M/s.Kannapuram Service Co-op Bank Ltd, Kannur V. ITO, Kannur

ITA 742/COCH/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8455 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 18-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Keywords: Question of law; Competent authority

Judgement Text

7 02 TO 7 0 5 /COCH/2013 711 TO 714/COCH/2013 7 06 & 707 /COCH/2013 742 TO 744/C OCH /2013 1 IN THE INCOME TAX APPEL L A TE T R IBUNAL COCHIN BENCH KOCHI BEFORE S /S H RI B P JAIN , A M & GEOR GE GEORGE K, JM ITA NO S 7 02 TO 7 0 5 /COCH/2013 ( A SST YEA S 2007 - 08 TO 2010 - 11 ) & ITA NOS 711 TO 714/COCH/2013 (ASST YEARS 2007 - 08 TO 2010 - 11) THE PAPPINISSERY SERVICE CO - OP BANK LTD NO. LL 121 PAPPINISSERY PO KANNUR 670 561 PAN NO . AAAJT1506G VS THE INCOME TAX OFFICER WARD 1, KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY SH GEORGE THOMAS REVENUE BY SH A DHANARAJ, S R DR DATE OF HEARING 4 TH JULY 2016 DATE OF PRONOUNCEMENT 4 TH , JU LY 2016 ITA NOS 7 06 & 707 /COCH/2013 (ASST YEARS 2007 - 08 & 2010 - 11) THE KANNADIPARAMBA SERVICE CO - OP BANK L T D KANNADIPARAMBA PO KANNUR 670 601 PAN NO . AA BAT1717F VS THE INCOME TAX OFFICER WARD 1, KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY SH GEORGE THOMAS REVENUE BY SH A DHANARAJ, S R DR DATE OF HEARING 4 TH JULY 2016 DATE OF PRONOUNCEMENT 4 TH , JU LY 2016 7 02 TO 7 0 5 /COCH/2013 711 TO 714/COCH/2013 7 06 & 707 /COCH/2013 742 TO 744/C OCH /2013 2 ITA NOS 7 42 TO 744 /COCH/2013 (ASST YEARS 2007 - 08 , 08 - 09 & 2010 - 11 ) THE KANNAPURAM SERVICE CO - OP BANK L T D PO CHERUKUNNU KANNUR 670 301 PAN NO . AA BAT 3964 G VS THE INCOME TAX OFFICER WARD 1, KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY SH RUPESH PA I REVENUE BY SH A DHANARAJ, S R DR DATE OF HEARING 4 TH JULY 2016 DATE OF PRONOUNCEMENT 4 TH , JU LY 2016 OR D ER PER BENCH : THESE ARE 13 APPEALS FILED BY DIFFERENT ASSESSEES ARISE OUT OF THE SEPARATE ORDERS OF THE CIT(A) AS PER THE DETAILS GIVEN UNDER: SL.NO. ITA NO. NAME OF THE ASSESSEE CIT(A)S ORDER DATE 1 - 4 5 - 8 7 02 TO 7 0 5 /COCH/2013 711 TO 714/COCH/2013 THE PAPPINISSERY SERVICE COOPERATIVE BANK LD 30.08.2013 9 - 10 7 06 & 707 /COCH/2013 THE KANNADIPARAMBA SERVICE CO - OP BANK L T D 30.08.2013 11 - 13 742 TO 744/C OCH /2013 THE KANNAPURAM SERVICE CO - OP BANK L T D 30.08.2013 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. 7 02 TO 7 0 5 /COCH/2013 711 TO 714/COCH/2013 7 06 & 707 /COCH/2013 742 TO 744/C OCH /2013 3 3 THE SOLITARY ISSUE THAT 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 A SSESSEE, IN ALL THESE APPEALS, IS A PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER 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 DENIE D 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 COUNSEL FOR THE ASSESSEE 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 CHIR AKKAL 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 7 02 TO 7 0 5 /COCH/2013 711 TO 714/COCH/2013 7 06 & 707 /COCH/2013 742 TO 744/C OCH /2013 4 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, T HE ISSUE REGARDING ENTITLEMENT FOR EXEMPTION UNDER SECTION 80P, IGNORING THE FACT THAT THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY? 6.1 IN CONSIDERING THE ABOVE QUESTION OF LAW, THE HONBLE HIGH COURT RENDERED THE FOLLOWING FINDINGS: 15. APPELL ANTS 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 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 B EEN APPROVED BY THE COMPETENT AUTHORITY UNDER SUCH STATE LAW. THIS, WE VISUALISE AS DUE RECIPROCATIVE LEGISLATIVE 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 TH E 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 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 PRO VIDE 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 AUTHORITIES UNDER THE IT ACT CANNOT PROBE INTO ANY ISSUE OR 7 02 TO 7 0 5 /COCH/2013 711 TO 714/COCH/2013 7 06 & 707 /COCH/2013 742 TO 744/C OCH /2013 5 SUCH MATTER RELATING TO SUCH APPLICANTS. 16. THE POSITION OF 1 AW BEING AS ABOVE WITH REFERENC E 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 SEC TION 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 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 QUESTION 'A' IN FAVOUR OF THE APPELLANTS AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE REGARDING THE ENTITLEMENT OF EXEMPT ION UNDER SECTION 8 0P AGAINST THE APPELLANTS. WE HOLD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETIES, REGISTERED AS SUCH UNDER 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 BYE - 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 SOCIETIE S AND PROVIDING AGRICULTURAL CREDIT FACILITIES TO ITS MEMBERS. THE HONBLE JURISDICTIONAL HIGH COURT, IN THE ABOVE CITED JUDGMENT HAS HELD THAT SUCH SOCIETIES ARE ENTITLED TO THE BENEFIT OF 7 02 TO 7 0 5 /COCH/2013 711 TO 714/COCH/2013 7 06 & 707 /COCH/2013 742 TO 744/C OCH /2013 6 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 4 TH DAY OF JU LY 2016 . SD/ - SD/ - ( GEORGE GEORGE K ) ( B P JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER COCHIN: DATED 4 TH JU LY 2016 RAJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT , 5 . DR 6 . GUARD FILE BY OR DER ASSISTANT REGISTRAR ITAT, COCHIN