The Azhikkode Service Co-op Bank Ltd, Kannur V. The ITo, Kannur

ITA 690/COCH/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8382 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-07-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTOM BOSE
• Keywords: Question of law; Competent authority

Judgement Text

ITA NOS. 688 TO 690 & 695/C/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH KOCHI BEFORE S/ SHRI B P JAIN , AM & GEORGE GEORGE K, JM ITA NO S 688 TO 690/COCH/2013 (A SST YEAR S 2007 - 08 TO 2009 - 10 ) THE AZHIKODE SER VICE COOP BANK LTD AZHIKODE KANNUR 670 009 VS THE INCOME TAX OFFICER WARD 1 KANNUR ( APPELLANT) (RESPONDENT) PAN NO. AAAAA7103M ASSESSEE BY SH GEORGE THOM A S REVENUE BY SH SHANTOM BOSE, CIT - DR DATE OF HEARING 27 TH JU LY 2016 DATE OF PRONOUNCEMENT 27 TH JU LY 2016 ITA NO S 695 /COCH/2013 (A SST YEAR S 2007 - 08 ) KANHIRODE SER VICE COOP BANK LTD KANHIRODE KANNUR 670 592 VS THE INCOME TAX OFFICER WARD 1 KANNUR ( APPELLANT) (RESPONDENT) PAN NO. AAAA K6054D ASSESSEE BY SH GEORGE THOM A S REVENUE BY SH SHANTOM BOSE, CIT - DR DATE OF HEARING 27 TH JU LY 2016 DATE OF PRONOUNCEMENT 27 TH JU LY 2016 ORDER PER BENCH ; THESE ARE FOUR APP EALS, FILED BY DIFFERENT ASSESSEES, ARISE OUT OF THE SEPARATE ORDERS OF THE CIT(A) AS PER THE DETAILS GIVEN UNDER: ITA NOS. 688 TO 690 & 695/C/2013 2 SL.NO. ITA NO. NAME OF THE ASSESSEE CIT(A)S ORDER DATE 1 - 3 688 TO 690/ C /2013 THE AZHIKODE SER VICE COOP BANK LTD 30.08.2013 4 ITA NO. 695 / C /2013 KANHIRODE SER VICE COOP BANK LTD 22.08.2013 2 SINCE COMMON ISSUE IS INVOLVED IN ALL THESE APPEALS; THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 3 THE SOLITARY ISSUE THAT IS RAISED IN ALL THESE APPEALS 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, IN ALL THESE APPEALS, IS A PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KER ALA 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). ITA NOS. 688 TO 690 & 695/C/2013 3 5 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD COUNSEL FOR THE ASSESSEE SUBMI TTED 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). 5. 1 THE LD DR WAS UNABLE TO CONTROVERT THE ABOVE SUBMISSIONS OF THE ASSESSEE. 6 WE 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 HELD 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 ON 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 P RIMARY AGRICULTURAL 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 SOCIET IES 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 ITA NOS. 688 TO 690 & 695/C/2013 4 HAVE BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE PROVISI ONS OF THAT ACT. 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 LEGI SLATIVE EXERCISE 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 U NDE R TH E KCS ACT , I T 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 FIXED 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 AUTH ORITIES 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 AGRICULTURA 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 N OT 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 APPELLANTS 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 QUESTIO N 'A' IN FAVOUR OF THE ITA NOS. 688 TO 690 & 695/C/2013 5 APPELLANTS AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE REGARDING THE ENTITLEMENT OF EXEMPT ION UNDER SECTION 80P AGAINST THE APPELLANTS. WE HOLD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETIES, REGISTERED AS SUCH UNDE R THE KCS ACT; AND CLASSIFIED SO, UNDER THAT ACT, INCLUDING THE APPELLANTS ARE ENTITLED TO SUCH EXEMPTION. 6.2 IN ALL THESE CASES BEFORE US, THE CERTIFICATE OF REGISTRATION OF ALL THESE ASSESSEES, UNDER THE KERALA COOPERATIVE SOCIETIES ACT AND THE BY E - LAWS, ARE PLACED ON RECORD. IT IS CLEAR FROM THE PERUSAL OF THE SAME THAT THE ASSESSEE IN ALL THESE APPEALS ARE PRIMARY AGRICULTURAL CREDIT SOCIETIES AND PROVIDING AGRICULTURAL CREDIT FACILITIES TO ITS MEMBERS. THE HONBLE JURISDICTIONAL HIGH COURT, IN T HE ABOVE CITED JUDGMENT HAS HELD THAT SUCH SOCIETIES 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 APPEALS OF ALL THESE ASSESSEE. IT IS ORDERED ACCORDINGLY. 7 IN THE RESULT, THE APPEALS FILED BY ALL THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27TH DAY OF JULY 2016 . SD / - SD/ - ( GEORGE GEORGE K ) ( B P JAIN ) J UDICIAL MEMBER ACCOUNTANT MEMBER COCHIN: DATED 27 TH , JULY 2016 RAJ* ITA NOS. 688 TO 690 & 695/C/2013 6 COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT, 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN