BANK OTHER THAN A PRIMARY AGRICULTURAL CR EDIT SOCIETY OR A PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BAN K. EXPLANATION FOR THE PURPOSE OF THIS SUB-SECTION, - 3 ITA NO. 648/PN/2011 SRI SAI GRAMIN BIGAR SHETI SAHAKARI SANSTHA A.Y.2007-08 (A) CO-OPERATIVE BANK AND PRIMARY AGRICULTURAL CREDI T SOCIETY SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED TO THEM IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949); (B) PRIMARY CO-OPERATIVE AGRICULTURAL AND RURAL DEVELO PMENT BANK MEANS A SOCIETY HAVING ITS AREA OF OPERATION CONFINED TO A TALUK AND THE PRINCIPAL OBJECT OF WHICH IS TO PROVIDE FOR LONG-TE RM CREDIT FOR AGRICULTURAL AND RURAL DEVELOPMENT ACTIVITIES. 5. IT IS TO BE MENTION HERE THAT UP TO A.Y. 2006-07 , ANY CO-OPERATIVE SOCIETY WHICH WAS ENGAGED IN THE BUSINESS OF CARRYI NG ON BANKING WAS ELIGIBLE FOR DEDUCTION IN RESPECT OF THE WHOLE OF T HE AMOUNT OF PROFIT ATTRIBUTABLE TO ITS BANKING ACTIVITIES. FOR THE BE NEFIT OF DECIDING THE PRESENT ISSUE, IT IS NECESSARY TO CONSIDER THE LEGAL POSITI ON AS APPLICABLE UP-TO THE A.Y. 2006-07, MORE PARTICULARLY IN VIEW OF SUB-SECT ION (2) OF SEC. 80-P. SECTION 80 P (2) READS AS UNDER :- 80P. (1) WHERE, IN THE CASE OF AN ASSESSEE BEING A CO-OPERATIVE SOCIETY, THE GROSS TOTAL INCOME INCLUDES ANY INCOME RE FERRED TO IN SUB- SECTION (2), THERE SHALL BE DEDUCTED, IN ACCORDANCE W ITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, THE SUMS SPECIFIED IN SUB-SECTION(2), IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE. (2) THE SUMS REFERRED TO IN SUB-SECTION (1) SHALL BE THE FOLLOWI NG, NAMELY :- (A) IN THE CASE OF A CO-OPERATIVE SOCIETY ENGAGED IN - (I) CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CRE DIT FACILITIES TO ITS MEMBERS, OR (II) A COTTAGE INDUSTRY, OR (III) THE MARKETING OF AGRICULTURAL PRODUCE GROWN BY ITS MEMBER S, OR (IV) THE PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS, LIVESTO CK OR OTHER ARTICLES INTENDED FOR AGRICULTURE FOR THE PURPOSE OF SUPPLYING THEM TO ITS MEMBERS, OR (V) .. (VI) .. 6. SUB-SECTION (4) WAS INTRODUCED FOR WITHDRAW ING THE DEDUCTION TO THE CO- OPERATIVE BANK OTHER THAN PRIMARY AGRICULTURE CRED IT SOCIETY OR PRIMARY CO- OPERATIVE AGRICULTURE AND RURAL DEVELOPMENT BANK. I N VIEW OF EXPLANATION BELOW SUB-SEC.(4) OF SEC. 80P, THE DEFINITION OF TH E CO-OPERATIVE BANK AS ASSIGNED IN PARA 5 OF THE BANKING REGULATION ACT IS TO BE CONSIDERED. IN THE OPINION OF THE A.O, AS THE NATURE OF THE ACTIVITIES OF THE ASSESSEE CREDIT SOCIETY ARE ANALOGOUS TO THE BANKING ACTIVITIES, WH ICH ARE MORE SPECIFICALLY DESCRIBE IN THE BANKING REGULATION ACT AND HENCE, ASSESSEE PARTAKES THE CHARACTER OF PRIMARY CO-OPERATIVE BANK AS DEFINED IN CLAUSE (CCII ) OF THE BANKING REGULATION ACT 1949. CLAUSE (CCI ) OF SEC 5 OF BR ACT DEFINES THE CO- OPERATIVE BANK MEANS STATE CO-OPERATIVE BANK, CENT RAL CO-OPERATIVE BANK AND PRIMARY CO-OPERATIVE BANK. 4 ITA NO. 648/PN/2011 SRI SAI GRAMIN BIGAR SHETI SAHAKARI SANSTHA A.Y.2007-08 7. THE PRIMARY CO-OPERATIVE BANK IS TREATED AS CO-OPERATIVE BANK IN VIEW OF CL. (CCI) OF SEC 5 OF THE B. R. ACT, 1949. DEFIN ITION OF PRIMARY CO-OPERATIVE BANK IS GIVEN IN CL. (CCV) OF SEC. 5 OF B. R. ACT, 1949, WHICH READS AS UNDER; P RIMARY CO-OPERATIVE BANK MEANS A CO-OPERATIVE SOCIETY O THER THAN A PRIMARY AGRICULTURAL CREDIT SOCIETY (I) THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF WHICH IS THE TRANSACTIONS OF BANKING BUSINESS; (II) THE PAID-UP SHARE CAPITAL AND RESERVES OF WHICH ARE NO T LESS THAN ONE LACK OF RUPEES; AND A. THE BY-LAWS OF WHICH DO NOT PERMIT ADMISSION OF ANY O THER CO- OPERATIVE SOCIETY AS A MEMBER: PROVIDED THAT THIS SUB-CLAUSE SHALL NOT APPLY TO THE A DMISSION OF CO- OPERATIVE BANK AS A MEMBER BY REASON OF SUCH CO-OPER ATIVE BANK SUBSCRIBING TO SHARE CAPITAL OF SUCH CO-OPERATIVE SOCI ETY OUT OF FUNDS PROVIDED BY STATE GOVERNMENT FOR THE PURPOSE. ON CAREFUL PERUSAL OF ABOVE DEFINITION IT IS SEEN THAT BASIC MANDATE ANY CO-OPERATIVE SOCIETY TO COVER IN DEFINITION OF PRIMAR Y CO-OPERATIVE BANK IS THAT ITS PRIMARY OBJECT OR PRINCIPAL BUSINESS SHOULD BE TRANSACTIONS OF BANKING BUSINESS. THE TERM BANKING IS DEFINED IN B. R. ACT AND AS PER SAID DEFINITION THERE IS NO RESTRICTI ON THAT DEPOSITOR SHOULD BE MEMBER OF SAID SOCIETY BUT IT IS PUBLIC AT LARGE WITH WHOM BUSINESS TRANSACTIONS CAN BE CARRIED OUT. OTHER TWO CONDIT IONS AS MENTIONED IN CLS.(II) &(III) ARE ON FULFILLING FIRST CON DITION GIVEN IN CL.(I). IN PRESENT CASE NOTHING IS ON RECORD TO SUGGEST THAT ALL THRE E CONDITIONS ARE FULFILLED TO HOLD THAT ASSESSEE WHICH IS A CO-OPERATIVE SOCIETY IS A PRIMARY CO-OPERATIVE BANK 8. IT IS PERTINENT TO NOTE HERE THAT THE DEFINIT ION OF THE CO-OPERATIVE CREDIT SOCIETY IS GIVEN IN CLAUSE (CCII) OF SEC. 5 WHICH READS AS UNDER : CO-OPERATIVE CREDIT SOCIETY MEANS A CO-OPERATIVE SO CIETY, THE PRIMARY OBJECT OF WHICH IS TO PROVIDE FINANCIAL ACCOMMODATION TO ITS MEMBERS AND INCLUDES A CO-OPERATIVE LAND MORTGAGE BANK; 9. THE BANKING REGULATION ACT, 1949 DEFINES OF CO-OPERATIVE BANK IN CL.(CCI) OF SEC. 5 (AS INSERTED BY SEC. 56 OF THE SAID ACT) AND CO-OPERATIVE CREDIT SOCIETY IS NOT INCLUDED BUT ITS IDENTITY IS KEPT SE PARATE BY WAY OF INDEPENDENT DEFINITION IN VIEW OF CLAUSE (CCII) OF SEC. 5 OF TH E BANKING REGULATION ACT WHICH DEFINES WHAT IS MEANING OF CREDIT CO-OPERATIVE SOC IETY. ON PLAIN READING OF THE BANKING REGULATION ACT, 1949, NOWHERE IT IS SUG GESTED THAT THE TERM CO- OPERATIVE BANK ALSO INCLUDES CO-OPERATIVE CREDIT SOCIETY ALSO. MEANING OF ANY TERM OR EXPRESSION IS TO BE ASCERTAINED IN THE CONTEXT OF PROVISIONS OF REFERRED ACT. AS PER SUB-SEC. (4) OF SEC. 80P OF TH E I. T. ACT, CO-OPERATIVE BANK MEANS STATE CO-OPERATIVE BANK, A CENTRAL CO-OPERATI VE BANK AND A PRIMARY CO-OPERATIVE BANK. IT IS SEEN THAT CO-OPERATIVE BAN K IS DEPRIVED OF THE BENEFIT OF THE DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. AS PER THE INTERPRETATION GIVEN BY THE AO, ASSESSEE CO-OPERATIVE CREDIT SOCIETY PARTAK ES THE CHARACTER OF THE PRIMARY CO-OPERATIVE BANK AND AS THE PRIMARY CO-OPER ATIVE BANK IS INCLUDED IN THE DEFINITION OF THE CO-OPERATIVE BANK AND HENC E, IS NOT ENTITLED TO THE 5 ITA NO. 648/PN/2011 SRI SAI GRAMIN BIGAR SHETI SAHAKARI SANSTHA A.Y.2007-08 BENEFITS OF SEC. 80P(2)(A)(I) OF I. T. ACT. IN OUR OPINION, THIS IS NOT THE CORRECT INTERPRETATION. IT IS WELL SETTLED PRINCIPLE IN TH E INTERPRETATION OF THE TAXING PROVISIONS THAT THE SAME ARE TO BE STRICTLY CONST RUED AND THERE IS N ROOM FOR ANY INTENDMENT. THERE IS NO PRESUMPTION AS TO TAX.N OTHING IS TO BE READ OR NOTHING IS TO BE IMPLIED. ONE HAS TO FAIRLY LOOK IN TO LANGUAGE USED BY THE PARLIAMENT. THE PARLIAMENT HAS ADOPTED THE DEFINIT ION OF THE CO-OPERATIVE BANK BY REFERING THE SAME AS GIVEN IN THE BANKING REGULATION ACT, 1949. IT IS CALLED LEGISLATION BY REFERENCE AND WE HAVE TO G IVE THE STRICT INTERPRETATION WHILE INTERPRETING THE EFFECT OF SUB-SEC. (4) TO S EC. 80 P. IN OUR OPINION, CO- OPERATIVE CREDIT SOCIETY IS DISTINCT AND SEPARATE F ROM THE CO-OPERATIVE BANK NOR IT CAN BE SAID AS A PRIMARY CO-OPERATIVE BANK W ITHIN THE MEANING OF BANKING REGULATION ACT, 1949. HENCE, THE ASSESSEEEE BEING A CO-OPERATIVE CREDIT SOCIETY IS ENTITLED FOR DEDUCTION U/S. 80 P (2)(A)(I) OF THE ACT. WE ACCORDINGLY UPHOLD THE ORDER OF THE LD CIT(A). WE, THEREFORE, FIND NO REASON TO TAKE THE DIFFERENT VIEW, BUT SUPPORT THE ORDER OF THE CIT(A). WE, ACCORDINGLY, CONFIRM THE ORDER OF CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 5. IN THE LIGHT OF THE DECISION IN THE CASE OF JAN KALYAN NAGARI SAHAKARI PAT SANSTHA LTD. (SUPRA), WE FIND NO REASO N TO TAKE THE DIFFERENT VIEW ON THE ISSUE WHETHER THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT. ACCORDINGLY, THE ORDER OF THE LD CIT(A) IS CONFIRMED. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 23RD NOVEMBER 2012. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (R.S.PADVEKAR ) JUDICIAL MEMBER PUNE, DATED THE 23RD NOVEMBER, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT, AURANGABAD 4. THE CIT(A)- AURANGABAD 5. THE D.R. B BENCH, PUNE 6. GUARD FILE /- TRUE COPY-/ 6 ITA NO. 648/PN/2011 SRI SAI GRAMIN BIGAR SHETI SAHAKARI SANSTHA A.Y.2007-08 BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE