INCOME TAX OFFICER, Buldhana V. M/S RADHAKRISHNA NAGRI SAHAKARI PAT SANSTHA MARYADIT, Buldhana

ITA 75/NAG/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93412 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 13-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: SHRI
• Section: 143(3)

Judgement Text

1 ITA NO. 75/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO.75/ NAG /2014 ASSESSMENT YEAR : 2010 - 11. THE INCOME - TAX OFICER, M/S RADHAKRISHNA NAGRI KHAMGAON. V/S SAHKARI PAT SANSTHA MARYADIT, BULDANA. PAN AAATR7656R. APPELLANT. RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI PANKAJ ZAVAR. DATE OF HEARING - 23 - 06 - 2015 DATE OF PRONOUNCEMENT 26 TH JUNE, 2015. O R D E R PER SHRI MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM TH E ORDER OF LEARNED CIT(APPEALS)I, NAGPUR DATED 26 - 11 - 2013 AND THE GROUND RAISED IS AS UNDER : ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN ALLOWING THE DEDUCTION U/S 80P(2)(A)(I) OF THE ACT BY HOLDING THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY WHICH IS CONTRARY TO THE FACTS OF THE CASE HOLDING THAT THE ASSESSEE IS NOT FALLING U/S 80P(4) OF THE ACT. 2. AT THE OUTSET, WE HAVE BEEN INFORMED THAT THE ISSUE HAS RAKED UP BY THE ASSESSING OFFICER VIDE AN ORDER UNDER SECTION 143(3) DATED 21 - 12 - 2012 IN RESPECT 2 ITA NO. 75/NAG/2014 OF AN ASSESSEE WHO HAS PROVIDED FACILITY TO ITS MEMBER ONLY BUT HELD BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS FUNCTIONED AS A BANKING SOCIETY, THEREFORE, INVOKED THE PROVISIONS OF SECTION 80P(4) AND DENIED THE DEDUCTION UNDER SECTION 80P(2)(A)(I) BY HOLDING AS UNDER : O N PERUSAL OF THE ABOVE, IT IS CLEAR THAT THE ASSESSEE SOCIETY IS CARRYING OUT BANKING ACTIVITIES. CONSIDERING THE DE CISION OF HONBLE ITAT, PUNE BENCH B, PUNE IN THE CASE OF M/S JANKALYAN NAGRI SAHKARI SANSTHA REPORTED (2012) 24 TAXMAN.COM 127 (PUNE), WHEREIN IT HAS BEEN HELD THAT THE COOPERATIVE SOCIETY IS TO BE CONSIDERED AS CO - OPERATIVE BANK, THE SECTION 5 6(CCII), PART - V OF THE BANKING REGULATION ACT, IF IT IS PROVIDING FINANCIAL ACCOMMODATION TO ITS MEMBERS. ON PERUSAL OF THE ABOVE, IT IS SEEN THAT THE ASSESSEE SOCIETY HAS EXTENDED ITS ACTIVITIES TO THE EXTENT OF BANKING THAN THE BASIC ACTIVITY OF PROVI DING FINANCIAL ACCOMMODATION. THE FACTS DISCUSSED IN THE FORGOING PARAS PROVES THAT THE SOCIETY IS ENGAGED IN BANKING ACTIVITY. THEREFORE, NOW IT IS A QUESTION WHETHER A SOCIETY WHICH SHOULD ONLY FACILITATE FINANCIAL ACCOMMODATION TO ITS MEMBERS, IS ENT ITLE FOR THE DEDUCTION U/S 80P(2)(A)(I) OF THE I.T. ACT, 1961 WHICH IS EXTENDING ITS ACTIVITIES TO THE BANKING ALSO UNDER THE GUISE OF SOCIETY. THEREFORE, THE DEDUCTION CLAIMED U/S 80P(2)(A)(I) OF THE I.T. ACT, 1961 AT ` .24,75,941/ - IS DISALLOWED. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, LEARNED CIT(APPEALS) HAS DISCUSSED THE PROVISIONS OF THE ACT ALONG WITH THE BANKING REGULATION RULES, 1966 AND THEREAFTER ARRIVED AT THE CONCLUSION AS UNDER : AFTER CAREFULLY CONSIDE RING THE FACTS OF THE CASE, IT IS CLEAR THAT THE A.O. HAS FAILED TO APPRECIATE THE DISTINCTION BETWEEN CREDIT COOPERATIVE SOCIETY AND COOPERATIVE BANK. THE CREDIT COOPERATIVE SOCIETY IS IN THE NATURE OF CREDIT RESOURCE SOCIETY WHICH STRIVES TO OBTAIN CR EDIT FOR ITS MEMBERS WITH 3 ITA NO. 75/NAG/2014 THE OBJECTIVE OF FACILITATING CREDIT TO INDIVIDUALS WHILE COOPERATIVE BANKS ARE FULL - FLEDGED BANKING ORGANIZATIONS. IT IS ALSO NECESSARY TO NOTE THAT THE APPELLANT COOPERATIVE CREDIT SOCIETIES IS UNDER THE PURVIEW OF THE MAHAR ASHTRA COOPERATIVE SOCIETY ACT AND CANNOT CONDUCT THE BUSINESS OF BANKING AS CLAIMED BY THE A,O, WITHOUT FULFILLING THE CONDITIONS OF THE REGISTRAR OF SOCIETIES AND THE RESERVE BANK OF INDIA. THEREFORE , THE ACTION OF THE A.O. IS SNOT JUSTIFIED. THE PROV ISIONS OF SECTION 80P(4) HAVE ONLY SOUGHT TO EXCLUDE THE COOPERATIVE BANKS FROM AVAILING THE BENEFITS OF THIS DEDUCTION. THE A.OS ACTION IS, THEREFORE, NOT BASED ON THE CORRECT LEGAL POSITION. THE ASSESSING OFFICER IS, THEREFORE, DIRECTED TO ALLOW THE DEDUCTION U/S 80P OF THE INCOME TAX ACT, 1961. 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES AND AFTER CONSIDERING THE FACTS OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE IN HAND HAS ALREADY BEEN DECIDED BY SEVERAL COORDINATE BENCHES AS REFERRED BELOW : 1) ITA NO. 393/NAG/2013 & C.O.NO. 23/NAG/2013 DATED 5 TH JUNE, 2015 IN THE CASE OF ITO V/S. VISHAL NAGRI SAHAKARI SANSTHA LTD. RELEVANT PORTION REPRODUCED BELOW : 2.1 APART FROM DECISION PRONOUNCED BY RESPECTED CO - ORDINATE BENCH NA GPUR IN ASSESSEE'S OWN CASE, WE HAVE ALSO BEEN INFORMED THAT IN THE BUNCH OF CASES ITAT 'E' BENCH, NAGPUR VIDE AN ORDER DATED 1ST FEBRUARY, 2013 OF CASES OF ITAT 'E' BENCH, (AT SERIAL NO. 1, VIDE ITA NO. 68/NAG/2012 (AY 2008 - 09) IN THE CASE OF ITO VS. M/S SHREE GOPALAKRISHNA URBAN CREDIT CO - OPERATIVE SOCIETY MARYADIT, NAGPUR) & OTHERS, WHEREIN E - BENCH OF NAGPUR TRIBUNAL, WHILE GRANTING THE BENEFIT OF DEDUCTION IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, HELD AS UNDER: 'WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. WE ARE OF THE OPINION THAT ORDERS OF THE FAAS DO NOT SUFFER FROM ANY LEGAL INFIRMITY. AFTER ANALYZING THE VARIOUS PROVISIONS OF THE ACTS AND THE CIRCULARS (ISSUED BY THE RBI AND CBDT) THEY HAVE HELD 4 ITA NO. 75/NAG/2014 THAT ASSESSEES WERE NOT A CO - OPERATIVE BANKS AS ENVISAGED BY THE AOS IN THEIR ASSESSMENT ORDERS. IN OUR CONSIDERED OPINION, ASSESSEE CO - OPERATIVE SOCIETIES CANNOT BE DEPRIVED OF THE BENEFITS OF DEDUCTIONS AVAILABLE AS PER THE PROVISIONS OF SECTION 80 P(2)(A) OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 80P(4) OF THE ACT, AS DONE BY THE AOS. WE FULLY AGREE WITH THE F'AAS THAT THE APPELLANTS ARE CREDIT CO - OPERATIVE SOCIETIES AND NOT CO - OPERATIVE BANKS AND THEREFORE THEY ARE ENTITLED TO CLAIM DEDUCTI ON AVAILABLE UNDER CHAPTER VI - A OF THE ACT. AS POINTED OUT BY THE ARS OF THE ASSESSEES, WE HAVE PASSED SIMILAR ORDER IN THE CASE OF MEDICAL COLLEGE HOSPITAL EMPLOYEES CREDIT CO - OP. SOCIETY LTD., (SUPRA). FOLLOWING OUR OWN SAID ORDER, WE DECIDE THE ALL THE GROUNDS OF APPEALS AGAINST THE AOS'. AND, THEREFORE, UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AS ALSO RESPECTFULLY FOLLOWING THE PRECEDENTS HEREINABOVE, WE FIND NO FORCE IN THIS GROUND OF THE REVENUE HENCE, DISMISSED. 2) ITA NO. 391/NAG/2013 & ITA NO. 397/NAG/2013 DATED 27 - 05 - 2015 IN THE CASE OF ITO V/S. M/S BLACK DIAMOND KARMACHARI CREDIT CO - OP. SOCIETY. RELEVANT PORTION REPRODUCED BELOW: 2. UPON HEARING LEARNED DEPARTMENTAL REPRESENTATIVE AND THE MANAGER OF THE SOCIETY, WE FIND THAT ITAT NAGPUR BENCH IN ASSESSEES OWN CASE IN ITA NO. 156/NAG/2012 FOR ASSESSMENT YEAR 2009 - 10 VIDE ORDER DATED 06.02.2013 HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER: WE HAVE HEARD THE RIVAL SUBMISSIONS A ND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. WE ARE OF THE OPINION THAT ORDERS OF THE FAAS DO NOT SUFFER FROM ANY LEGAL INFIRMITY. AFTER ANALYZING THE VARIOUS PROVISIONS OF THE ACTS AND THE CIRCULARS (ISSUED BY THE RBI AND CBDT) THEY HAVE HELD THAT AS SESSEES WERE NOT A CO - OPERATIVE BANKS AS ENVISAGED BY THE AOS IN THEIR ASSESSMENT ORDERS. IN OUR CONSIDERED OPINION, ASSESSEE CO - OPERATIVE SOCIETIES CANNOT BE DEPRIVED OF THE BENEFITS OF DEDUCTION AVAILABLE AS PER THE PROVISIONS OF SECTION 80P(2)(A) OF TH E ACT BY INVOKING THE PROVISIONS OF SECTION 80P(4) OF THE ACT, AS DONE BY THE AOS. WE FULLY AGREE WITH THE FAAS THAT THE APPELLANTS ARE CREDIT CO - OPERATIVE SOCIETIES AND NOT CO - OPERATIVE BANKS AND THEREFORE THEY ARE ENTITLED TO CLAIM DEDUCTION AVAILABLE UNDER CHAPTER VI - A OF THE ACT. AS POINTED OUT BY THE ARS OF THE ASSESSEE, WE HAVE PASSED SIMILAR ORDER IN THE CASE OF MEDICAL COLLEGE HOSPITAL EMPLOYEES CREDIT 5 ITA NO. 75/NAG/2014 CO. - OP. SOCIETY LTD., (SUPRA). FOLLOWIN G OUR OWN SAID ORDER, WE DECIDE THE ALL THE GROUNDS OF APPEALS AGAINST THE AOS. 3. SINCE THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ITATS DECISION IN ASSESSEES OWN CASE, WE UPHOLD THE ORDER OF LEARNED CIT(A). 3) ITA NOS. 357/NAG/201 2, 359/NAG/2013, 361/NAG/2013 & 371/NAG/2013 DATED 27 - 05 - 2015 IN THE CASE OF ITO V/S. Z.P. PRIMARY TEACHERS CREDIT CO - OP. SOCIETY LTD. AND OTHERS. RELEVANT PORTION REPRODUCED BELOW : 7. NOW, WE FIND THAT IT IS UNDISPUTED, THAT THESE CO - OPERATIVE SOCIE TIES ARE ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS. IT IS NOT AT ALL THE CASE THAT THEY ARE PROVIDING SERVICES OR FACILITIES TO THE PUBLIC AT LARGE. THE DECISION REFERRED BY THE LD. DR IN THE CASE OF 144 CTR 240, IS THE JUDGMENT OF HONBLE MADRAS HIGH COURT AND SAME WAS DELIVERED IN THE CONTEXT OF EXGIBILITY TO INTEREST TAX ACT. IN OUR CONSIDERED OPINION, THE FACTS OF THE CASE AND RATIO EMANATING THEREFROM ARE NOT AT ALL APPLICABLE TO THE FACTS OF THE CASE. WE NOTE THAT NAGPUR TRIBUNAL IT SELF HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSES IN BATCH OF GROUP OF CASES BY ORDER DATED 1 ST FEBRUARY, 2013, WHICH INCLUDED ONE OF THE ASSESSEES M/S INDER COLOUR CREDIT CO - OP. SOCIETY. TWO OF THE CASES IN THE SAID CASE ALSO TRAVELLED TO THE HONB LE JURISDICTIONAL HIGH COURT. BY THE ORDER DATED 26 TH SEPTEMBER, 2013 IN ITA NO. 59 & 60 OF 2013. THE HONBLE JURISDICTIONAL HIGH COURT HAS DISMISSED THE REVENUES APPEAL IN THIS REGARD. 8. IN THE AFORESAID BACKGROUND OF DISCUSSION AND PRECEDENT, IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE ORDER OF LD. CIT(A). ACCORDINGLY, WE UPHOLD THE SAME. 6 ITA NO. 75/NAG/2014 4) ACIT V/S. BULDANA URBAN CO - OPERATIVE CREDIT SOCIETY LTD., ITA NOS. 151 TO 15 3 & 179 TO 181(NAG) OF 2012. 5. IN THE LIGHT OF ABOVE DISCUSSION AND THE CASES CITED, THE GROUND OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF JUNE, 2015. SD/ - ( SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER. NAGPUR, DATED: 26 TH JUNE, 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE