The Kappad Service Co-op Bank Ltd, Kannur V. ITO, Kannur

ITA 683/COCH/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8556 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 07-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: DR K P PRADEEP
• Keywords: Question of law; Competent authority

Judgement Text

ITA NOS 683 TO 685/COCH/2013 & ITA NO.327/COCH/20 12 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH (SMC) KOCHI BEFORE SH RI B P JAIN , ACCOUNTANT MEMBER ITA NO S . 683 TO 685/COCH/2013 ( A SST YEAR S 2007 - 08,08 - 09 & 2000 - 11 ) & ITA NO.327/COCH/2012 (ASST YEAR 2009 - 10) THE KAPAD SERVICE COOP BANK LTD PO KAPP AD KANNUR DIST PIN 670006 VS THE INCOME TAX OFFICER WARD 1 KANNUR ( APPELLANT) (RESPONDENT) PAN NO. AABAK4922D ASSESSEE BY DR K P PRADEEP REVENUE BY SH A DHANARAJ SR DR DATE OF HEARING 21 ST JUNE 2016 DATE OF PRONOUNCEMENT 21 ST JUNE 2016 OR D ER PER B P JAIN, AM : THE APPEALS IN ITA NO. 683 TO 685/COCH/2013 FILED BY THE ASSESSEE ARISE OUT OF THE CONSOLIDATED ORDER DATED 30 TH AUG 2013 OF THE CIT(A), KOZHIKODE FOR THE AYS 2007 - 08 TO 2010 - 11 AND THE APPEAL IN ITA NO. 327/COCH/2012 ARISES OUT OF THE ORDER DATED 21.9.2012 OF THE CIT(A), KOZHIKODE ,FOR THE AY 2009 - 10. THE ISSUES INVOLVED IN ALL THESE APPEALS ARE COMMON AND THEREFORE THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. ITA NOS 683 TO 685/COCH/2013 & ITA NO.327/COCH/20 12 2 2 FIRST I SHALL TAKE UP FOR A DJUDICATION THE APPEAL IN ITA NO.683/COCH/2013 FOR THE AY 2007 - 08 AND THE ORDER HEREIN BELOW SHALL BE IDENTICALLY APPLICABLE FOR ALL THE OTHER APPEALS FOR THE ASSESSMENT YEARS MENTIONED ABOVE. ITA NO. 683/COCH/2013 (AY 2007 - 08) 3 THE SOLITARY ISSUE TH AT WAS ARGUED IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ACTION OF THE AO IN DENYING THE DEDUCTION U/S 80P(2) OF THE ACT. 4 BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS: THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UN DER THE KERALA COOPERATIVE SOCIETIES ACT, 1969. IT IS ENGAGED IN THE BUSINESS OF PROVIDING AGRICULTURAL CREDIT TO ITS MEMBERS. THE CLAIM OF DEDUCTION U/S 80P (2) WAS DENIED BY THE AO FOR THE REASON THAT THE ASSESSEE IS PRIMARILY ENGAGED IN THE BUSINESS OF BANKING AND IN VIEW OF SECTION 80P(4) OF THE ACT, THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 80P(2) OF THE ACT. THE VIEW TAKEN BY THE AO WAS CONFIRMED BY THE CIT(A). 5 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD AR SUBMITTED THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE RECENT JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE CHIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS IN ITA NO.212 OF 2013 ( JUDGMENT DATED 15 TH FEBRUARY 2016). ITA NOS 683 TO 685/COCH/2013 & ITA NO.327/COCH/20 12 3 5 .1 THE LD DR W AS UNABLE TO CONTROVERT THE ABOVE SUBMISSIONS OF THE ASSESSEE. 6 I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD.. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE CHIRAKKAL SERVICE COOPERATIVE BANK LTD & OTHERS (SUPRA) HAS H ELD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT, 1969 IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2). THE HONBLE HIGH COURT WAS CONSIDERING THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: A) WHETHER O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE UNDER CONSIDERATION, THE TRIBUNAL IS CORRECT IN LAW IN DECIDING AGAINST THE ASSESSEE, THE ISSUE REGARDING ENTITLEMENT FOR EXEMPTION UNDER SECTION 80P, IGNORING THE FACT THAT THE ASSESSEE IS A PRIMARY AGRICUL TURAL CREDIT SOCIETY? 6 .1 IN CONSIDERING THE ABOVE QUESTION OF LAW, THE HONBLE HIGH COURT RENDERED THE FOLLOWING FINDINGS: 15. APPELLANTS IN THESE DIFFERENT APPEALS ARE INDISPUTABLY SOCIETIES REGISTERED UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969, FOR SORT, KCS ACT AND THE BYE - LAWS OF EACH OF THEM, AS MADE AVAILABLE TO THIS COURT AS PART OF THE PAPER BOOKS, CLEARLY SHOW THAT THEY HAVE BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE PROVISIONS OF THAT AC T. THE PARLIAMENT, HAVING DEFINED THE TERM 'CO - OPERATI VE SOCIETY' FOR THE PURPOSES OF THE BR ACT WI TH REFERENCE TO, AMONG OTHER THINGS, THE REGISTRATION OF A SOCIETY U N DER ANY STATE LAW RELATING TO CO - OPERATIVE SOCIETIES FOR THE TIME BEING; IT CANNOT BUT BE TAKEN THAT THE PURPOSE OF THE SOCIETIES SO REGISTERED UNDER THE STATE LAW AND ITS OBJECTS HAVE TO BE UNDERSTOOD AS THOSE WHICH HAVE BEEN APPROVED BY THE COMPETENT AUTHORITY UNDER SUCH STATE LAW. THIS, WE VISUALISE AS DUE RECIPROCATIVE LEGISLATIVE EXERCI SE BY THE PARLIAMENT RECOGN I SING THE PREDOMINANCE OF DECISIONS RENDERED UNDER THE RELEVANT STATE LAW. IN TH I S VIEW OF THE MATTER, ALL THE APPELLANTS HAV I NG BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CRED I T SOC I ET I ES B Y THE COMPETENT AUTHOR I TY UNDE R TH E KCS A CT , I T ITA NOS 683 TO 685/COCH/2013 & ITA NO.327/COCH/20 12 4 HAS NECESSAR IL Y TO BE HELD THAT THE PRINCIPAL OBJECT OF SUCH SOCIETIES IS TO UNDERTAKE AGR I CULTURAL CREDIT ACTIVITIES AND TO PROVIDE LOANS AND ADVANCES FOR AGRICULTURAL PURPOSES , THE RATE ' OF INTEREST ON SUCH LOANS AND ADVANCES TO BE AT THE RATE FI XED BY THE REGISTRAR OF CO - OPERATIVE SOCIETIES UNDER THE KCS ACT AND HAV I NG I TS AREA OF OPERATION CONFINED TO A VILLAGE, PANCHAYAT OR A MUNICIPALITY. THIS IS THE CONSEQUENCE OF THE DEFINITION CLAUSE IN SECTION 2(OAA) OF THE KCS ACT. THE AUTHORITIES UNDER THE IT ACT CANNOT PROBE INTO ANY ISSUE OR SUCH MATTER RELATING TO SUCH APPLICANTS. 16. THE POSITION OF 1 AW BEING AS ABOVE WITH REFERENCE TO THE STATUTORY PROVISIONS, THE APPELLANTS HAD SHOWN TO THE AUTHORITIES AND THE TRIBUNAL THAT THEY ARE PRIMARY AGRICU LTURA L CREDIT SOCIETIES IN TERMS OF CLAUSE (CCIV) OF SECTION 5 OF THE BR ACT, HAVING REGARD TO THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF EACH OF THE APPELLANTS. IT IS ALSO CLEAR FROM THE MATERIALS ON RECORD THAT THE BYE - LAWS OF EACH OF THE APPELLANTS DO . NOT PERMIT ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS MEMBER, EXCEPT MAY BE, IN ACCORDANCE WITH THE PROVISO TO SUB - CLAUSE 2 OF SECTION 5(CCIV) OF THE BR ACT. THE DIFFERENT ORDERS OF THE TRIBUNAL WHICH ARE IMPEACHED IN THESE APPEALS DO NOT CONTAIN ANY FINDING OF FACT TO THE EFFECT THAT THE BYE - 1AWS OF ANY OF THE APPELLANT OR ITS CLASS I FICATION BY THE COMPETENT AUTHORITY UNDER THE KCS ACT LS ANYTHING DIFFERENT FROM WHAT WE HAVE STATED HEREIN ABOVE. FOR THIS REASON, IT CANNOT BUT BE HELD THAT THE APPEL LANTS ARE ENTITLED TO EXEMPTION FROM THE PROVISIONS OF SECTION 80P OF THE IT ACT BY VIRTUE OF SUB - SECTION 4 OF THAT SECT; ON. IN THIS VIEW OF THE MATTER, THE APPEALS SUCCEED. 17. IN THE LIGHT OF THE AFORESAID, WE ANSWER SUBSTANTIA 1 QUESTION 'A' IN FAVOU R OF THE APPELLANTS AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE REGARDING THE ENTITLEMENT OF EXEMPT I ON UNDER SECTION 80P AGAINST THE APPELLANTS. WE HOLD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETIES, REGISTERED AS SUCH UNDER THE KCS AC T; AND CLASSIFIED SO, UNDER THAT ACT, INCLUDING THE APPELLANTS ARE ENTITLED TO SUCH EXEMPTION. 6 .2 IN THE INSTANCE CASE, THE CERTIFICATE OF REGISTRATION OF THE ASSESSEE UNDER THE KERALA COOPERATIVE SOCIETIES ACT AND THE BYE - LAWS ARE PLACED ON RECOR D. IT IS CLEAR FROM THE PERUSAL OF THE SAME THAT THE ASSESSEE IS PRIMARY AGRICULTURAL CREDIT SOCIETY AND PROVIDING AGRICULTURAL CREDIT FACILITIES TO ITS MEMBERS. THE HONBLE JURISDICTIONAL HIGH COURT, IN THE ABOVE CITED JUDGMENT HAS HELD THAT ITA NOS 683 TO 685/COCH/2013 & ITA NO.327/COCH/20 12 5 SUCH SOCIETIE S ARE ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P(2) OF THE ACT. IN VIEW OF THE ABOVE FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), WE ALLOW THE APPEAL OF THE ASSESSEE. IT IS ORDERED ACCORDINGLY. ITA NO. 684 & 685/COCH/2013 & ITA NO.327/COC H/2012: 7 SINCE THE ISSUE IN ALL THE APPEALS IS IDENTICAL; THEREFORE, MY ORDER IN ITA NO. 683/COCH/2013 IS APPLICABLE IN ALL THESE APPEALS. THEREFORE, ALL THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. 8 IN THE RESULT , ALL THE APPEAL S FILED BY THE ASSESS EE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21ST DAY OF JUNE 2016 . SD/ - ( B P JAIN ) ACCOUNTANT MEMBER COCHIN: DATED 21 ST , JUNE 2016 RAJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT , COCHIN