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

ITA 746/COCH/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8493 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 18-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A DHANARAJ
• Assessee Lawyers: K N VALSAN
• Keywords: Question of law; Competent authority

Judgement Text

13 APPEALS 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN (SMC) BEFORE SHRI B P JAIN , ACCOUNTANT MEMBER ITA NO S 86 & 88/COCH/2014 ( ASST YEAR S 2009 - 10 & 10 - 11 ) THE EZHUPUNNA SERVICE COOP BANK LTD NO.A 953 EZHUPUNNA PO CHERTHALA ALAPPUZHA 688 548 PA N NO . AAABT2580J VS THE INCOME TAX OFFICER WARD 4 ALAPPUZHA ( APPELLANT) (RESPONDENT) ASSESSEE BY SH K N VALSAN REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 22 ND JUNE 2016 DATE OF PRONOUNCEMENT 22 ND JUNE 2016 ITA NO S 691 TO 693/COCH/2013 ( AS ST YEARS 2007 - 08 TO 2009 - 10 ) THE KADANNAPPALLI PANAPPUZHA SERVICE COOP BANK LTD KADANNAPPALLI KANNUR 670 501 PA N NO. AAAAK6740Q VS THE INCOME TAX OFFICER WARD 1 KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY SH GEORGE THOMAS REVENUE BY SH A DHANARA J, SR DR DATE OF HEARING 22 ND JUNE 2016 DATE OF PRONOUNCEMENT 22 ND JUNE 2016 ITA NO 694/COCH/2013 ( ASST YEAR 2007 - 08 ) THE MOKERI SERVICE COOP BANK LTD NO.F 1463 PO PATHAYAKUNNU KANNUR DIST PA N NO AAMFM5490J VS THE INCOME TAX OFFICER WARD 2 KANNU R ( APPELLANT) (RESPONDENT) ASSESSEE BY SH GEORGE THOMAS REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 22 ND JUNE 2016 DATE OF PRONOUNCEMENT 22 ND JUNE 2016 13 APPEALS 2 ITA NO 696/COCH/2013 ( ASST YEAR 2007 - 08 ) THE CHITTARIPARAMA SERVICE COOP BANK LTD CHITTARIPARAMBA KANNUR 670 650 PA N NO AABAC4156F VS THE INCOME TAX OFFICER WARD 2 KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY SH GEORGE THOMAS REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 22 ND JUNE 2016 DATE OF PRONOUNCEMENT 22 ND JUNE 2016 ITA NO 69 7 /COCH/2013 ( ASST YEAR 2010 - 11 ) THE KUNHIMANGALAM SERVICE COOP BANK LTD NO. C 4682 KUNHIMANGALAM KANNUR 670 309 PA N NO AAAAK6560A VS THE INCOME TAX OFFICER WARD 1 KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY SH GEORGE THOMAS REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 22 ND JUNE 2016 DATE OF PRONOUNCEMENT 22 ND JUNE 2016 ITA NO S 745 TO 747 /COCH/2013 ( ASST YEAR 2007 - 08 TO 2009 - 10 ) THE MADAI SERVICE COOP BANK LTD VENGARA PO KANNUR 670 305 PA N NO AAAJM1064A VS THE I NCOME TAX OFFICER WARD 1 KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY SH VEDANGA R PRABHU REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 22 ND JUNE 2016 DATE OF PRONOUNCEMENT 22 ND JUNE 2016 13 APPEALS 3 ITA NO S 800 & 801/COCH/ 2013 ( ASST YEAR 200 8 - 09 & 2 009 - 10 ) M/S KUTTIKKAKAM SERVICE COOP BANK LTD VENGARA PO KUTTIKKAKAM PO KANNUR 670 663 PA N NO AA AAK4614M VS THE INCOME TAX OFFICER WARD 1 KANNUR ( APPELLANT) (RESPONDENT) ASSESSEE BY SH VEDANGA R PRABHU REVENUE BY SH A DHANARAJ, SR DR DATE OF HEARING 22 ND JUNE 2016 DATE OF PRONOUNCEMENT 22 ND JUNE 2016 ORDER PER B P JAIN, AM : THESE ARE 13 APPEALS BY DIFFERENT ASSESSEE ARISE OUT OF THE SEPARATE ORDERS OF THE CIT(A) AS PER THE DETAILS GIVEN BELOW: SL.NO. ITA NO. NAME OF THE ASSESSEE CIT(A )S ORDER DATE 1 - 2 86 & 88/COCH/2014 THE EZHUPUNNA SER COOP SOCIETY BANK LTD 03.12.2013 3 - 5 691 TO 693/COCH/2013 THE KADANNAPPALLI PANAPPUZHA SERVICE COOP BANK LTD 22 . 08.2013 6 694/COCH/2013 THE MOKERI SERVICE COOP BANK LTD 30.08.2013 7 696/COCH/2013 THE CHITTARIPARAMA SERVICE COOP BANK LTD 30.08.2013 8 697/COCH/2013 THE KUNHIMANGALAM SERVICE COOP BANK LTD 30.08.2013 9 - 11 745 TO 747/COCH/2013 THE MADAI SERVICE COOP BANK LTD 30.08.2013 12 - 13 800 & 801/COCH/2013 M/S KUTTIKKAKAM SERVICE COOP BANK LTD 30.08.2013 2 SINCE COMMON ISSUE IS INVOLVED IN ALL THESE APPEALS; THEREFORE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 13 APPEALS 4 3 THE SOLITARY ISSUE THAT WAS ARGUED IS WHETHER THE CIT(A) IS JUSTIFIED IN CONFIRMING THE A CTION 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 KERALA COOPERATIVE SOCIETIES ACT, 196 9. 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). 4 .1 THE ASSESSEE BEING AGGRIEVED IS IN APPEAL BEFORE US. THE LD AR SUBMITTED THAT THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSE SSEE 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). 4 .2 THE LD DR WAS UNABLE TO CONTROVERT THE ABOVE SUBMISSIO NS OF THE ASSESSEE. 13 APPEALS 5 5 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 HELD THAT THE PRIMARY AGRICULTURAL CREDIT SOC IETY 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 PRIMARY AGRICULTURAL CREDIT SOCIETY? 5 .1 IN CONSIDERING TH E 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 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 S O 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 EXERCISE BY THE PARLIAMENT RECOGN I SING THE PREDOMI NANCE 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 ACT , I T HAS NECESSAR IL Y TO BE HELD THAT THE P RINCIPAL 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 SOCIET IES 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 SU CH MATTER RELATING TO SUCH APPLICANTS. 13 APPEALS 6 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 - OPERA TIVE 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 APPELLANTS ARE ENTITLED TO EXEMPTION FROM THE PR OVISIONS 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 TRIBUN AL 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 ACT; AND CLASSIFIED SO, UNDER THAT ACT, INCLUD ING THE APPELLANTS ARE ENTITLED TO SUCH EXEMPTION. 5 .2 IN ALL THESE C ASE S BEFORE ME, THE CERTIFICATE OF REGISTRATION OF THE ASSESSEE UNDER THE KERALA COOPERATIVE SOCIETIES ACT AND THE BYE - LAWS ARE PLACED ON RECORD. IT IS CLEAR FROM THE PERUSAL OF T HE SAME THAT THE ASSESSEE S, IN ALL THESE CASES, ARE PRIMARY AGRICULTURAL CREDIT SOCIET IES AND PROVIDING AGRICULTURAL CREDIT FACILITIES TO ITS MEMBERS. THE HONBLE JURISDICTIONAL HIGH COURT, IN THE ABOVE CITED JUDGMENT HAS HELD THAT SUCH SOCIETIES ARE ENTIT LED 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), I ALLOW THE APPEAL S OF ALL THE ASSESSEE S MENTIONED ABOVE . IT IS ORDERED ACCORDINGLY. 13 APPEALS 7 6 IN THE RESULT, THE APPEALS FILED BY ALL THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF JUNE 2016 SD/ - ( B P JAIN ) ACCOUNTANT MEMBER COCHIN: DATED 22 ND JUNE 2016 R AJ* COPY TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT, 5 . DR 6 . GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, COCHIN