The Income Tax Officer, Ward-2, Karwar., Karwar V. M/s Kanara Sarswat Credit Souharda Sahakari Niyamit., Kumta

ITA 8/PAN/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7496 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 09-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVENDRA GUPTA LD
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI SINGLE MEMBER CASE BEFORE SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 0 6 /PAN/2017 (ASST. YEAR: 20 13 14 ) INCOME TAX OFFICER, WARD 2, KARWAR, SANTERI KRUPA BUILDING, HABBUWADA, KARWAR 581 306 , KARNATAKA V. M/S THE ASHRAY CO - OPERATIVE CREDIT SOCIETY LTD., SADASHIVGAD, KARWAR PAN NO. AAAAT 7877 P (APPELLANT) (RESPONDENT) ITA NO. 0 8 /PAN/2017 (ASST. YEAR: 20 13 14 ) INCOME TAX OFFICER, WARD 2, KARWAR, SANTERI KRUPA BUILDING, HABBUWADA, KARWAR 581 306, KARNATAKA V. M/S KANARA SARASWAT CREDIT SOUHARDA SAHAKARI NIYAMIT, CAR STREET, KUMTA PAN NO. AABAK 4326 K (APPELLANT) (RESPONDENT) ITA NO. 11 /PAN/2017 (ASST. YEAR: 20 13 14 ) INCOME TAX OFFICER, WARD 1, AAYAKAR BHAVAN, ADI UDUPI, MALPE ROAD, UDUPI 576 103 V. M/S GURUMACHIDAVA VIVIDHODESHA SAHAKARI SANGHA MEDICARE BUILDING, COURT BACK ROAD, UDUPI - 576101 PAN NO. AABAG 0591 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.K. PIKALE - CA (ITA NO.06 & 08 /PAN/2017) NONE (ITA NO. 11/PAN/2017) DEPARTMENT BY : SHRI SHIVENDRA GUPTA LD.DR DATE OF HEARING : 15/03/2017 DATE OF PRONOUNCEMENT : 15/03/2017. 2 ITA NO S . 06 , 08 & 11 /P A N/201 7 M/S THE ASHRAY COMPANY - OPERATIVE CREDIT SOCIETY LTD., M/S. KANARA SARASWAT CREDIT SOUHARDA SAHAKARI NIYAMIT M/S GURUMACHIDAVA VIVIDHODESHA SAHAKARI SANGHA LTD., O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER TH E S E ARE THE APPEAL S FILED BY THE REVENUE AGAINST THE SEPARATE ORDER S PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) , MANGALORE IN ITA NO S . 211/KWR/CIT(A) MNG/2015 16 DATED 31.10.2016, ITA NOS.209/KWR/CIT(A) MNG/2015 16 DATED 28.10.2016 AND ITA NOS.177/UDP/CIT(A) MNG/2015 16 DATED 31.10.2016 FOR THE ASSESSMENT YEAR 201 3 14. 2. THE SOLE ISSUE INVOLVED IN TH E S E APPEAL S IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING DEDUCTION TO THE ASSESSEE UNDER SEC. 80P(2)(A)(I) OF THE INCOME TAX ACT, 1961. 3 . THE FACTS OF THE CASE , IN BRIEF, ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME AFTER CLAIMING DEDUCTI ON UNDER SEC. 80P(2)(A)(I) OF THE ACT AT NIL . IT WAS CLAIMED THAT THE SOCIETY IS ENTITLED TO DEDUCTION UNDER SEC. 80P(2)(A)(I) AS IT WAS A COOPERATIVE SOCIETY CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. HOWEVER, THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SEC. 80P(2)(A)(I) WAS REJECTED BY THE ASSESSING OFFICER IN THE ORDER PASSED UNDER SEC. 143(3) OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS A COOPERATIVE BANK, AND HENCE, NOT ENTITLED TO CLAIM DEDUCTION BY VIRTUE OF SEC. 80P(4). 4. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) AL LOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER: - 7. THE HONBLE JURISDICTIONAL HIGH COURT OF KARNATAKA IN THE CASE OF CIT VS SHRI BILUR GURUBASAVA PATTIN SAHAKARI SANGH NIYAMIT , 3 ITA NO S . 06 , 08 & 11 /P A N/201 7 M/S THE ASHRAY COMPANY - OPERATIVE CREDIT SOCIETY LTD., M/S. KANARA SARASWAT CREDIT SOUHARDA SAHAKARI NIYAMIT M/S GURUMACHIDAVA VIVIDHODESHA SAHAKARI SANGHA LTD., BAGALKOT - ITA NO.5006/2013 DTD:05/02/2014 AS CLEARLY DISCUSSED THE ISSUE AND HELD THAT: ....... THEREFORE, AS THE ASSESSEE IS NOT A CO - OPERATIVE BANK CARRYING ON EXCLUSIVELY BANKING BUSINESS AND AS IT DOES NOT POSSESS A LICENSE FROM RESERVE BANK OF INDIA TO CARRY ON BUSINESS, IT IS NOT A CO - OPERATIVE BANK. IT IS A CO - OPERATIVE SOCIETY WHICH ALSO CARRIES ON THE BUSINESS OF LENDING MONEY TO ITS MEMBERS WHICH IS COVERED UNDER SECTION 80P(2) (A) (I) I.E. CARRYING ON THE BUSINESS OF BANKING FOR PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE OBJECT OF THE AFORESAID AMENDMENT IS NOT TO EXCLUDE THE BENEFIT EXTENDED UNDER SECTION 80P(1) TO SUCH SOCIETY .... IN THE SIMILAR CASE ON AN EXAMINATION OF THE RELEVANT LEGAL PROVISIONS, IT IS TO BE NOTICED AT THE OUTSET THA T THIS COURT IN THE APPEAL IN ITA 351/2011, CIT V. BANGALORE COMMERCIAL TRANSPORT CREDIT CO - OPERATIVE SOCIETY - LIMITED, DECIDED ON 27. 6.2014, HAD FRAMED THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW: (I) WHETHER THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE PROVISION OF SUB - SECTION (4) OF SECTION 80P OF THE INCOME TAX ACT ARE APPLICABLE ONLY TO COOPERATIVE BA NKS AND NOT TO CREDIT C O - OPERATIVE SOCIETIES, WHICH ARE ENGAGED IN BUSINESS OF BANKING, INCLUDING PROVIDING CREDIT FACILITIES TO THEIR MEMBERS? (II) WHETHER THE TRIBUNAL WAS CORRECT IN HOLDING THAT THE ASSESSEE IS A COOPERATIVE SOCIETY AND NOT A COOPERATIVE BANK IN TERMS OF SUB - SECTION (4) OF SECTION 80P OF THE INCOME TAX ACT WITHOUT CONSIDERING THE MEANING OF COOPERATIVE BANK AS ENVISAGED UNDER PART V OF THE BANKING REGULATION ACT, 1949, WHEREIN IT IS DEFINED THAT CO - OPERATIVE BANK INCLUDES PRIMARY COOPERATIVE BANK, WHICH IS FURTHER DEFINED AS COOPERATIVE SOCIETY WITH THE PRIMARY OBJECT OF TRANSACTIONS OF BANKING BUSINESS? THE SAID ISSUES WERE ANSWER ED IN FAVOUR OF THE ASSESSEE. THE JURISDICTIONAL ITAT, FOLLOWING THE DECISIONS OF HONBLE JURISDICTIONAL HIGH COURT OF KARNATAKA ON SIMILAR FACTS AND IDENTICAL ISSUE, HAS BEEN CONSISTENTLY HOLDING THE VIEW THAT CO - OPERATIVE SOCIETY REGISTERED AS CO - OPER ATIVE SOCIETY PROVIDING CREDIT FACILITY TO ITS MEMBERS AND NOT REGISTERED 4 ITA NO S . 06 , 08 & 11 /P A N/201 7 M/S THE ASHRAY COMPANY - OPERATIVE CREDIT SOCIETY LTD., M/S. KANARA SARASWAT CREDIT SOUHARDA SAHAKARI NIYAMIT M/S GURUMACHIDAVA VIVIDHODESHA SAHAKARI SANGHA LTD., WITH THE RBI CANNOT BE DENIED THE DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE INCOME - TAX ACT. 9. THE FACT THAT THE APPELLANT IS A COOPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 ENGAGED IN PROVIDING CREDIT FACILITIES TO ITS MEMBERS HAS BEEN CLEARLY MENTIONED BY THE A.O IN THE AFORESAID ASSESSMENT ORDER. THE APPELLANT IN ITS SUBMISSIONS DATED 11/02/2016 AND THROUGH AN AFFIDAVIT DATED 11/02/2016 HAS CLEAR LY STATED THAT THE APPELLANT IS A CO - OPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA SOUHARDA SAHAKARI ACT, 1997 ENGAGED IN PROVIDING CREDIT FACILITIES ONLY TO ITS MEMBERS AND IT DOES NOT POSSESS ANY BANKING LICENCE FROM THE RBI. IT IS THEREFORE, CLEAR TH AT THE APPELLANTS CASE IS SQUARELY COVERED BY THE AFORESAID DECISIONS OF THE JURISDICTIONAL HIGH COURT OF KARNATAKA AS FACTS ARE SIMILAR AND ISSUE INVOLVED IS IDENTICAL. IT APPEARS SLP FILED BY DEPARTMENT BEFORE HONBLE SUPREME COURT ON THE SIMILAR ISSUE IS PENDING. UNLESS THE DECISION OF THE JURISDICTIONAL HIGH COURT IS REVERSED BY THE HONBLE SUPREME COURT, THE POSITION OF THE LAW IS CLEAR THAT THE APPELLANTS CASE IS NOT COVERED BY SECTION 80P(4) AS IT IS NOT A CO - OPERATIVE BANK AND IT IS ENTITLED TO THE DEDUCTION U/S 80P(2)(A)(I). HENCE, THE APPEAL FILED BY THE APPELLANT IS ALLOWED. THE APPELLANT GETS THE RELIEF OF RS.76,04,883/ - UNDER SECTION 80P(2)(A)(I) OF THE INCOME - TAX ACT. 5. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER S OF THE ASSESSING OFFICER. HE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ABOVE QUOTED ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED THE CLAIM OF DEDUCTION UNDER SEC. 80P(2)(A)(I) OF THE ACT AF TER FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHRI BILULRU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMIT, BAGALKOT IN ITA NO. 5006/2013 DATED 05/02/2014 . NO CONTRARY DECISION COULD BE CITED BY THE DEPARTMENTAL REP RESENTATIVE. I THEREFORE, DO NOT FIND ANY GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS), W HICH ARE HEREBY CONFIRMED AND THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 5 ITA NO S . 06 , 08 & 11 /P A N/201 7 M/S THE ASHRAY COMPANY - OPERATIVE CREDIT SOCIETY LTD., M/S. KANARA SARASWAT CREDIT SOUHARDA SAHAKARI NIYAMIT M/S GURUMACHIDAVA VIVIDHODESHA SAHAKARI SANGHA LTD., 6. IN THE RESULT, THE APPEALS FILED BY THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 15 TH DAY OF MARCH, 2017 AT GOA . SD/ - (GEORGE MATHAN) JUDICIAL MEMBER DATED : 1 5 TH MARCH, 2017. VSSGB/ - COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A), 5 . THE D.R. 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI