ITO, Bangalore V. M/s Vasavi Credit Co-Operative Society Ltd., Bangalore

ITA 811/BANG/2015

• Counselvise Citation: 81121114 RSA 2015
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ITA NO.811/BANG/2015 ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER, WARD 2(2)(3), BANGALORE. VS. M/S. VASAVI CREDIT CO-OPERATIVE SOCIETY LTD., KANNIKA PARAMESHWARI TEMPLE COMPLEX, 8 TH CROSS, MALLESHWARAM, BANGALORE 560 003. PAN: AAAJV 0152C APPELLANT RESPONDENT APPELLANT BY : DR. P.K. SRIHARI, ADDL. CIT(DR) RESPONDENT BY : NONE DATE OF HEARING : 21.10.2015 DATE OF PRONOUNCEMENT : 28.10.2015 O R D E R PER ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER D ATED 10.02.2015 OF THE CIT(APPEALS)-2, BANGALORE RELATING TO ASSESS MENT YEAR 2010-11. 2. THE ASSESSEE, A CO-OPERATIVE SOCIETY REGISTERED UNDER THE KARNATAKA STATE CO-OPERATIVE ACT, RENDERS FINANCIAL SERVICES TO ITS ITA NO.811/BANG/2015 PAGE 2 OF 7 MEMBERS. IT FILED ITS RETURN OF INCOME FOR THE AY 2010-11 ON 12/10/2010, DECLARING INCOME OF RS.2,11,114/- AFTER CLAIMING DE DUCTION U/S 80P(2)(A)(I) OF THE ACT IN RESPECT OF A SUM OF RS.52,03,447/- EA RNED BY IT FROM ITS MONEY LENDING TO ITS MEMBERS. AFTER THE RETURN WAS PROCES SED U/S 143(1) OF THE ACT, IT WAS SELECTED FOR SCRUTINY. THE AO MADE AN A DDITION OF RS.1,22,783/- TO THE INCOME FROM HOUSE PROPERTY SIN CE THE APPELLANT HAD COMPUTED INCOME OF RS.1,69,910/- OUT OF RS.3,23,447 /- DECLARED FROM THIS SOURCE AS AGAINST RS.4,98,851/- SHOWN IN THE PROFIT AND LOSS ACCOUNT. IN COMPLETING THE ASSESSMENT U/S 143(3) OF THE ACT, TH E TOTAL INCOME OF THE APPELLANT WAS DETERMINED AT RS.55,37,344/- DENYING THE APPELLANT THE BENEFIT OF DEDUCTION CLAIMED BY IT. 3. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE CIT(APPEALS) ONLY AGAINST THE DENIAL OF THE BENEFIT OF DEDUCTION U/S 80P(2)(A)(I) IN RESPECT OF THE INCOME OF RS.52,03,447/-. 4. IT WAS SUBMITTED BEFORE THE CIT(APPEALS) THAT TH E ASSESSEE IS A CO- OPERATIVE SOCIETY EXTENDING CREDIT FACILITIES TO IT S MEMBERS AND IT WAS NOT A CO-OPERATIVE BANK AS CONTEMPLATED UNDER THE BANKING REGULATION ACT. IT RELIED UPON THE DECISION OF THIS TRIBUNAL IN ITS OW N CASE FOR THE A.Y. 2009- 10 IN ITA NO.270/BANG/2013 DATED 17.3.2014 WHEREIN THE ISSUE WAS HELD IN FAVOUR OF THE ASSESSEE AND THE APPEAL BY THE DEP ARTMENT WAS DISMISSED. ITA NO.811/BANG/2015 PAGE 3 OF 7 5. THE CIT(APPEALS) NOTED THAT VARIOUS BENCHES OF T HE ITAT HAVE HELD SIMILAR CLAIM OF DEDUCTION U/S. 80P(2)(A)(I) OF TH E ACT IN FAVOUR OF THE ASSESSEES IN THE FOLLOWING CASES:- I) SRI LAXMI CREDIT SOUHARDA SAHAKARI LTD., BELGAU M V. ITO, NIPANI, ITA.NO.200/PNJ/2013 FOR AY 2009-10 DATED 4/ 7/2014 REPORTED IN 2014-TIOL-677-ITAT-PANAJI II) ITO, WARD-9(3), BANGALORE V. YESHWANTHPUR CREDI T COOPERATIVE SOCIETY LTD.., BANGALORE FOR AY 2007-08 OF THE HONBLE ITAT, BANGALORE BENCH A DATED 11/4/2012. III) DCIT, CENTRAL CIRCLE, PANAJI V. M/S JAYALAKSHM I MAHILA VIVIDODESHAGALA SOUHARDA SAHAKARI LTD., & M/S DWARA KA SOUHARDA CREDIT SAHAKARI LTD., KARWAR IN ITA.NO.O1 TO 03/PNJ/2012 DATED 30/3/2012. [ITAT, PANAJI BENCH, P ANAJI] IV) ITO, WARD-1(4) V. JANKALYAN NAGRI SAHAKARI PAT SANSTHA LTD. [(2012) 24 TAXMANN.COM 127 (PUNE-TRIB) DATED 26/6/2 012]. 6. THE CIT(APPEALS) OBSERVED AS FOLLOWS:- 3.4 THE HONBLE ITAT, BANGALORE AND PANAJI REFERR ED TO ABOVE HAVE HELD THAT THE INCOME EARNED BY APPELLANT FROM ITS ACT OF LENDING MONEY OUT OF DEPOSITS RECEIVED FROM THE PUBLIC OR ITS MEMBERS SHALL BE ELIGIBLE FOR EXEMPTION UNDER SECTI ON 80P(2)(A)(I) OF THE ACT. THE FINDINGS GIVEN BY ME R EGARDING THE FACTS AND THE VIEW TAKEN BY ME ON THE BASIS OF SUCH FACTS IN REGARD TO THE NON-ASSESSABILITY OF INCOME EARNED BY M/S BALAJI HOUSE BUILDING CO-OPERATIVE SOCIETY LTD. FROM LOANS GIVEN TO ITS MEMBERS AT PARA 3.4 AND 3.5 OF MY ORDER RESPECTIVEL Y IN THE SAID CASE FOR THE ASSESSMENT YEAR 2009-10 VIDE ORDER ITA .NO.794/W- 4(2)/CIT(A)-II/11-12 DATED 24/9/2012 HAS BEEN UPHEL D BY THE HONBLE ITAT, BANGALORE BENCH A IN ITS ORDER ITA NO.1502(BANG)2012 DATED 7/3/2014 WHEREIN THE HONBL E ITAT HAS QUOTED WITH APPROVAL MY OBSERVATIONS AT PARA 3. 5 IN MY AFORESAID ORDER. THE RELEVANT PORTIONS FROM THE ORD ER OF THE HONBLE ITAT ARE REPRODUCED BELOW:- ITA NO.811/BANG/2015 PAGE 4 OF 7 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE. WE HAVE ALSO GONE THROUGH THE DECIS IONS CITED BY BOTH THE PARTIES BEFORE US. ON THE FACTS O F THE PRESENT CASE, IT IS NOTICED THAT THE CIT(A) ANALYZE D THE INCOME & EXPENDITURE STATEMENTS AND GIVEN AN UNDISPUTED FINDING THAT THE ASSESSEE HAS EARNED A G ROSS REVENUE OF RS.15,15,611/- FROM THE CREDIT FACILITIE S OUT OF THE ACTIVITIES OF EXTENDING CREDIT FACILITIES TO TH E MEMBERS OF THE SOCIETY. PARA 3.5 IS RELEVANT IN THIS REGA RD. THE SAID PARA IS REPRODUCED AS UNDER FOR READY REFERENC E: 3.5 THE ENCLOSED PROFIT AND LOSS ACCOUNT WITH THE WRITTEN SUBMISSIONS SHOWS THAT, OUT OF THE TOTAL GROSS REVENUE DECLARED IN THE INCOME EXPENDITURE ACCOUNT, RS. 15,15,611/- IS ENTIRELY INTEREST ON LO ANS SANCTIONED PLUS RS. 1,O7,OOO/- LOAN APPLICATION PROCESSING FEES. THIS ACTIVITY CLEARLY FALLS UNDER THE AMBIT OF SECTION 80P(2)(A)(I) OF THE ACT AND, AS STIPULATED BY THE SUB-SECTION, THE INCOME DERIVED B Y CO-OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMB ERS IS EXEMPT AND, THEREFORE, THIS INCOME EARNED BY THE APPELLANT-SOCIETY IS ALLOWABLE AND EXEMPT U/S 8OP O F THE I.T. ACT. 7.1 FROM THE ABOVE, IT IS EVIDENT THAT THE ASS ESSEE EARNED THE GROSS RECEIPTS ONLY FROM THE MEMBERS OUT OF THE ACTIVITIES OF PROVIDING CREDIT FACILITIES. NONE OF THE RECEIPTS ORE EARNED FROM THE MEMBERS BELONGING TO T HE OTHER CO-OP.SOCIETY. ON THESE FACTS, WE ARE OF THE OPINION, THAT THE DECISIONS RELIED UPON BY THE LEARNED DR AR E DISTINGUISHABLE. THEREFORE, IN OUR OPINION, THE CON CLUSIONS GIVEN BY THE CIT(A) IN PARA 3.4 TO 3.5 ARE FAIR AND REASONABLY (SIC) THEREFORE, THE ORDER OF THE CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. 7. THE LD. CIT(APPEALS) FURTHER HELD AS FOLLOWS:- 3.5 THE FACTS MUTATIS MUTANDIS WITH RESPECT TO TH E AMOUNT OF INCOME IN THE APPEAL UNDER CONSIDERATION ARE SIMILA R. IT IS SIGNIFICANT TO NOTE HERE THAT THE HONBLE ITAT HAS DISTINGUISHED THE DECISION OF THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF MADRAS AUTORICKSHAW DRIVERS CO.OP. SOCIETY LTD. [1 43 ITR 98) ITA NO.811/BANG/2015 PAGE 5 OF 7 RELIED ON BY THE DEPARTMENTAL REPRESENTATIVE SINCE, IN THAT CASE, THE FACT WAS THAT THE SAID SOCIETY WAS PURCHASING A UTORICKSHAWS FROM MANUFACTURERS/DEALERS AND RESELLING THEM TO IT S MEMBERS ON TERMS AND CONDITIONS RELATING TO HIRE PURCHASE. HOW EVER, IN THE APPELLANTS CASE, ITS ACTIVITIES ARE CONFINED TO GI VING LOANS TO ITS MEMBERS AND EARNING INCOME THEREFROM. HENCE, FOR TH E VERY SAME REASONS AS HAVE BEEN GIVEN IN MY APPELLATE ORD ER FOR THE ASSESSMENT YEAR 2009-10 REFERRED TO ABOVE, WHICH HA S BEEN APPROVED BY THE HONBLE ITAT, BANGALORE BENCH A I N ITS ORDER REFERRED TO ABOVE, I HOLD THAT THE APPELLANT IS ENT ITLED TO CLAIM DEDUCTION U/S 80P(2)(A)(I) OF THE ACT IN RESPECT OF THE INCOME OF RS.52,03,447/- EARNED BY IT AND ALLOW THE CLAIM ACC ORDINGLY. HOWEVER, IN VIEW OF THE DISCREPANCIES IN THE DISALL OWANCE U/S 80P(2)(A)(I) POINTED OUT AT PARA 1 OF THIS ORDER, T HE AO IS DIRECTED TO VERIFY THE CORRECTNESS OF THE AMOUNT BEFORE GIVI NG EFFECT TO THIS ORDER. 8. THE DEPARTMENT IS IN APPEAL AGAINST THE ORDER OF THE CIT(APPEALS). 9. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(APPEALS) AND RELIED UPON THE ORDER OF THE CIT(A PPEALS). 10. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT T HE ISSUE IS COVERED BY THE DECISION OF THE COORDINATE BENCH OF THE TRIB UNAL IN ASSESSEES OWN CASE FOR THE AY 2009-10 IN ITA NO.270/BANG/2013 DAT ED 17.3.2014, WHEREIN THE DEPARTMENTAL APPEAL FILED AGAINST THE O RDER OF CIT(APPEALS) ALLOWING SIMILAR CLAIM OF ASSESSEE WAS DISMISSED. FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(APPEALS). ITA NO.811/BANG/2015 PAGE 6 OF 7 11. HOWEVER, THERE IS SOME DISCREPANCY AS REGARDS T HE AMOUNT OF DEDUCTION U/S. 80P(2)(A)(I) VIZ., THOUGH AT PARA 2 IN PAGE 3 OF THE ASSESSMENT ORDER THE AO HAS MENTIONED THAT THE DISA LLOWANCE MADE IN THIS REGARD IS RS.52,44,651/-, BUT IN THE COMPUTATI ON OF INCOME THE DISALLOWANCE MADE IS RS.52,03,447/-: THIS CORRESPON DS WITH THE AOS OBSERVATION AT PAGE 2 OF THE ASSESSMENT ORDER THAT THE CLAIM MADE BY THE APPELLANT U/S 80P(2)(A)(1) WAS RS.52,03,447/-. IN THIS REGARD, THE CIT(APPEALS) HAD DIRECTED THE AO TO VERIFY THE CORR ECTNESS OF THE AMOUNT BEFORE ALLOWING THE CLAIM OF DEDUCTION U/S. 80P(2)( A)(I) OF THE ACT. ACCORDINGLY, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF VERIFICATION OF THE CORRECTN ESS OF THE AMOUNT OF DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT TO BE ALLOWE D TO THE ASSESSEE. 12. IN THE RESULT, THE APPEAL BY THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF OCTOBER, 2015. SD/- SD/- ( ABRAHAM P. GEORGE ) (ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 28 TH OCTOBER, 2015. /D S/ ITA NO.811/BANG/2015 PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.