M/sKalakkode Service Co-op Bank ltd, Kollam V. ITO, Kollam

ITA 679/COCH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61558 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-07-2012
• Assessment Year: misc
• Appeal Filed On: 15-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADUMNA KUMA SINGH
• Assessee Lawyers: VEDANGA R PRABHU

Judgement Text

1 ITA NO. 52 & 679/COCH/2010 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 52/COCH/2011 (ASSESSMENT YEAR 2007-08) ITO, WD.1 VS M/S KALAKKODE SERVICE CO-OP. KOLLAM BANK LTD, NO.1194, KALLAKODE PO PARAVOOR, KOLLAM 691 302 PAN : AAAAT1143Q (APPELLANT) (RESPONDENT) I.T.A NO. 679/COCH/2010 (ASSESSMENT YEAR 2007-08) M/S KALAKKODE SERVICE CO-OP.BANK LTD VS ITO, WD.1 KOLLAM 691 302 KOLLAM (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VEDANGA R PRABHU REVENUE BY : SHRI PRADUMNA KUMA SINGH DATE OF HEARING : 24-07-2012 DATE OF PRONOUNCEMENT : -07-2012 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE REVENUE AND THE ASSESSEE A RE DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX(A)-I, TRIVANDRUM DATE D 05-10-2010 FOR THE ASSESSMENT YEAR 2007-08. SINCE BOTH THE APPEALS ARISE OUT OF THE VERY SAME ORDER OF COMMISSIONER OF INCOME-TAX(A), WE HEARD THEM TOGETHER AND DISPOS E OF THE SAME BY THIS COMMON ORDER. 2 ITA NO. 52 & 679/COCH/2010 2. WE HEARD SHRI VEDANGA R PRABHU, THE LD.REPRESENT ATIVE FOR THE ASSESSEE, WHO SUBMITTED THAT THE ASSESSEE IS A PRIMARY AGRICULTUR AL CREDIT SOCIETY ENGAGED IN THE BUSINESS OF BANKING. THE ASSESSEE CLAIMED DEDUCTIO N U/S 80P(2) OF THE ACT. HOWEVER, THE LOWER AUTHORITIES DISALLOWED THE CLAIM OF THE A SSESSEE ON THE GROUND THAT THE ASSESSEE IS A BANK AND NOT A CO-OPERATIVE SOCIETY. REFERRING TO THE PAPER BOOK PAGE NO.7, THE LD.REPRESENTATIVE SUBMITTED THAT THE CO-O PERATIVE DEPARTMENT CERTIFIED THAT THE ASSESSEE IS A REGISTERED PRIMARY AGRICULTURAL C REDIT SOCIETY. THEREFORE, IT IS NOT CORRECT TO SAY THAT THE ASSESSEE IS ONLY A BANK AND NOT A SOCIETY. ON A QUERY FROM THE BENCH WHETHER THIS CERTIFICATE WAS PRODUCED BEFORE THE ASSESSING OFFICER, THE LD.REPRESENTATIVE VERY FAIRLY SUBMITTED THAT THIS C ERTIFICATE WAS ONLY PRODUCED BEFORE THE COMMISSIONER OF INCOME-TAX(A). HOWEVER, IT WAS NOT CONSIDERED EVEN BY THE COMMISSIONER OF INCOME-TAX(A). 3. ON THE CONTRARY, SHRI PRADUMNA KUMAR SINGH, THE LD.DR SUBMITTED THAT THE ACTIVITY OF THE ASSESSEE IS IN THE NATURE OF BANKIN G; THEREFORE, THE LOWER AUTHORITIES FOUND THAT THE ASSESSEE IS A BANK AND NOT A SOCIETY . THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT THE LOWER AUTHORITIES HAD NO OCCASIO N TO CONSIDER THE CERTIFICATE ISSUED BY THE CO-OPERATIVE DEPARTMENT. SINCE IT IS NOT A SOCIETY, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80P(2) OF THE ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE OBSERVATION MADE BY THE COMMISSIONER OF INCOME-TAX(A) AT PAGE 3, PARAGRAPH 4.2 IT APPEARS T HAT THE CERTIFICATE ISSUED BY THE JOINT REGISTRAR OF CO-OPERATIVE, COPY OF WHICH IS AVAILAB LE AT PAGE 7 OF THE PAPER BOOK, IS FILED BEFORE THE COMMISSIONER OF INCOME-TAX(A). HOWEVER, THE COMMISSIONER OF INCOME- TAX(A) WITHOUT CONSIDERING THE SAME FOUND THAT THE ACTIVITY OF THE ASSESSEE IS IN THE NATURE OF GIVING FINANCIAL ASSISTANCE TO VARIOUS SE CTIONS OF THE PEOPLE. THE COMMISSIONER OF INCOME-TAX(A) HAS ALSO FOUND THAT I N THE BYE LAW IT IS NOT STATED THAT THE ASSESSEE WAS A PRIMARY AGRICULTURAL CO-OPERATIV E SOCIETY. THE ASSESSEE HAS FILED THE 3 ITA NO. 52 & 679/COCH/2010 COPY OF THE BYE LAW, THE TRANSLATED VERSION OF WHIC H IS AVAILABLE AT PAGE 12 OF THE PAPER BOOK. IT APPEARS THAT THE COMMISSIONER OF INCOME-T AX(A) HAS NOT TAKEN INTO CONSIDERATION THE OBJECT CONTAINED IN THE BYE LAW A S IS AVAILABLE AT PAGE 12 OF THE PAPER BOOK. IT IS ALSO AN ADMITTED FACT THAT THE ACCOUNT S OF THE ASSESSEE WERE AUDITED BY THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES. IT IS N OT KNOWN IN CASE THE ASSESSEE WAS NOT A CO-OPERATIVE SOCIETY WHAT CONSTITUTED FOR THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES TO AUDIT THE ACCOUNTS OF THE ASSESSEE. IT IS ALSO NOT CLEAR WHETHER THE ASSESSEE WAS GIVEN THE LICENCE / PERMISSION BY RBI TO CARRY ON THE BAN KING ACTIVITY UNDER BANKING REGULATIONS ACT OR NOT. IN THESE FACTUAL CIRCUMSTA NCES, THIS TRIBUNAL IS OF THE OPINION THAT THE MATTER NEEDS TO BE CONSIDERED IN THE LIGHT OF THE CERTIFICATE ISSUED BY THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, WHICH IS AVAIL ABLE AT PAGE 7 OF THE PAPER BOOK. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ISSUE OF DEDUCTION U/S 80P(2) IS REMITTED BACK TO THE FILE OF THE ASSE SSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 5. NOW COMING TO THE DEPARTMENTAL APPEAL IN ITA NO. 52/COCH/2011 THE ONLY ISSUE ARISES FOR CONSIDERATION IS REGARDING COMPUTATION O F INCOME. THE LD.DR SUBMITTED THAT THE ASSESSING OFFICER COMPUTED THE INCOME ON THE BA SIS OF THE AUDIT REPORT OF THE CO- OPERATIVE DEPARTMENT ON RECEIPT AND PAYMENT METHOD AS AGAINST THE REAL INCOME AND REAL EXPENDITURE METHOD ON WHICH THE RETURN OF INCO ME WAS FILED. ACCORDING TO THE LD.DR SINCE THE ACCOUNTS OF THE ASSESSEE WAS SUBJEC TED TO AUDIT BY CO-OPERATIVE DEPARTMENT, THE CORRECT METHOD IS TO COMPUTE THE IN COME ON THE BASIS OF THE SAID AUDIT REPORT. WE HEARD THE LD.REPRESENTATIVE FOR THE ASS ESSEE ALSO. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE MAIN ISSUE OF DE DUCTION U/S 80P(2) IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATI ON. THEREFORE, THIS TRIBUNAL IS OF THE OPINION THAT THE METHOD OF COMPUTATION OF INCOME AL SO NEEDS TO BE RECONSIDERED BY 4 ITA NO. 52 & 679/COCH/2010 ASSESSING OFFICER IN THE LIGHT OF MATERIAL AVAILABL E ON RECORD FOR THE SAKE OF CONSISTENCY. ACCORDINGLY, THE ORDERS OF LOWER AUTHORITY ARE SET ASIDE IN RESPECT OF COMPUTATION OF INCOME AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECOMPUTE THE INCOME AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE AND IN ACCORDANCE WITH LAW. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AND THE REVENUE STAND ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH JULY, 2012. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 27 TH JULY, 2012 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH