Income Tax Officer ,Ward-7(1), Nagpur V. M/s KTPS Employees Credit Co-Operative Society, Nagpur

ITA 84/NAG/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1944 (ITAT-NAGPUR)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 14-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) . . , . / , . . BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER /AND SHRI RAJENDRA, ACCOUNTANT MEMBER S.N. ITA NO. & AY APPELLANT RESPONDENT 1. 68/NAG/2012 (2008-09) ITO WARD-6(3), NAGPUR M/S. SHREE GOPALAKRISHNA URBAN CREDIT COOPERATIVE SOCIETY MARYADIT, NAGPUR. PAN: AABAS 4849 R 2. 69/NAG/2012 (2007-08) ITO WARD-6(3), NAGPUR M/S. PRAJWAL NAGARI SAHAKARI PAT SANSTHA, NAGPUR . PAN: AAAAP 5905 G 3. 70/NAG/2012 (2008-09) ITO WARD-6(3), NAGPUR M/S. NAGPUR ZILLA PARISHAD PRIMARY TEACHERS CREDIT COOPERATIVE SOCIETY, NAGPUR. PAN: AAAAN 1090 L 4. 83/NAG/2012 (2009-10) ITO WARD-7(1), NAGPUR M/S. KALMESHWAR NAGRIK SAHAKARI PAT SANSTHA MARYADIT, KALMESHWAR, DIST. NAGPUR. PAN: AAAAK 5571 D 5. 84/NAG/2012 (2009-10) ITO WARD-7(1), NAGPUR M/S. KTPS EMPLOYEES CREDIT CO-OPERATIVE SOCIETY, KORADI, DIST. NAGPUR. PAN: AAAAK 2760 J 6. 85/NAG/2012 (2009-10) ITO WARD-7(1), NAGPUR M/S. INDER COLLIERY EMPLOYEES CREDIT CO-OP SOCIETY LTD., TAHSIL PARSHIVANI, DIST. NAGPUR . PAN: AAAAI 0833 L 7. 86/NAG/2012 (2009-10) ITO WARD-7(2), NAGPUR M/S. SHUBHALAXMI CREDIT COOP. SOCIETY LTD., PARDI NAGPUR. PAN: AABAS 0342 R 8. 199/NAG/2012 (2009-10) ITO WARD-4(1), NAGPUR M/S. GIRNAR URBAN CREDIT CO-OP SOCIETY, SANTAJI MATH, NAGPUR. PAN: AAAAG 2190 G ITA NO. REVENUE BY ASSESSEE BY (S/SHRI/SMT) 68/NAG/2012 (2008-09) SMT. SHARDHA NICHHAL ASHISH B. MUKIM & VINOD TAJPURIA 69/NAG/2012 (2007-08) NONE 70/NAG/2012 (2008-09) NONE 83/NAG/2012 (2009-10) L.S. DEWANI & K.P. DEWANI 84/NAG/2012 (2009 - 10) NONE 85/NAG/2012 (2009-10) M. MANI 86/NAG/2012 (2009-10) L.S. DEWANI & K.P. DEWANI 199/NAG/2012 (2009-10) ASHISH B. MUKIM & VINOD TAJPURIA 68/NAG/2012 (2008-09) 69/NAG/2012 (2007-08) 70/NAG/2012 (2008-09) 83/NAG/2012 (2009-10) 84/NAG/2012 (2009-10) 85/NAG/2012 (2009-10) 86/NAG/2012 (2009-10) 199/NAG/2012 (2009-10) 2 / DATE OF HEARING : 28-01-2013 !' / DATE OF PRONOUNCEMENT : 01-02-2013 #$ / O R D E R PER BENCH, OUT OF THE ABOVE MENTIONED EIGHT APPEALS, IN SEVEN MATTERS, ASSESSING OFFICERS (AOS) HAVE FILED FOLLOWING COMMON GROUNDS OF APPEAL - ONLY DIFFERENCE IN THEM IS OF AMOUNT OF DEDUCTION CLAIMED. IN THE CAS E OF ITA NO. 83/NAG/12 GROUNDS OF APPEAL READ AS UNDER: 1 .ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION OF RS. 14,33,420/- U/S 80 P(2)(A)(I) OF THE IT ACT, 1961. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE CIT(A ) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE IS NOT A COOPERATIVE BANK FOR THE PURPOSES OF SECTION 80P(4) OF THE I.T. ACT, 1961. 3. ANY OTHER GROUND THAT MAY BE RAISED AT THE TIM E OF HEARING. IN OTHER SIX CASES, THE AMOUNTS IN DISPUTE IN GOA N O.1 ARE AS FOLLOWS: RS. 12,20,136/- (ITA NO. 68/NAG/12); RS. 21,31,625 /- (ITA NO. 69/NAG/12); RS. 1,21,67,809/- (ITA NO.70/NAG/12); RS. 91,68,0 36/- (ITA NO. 84/NAG/12); RS. 59,93,388/- (ITA NO. 85/NAG/12) & RS. 90,81,811 /- (ITA NO. 86/NAG/12). IN THE ITA NO. 199/NAG/12, THOUGH THE EFFECTIVE GRO UND OF APPEAL IS THE SAME I.E. DEDUCTION U/S. 80 P(2) OF THE ACT, BUT GROUNDS HAVE BEEN NUMBERED AS GROUND NOS. 1 TO 4. GROUNDS OF APPEAL IN THIS CASE READ AS UND ER : 1.IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, LEARNED CIT(A) ERRED IN ALLOWING DEDUCTION U/S 80P(2)(A)(I) TO THE ASSES SEE, THOUGH THE. ASSESSEE IS ENGAGED IN BANKING ACTIVITIES. 2.IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CAS E LEARNED CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 8OP (2)(A); THOUGH THE ASSESSEE HAS ASSUMED THE CHARACTER OF A BANK. 3.IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, LEARNED CIT(A) ERRED IN NOT CONSIDERING A.OS CITATION OF HONBLE MADRAS HIGH COURT CASE AS REPORTED IN 144 CTR 240 (1998). 4.ANY OTHER GROUND THAT MAY BE RAISED DUR ING THE COURSE OF HEARING OF APPEAL. 68/NAG/2012 (2008-09) 69/NAG/2012 (2007-08) 70/NAG/2012 (2008-09) 83/NAG/2012 (2009-10) 84/NAG/2012 (2009-10) 85/NAG/2012 (2009-10) 86/NAG/2012 (2009-10) 199/NAG/2012 (2009-10) 3 AS THE ARGUMENTS OF THE AOS AND DECISIONS OF THE FI RST APPELLATE AUTHORITIES (FAAS) IN THESE CASES ARE COMMON, FOR THE SAKE OF CONVENIE NCE, WE ARE PASSING A CONSOLIDATED ORDER. THE DETAILS OF RETURNS FILED, RETURNED INCOM ES, ASSESSED INCOMES, DATES OF ORDER U/S. 143(3) IN THESE CASES CAN BE SUMMARIZED AS UNDER: ITA NO. & AY DATE OF RETURN RETURNED INCOME DATE OF ORDERS U/S. 143(3) OF THE ACT ASSESSED INCOME DATE OF ORDER OF FAA (CIT(A)-II NAGPUR) (1) (2) (3) (4) (5) (6) 68/NAG/2012 (2008-09) 17 - 09 - 2008 12,20,136/ - 31 - 12 - 2010 12,20,136/ - 27 - 07 - 2011 69/NAG/2012 (2007-08) 31-10-2007 NIL 29-12-2009 21,31,625/- 20-12-2010 70/NAG/2012 (2008-09) 30-09-2008 1,21,67,809/- 31-12-2010 1,21,67,809/- 26-07-2011 83/NAG/2012 (2009-10) 23 - 09 - 2009 NIL 30 - 09 - 2011 14,33,420/ - 28 - 12 - 2011 84/NAG/2012 (2009-10) 18-09-2009 NIL 29-08-2011 94,77,970/- 28-12-2011 85/NAG/2012 (2009-10) 06 - 09 - 2009 NIL 25 - 10 - 2011 60,18,390/ - 28 - 12 - 2011 86/NAG/2012 (2009-10) 18-09-2009 NIL 16-11-2011 90,81,811/- 30-12-2011 199/NAG/2012 (2009-10) 29 - 09 - 2009 NIL 29 - 11 - 2011 14,38,980/ - 30 - 01 - 2012 2. ASSESSEE CREDIT CO-OPERATIVE SOCIETIES, ENGAGED I N THE BUSINESS OF BANKING / PROVIDING CREDIT FACILITIES TO THEIR MEMBERS FILED THEIR RETURNS OF INCOME AS INDICATED IN THE ABOVE TABLE UNDER COLUMN NO.2 DECLARING TOT AL INCOME AS MENTIONED AT COLUMN NO. 3. ASSESSMENTS WERE FINALISED BY THE AO S U/S. 143(3) OF THE INCOME TAX ACT, 1961 (ACT) ON VARIOUS DATES. 3. DURING THE ASSESSMENT PROCEEDINGS, AOS FOUND THAT A SSESSEE CO-OPERATIVE SOCIETIES HAD CLAIMED DEDUCTION U/S. 80P(2)(D) OF T HE ACT. THEY FURTHER MADE ENQUIRIES ABOUT THE SAID DEDUCTION AND AFTER CONSID ERING THE SUBMISSIONS OF THE SOCIETIES, THEY HELD THAT ASSESSEE-SOCIETIES WERE N OT ENTITLED TO DEDUCTION AS PER THE PROVISIONS OF SEC. 80 P(2)(D) OF THE ACT. INVOKIN G THE PROVISIONS OF SECTION 80P(4) OF THE ACT THEY HELD THAT THE ASSESSEE SOCIETIES HA D WRONGLY CLAIMED THE DEDUCTION IN THE AYS. CONCERNED. 4. SOCIETIES PREFERRED APPEALS BEFORE THE FAAS. AFTER CONSIDERING THEIR SUBMISSIONS, FAAS HELD THAT AS PER SECTION 80P(2) T WO CATEGORIES OF CO-OPERATIVE SOCIETIES HAVE BEEN CONTEMPLATED BY THE ACT-ONE THA T CARRIED ON BUSINESS OF BANKING AND THE OTHER THAT PROVIDED CREDIT FACILITIES TO IT S MEMBERS. AS PER FAAS, BOTH THE SOCIETIES PERFORMED DISTINCT AND SEPARATE JOBS, THA T PROVISIONS OF THE SECTION 80P USED 68/NAG/2012 (2008-09) 69/NAG/2012 (2007-08) 70/NAG/2012 (2008-09) 83/NAG/2012 (2009-10) 84/NAG/2012 (2009-10) 85/NAG/2012 (2009-10) 86/NAG/2012 (2009-10) 199/NAG/2012 (2009-10) 4 WORD OR TO DIFFERENTIATE BETWEEN THESE TWO TYPES OF SOCIETIES. AFTER CONSIDERING THE RELEVANT PROVISIONS OF BANKING REGULATION ACT, MAHA RASHTRA CO-OPERATIVE SOCIETY ACT, CIRCULAR ISSUED BY THE RBI AND THE EXPLANATORY NOTES ON PROVISIONS RELATING TO FINANCE ACT, 2006 (CIRCULAR NO. 14/2006), FAA HELD THAT ASSESSEE-SOCIETIES WERE NOT CO-OPERATIVE BANKS THEY WERE CO-OPERATIVE SOCIETI ES. FOR ARRIVING AT THE ABOVE SAID CONCLUSION, FAA OBSERVED AS UNDER: I. ASSESSEES DID NOT OBTAIN LICENSE FROM THE RESER VE BANK OF INDIA U/S. 22 TO FUNCTION AS A BANK. II. ASSESSEES HAD NO POWER TO ISSUE CHEQUE FACILITI ES TO MEMBERS WHICH WAS THE MOST COMMON CHARACTERISTIC OF THE BANK. III. ASSESSEE SOCIETY HAD TO COMPLY WITH THE RULES FRAMED FOR CO-OPERATIVE SOCIETIES UNDER THE MAHARASHTRA CO-OPERATIVE SOCIETIES RULES. IV. AS PER THE BANKING REGULATION (CO-OPERATIVE SOC IETIES) RULES, 1966, CO-OPERATIVE BANK WERE SUBJECT TO RESERVE BANK REGULATIONS AND HAD TO SUBMIT VARIOUS RETURNS EVERY MONTH PRESCRIBED UNDER SUCH RULES. THE MANNER OF PUBLICA TION OF ACCOUNTS AND BALANCE SHEET WAS ALSO PRESCRIBED. AOS HAD NOT POINTED OUT THAT ASSE SSEES WERE ALSO UNDER ANY OBLIGATION TO ADHERE TO THESE REGULATIONS. HE FURTHER HELD THAT AOS HAD FAILED TO APPRECIATE THE DISTINCTION BETWEEN CREDIT CO-OPERATIVE SOCIETIES AND CO-OPERAT IVE BANKS, THAT CREDIT CO-OPERATIVE SOCIETIES WERE IN THE NATURE OF CREDIT RESOURCE SOC IETY WHICH STRIVED TO OBTAIN CREDITS FOR ITS MEMBERS WITH THE OBJECTIVES OF FACILITATING CREDIT TO INDIVIDUALS WHILE CO-OPERATIVE BANKS WERE FULL-FLEDGED BANKING ORGANISATIONS, THAT THE A SSESSEE CO-OPERATIVE CREDIT SOCIETIES WERE UNDER THE PURVIEW OF MAHARASHTRA CO-OPERATIVE SOCIE TY ACT AND COULD NOT CONDUCT THE BUSINESS OF BANKING AS CLAIMED BY THE AO WITHOUT FU LFILLING THE CONDITIONS OF THE REGISTRAR OF SOCIETIES AND THE RESERVE BANK OF INDIA, THAT THE A CTION OF THE AO WAS NOT JUSTIFIED, THAT PROVISIONS OF SECTION 80P(4) HAD ONLY SOUGHT TO EXC LUDE THE CO-OPERATIVE BANKS FROM AVAILING THE BENEFITS OF THE DEDUCTION. AS A RESULT, APPEALS FILED BY THE ASSESSEE-SOCIETI ES WERE ALLOWED BY THE FAA. 5. BEFORE US, DEPARTMENTAL REPRESENTATIVE (DR) RELIED ON THE ORDER OF THE AO AND IT WAS SUBMITTED THAT ASSESSEE-SOCIETIES WERE A DVANCING LOANS AND RECEIVING INTERESTS FROM OTHER ENTITIES THAT INTEREST RECEIVE D FROM SUCH PERSONS WAS NOT EXEMPT AS PER THE PROVISIONS OF THE ACT. AUTHORISED REPRE SENTATIVES (ARS) SUPPORTED THE ORDER OF THE FAA AND RELIED UPON THE ORDER OF THE M EDICAL COLLEGE HOSPITAL EMPLOYEES CREDIT CO-OP.SOCIETY LTD., ( ITA NO.85/NA G/2011AY.2007-08) DELIVERED BY THE NAGPUR E-BENCH ON 19-12-2012. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E ORDERS OF THE REVENUE AUTHORITIES. WE ARE OF THE OPINION THAT ORDERS OF THE FAAS DO NOT SUFFER FROM ANY LEGAL INFIRMITY. AFTER ANALYSING THE VARIOUS PROVI SIONS 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 O RDERS. IN OUR CONSIDERED OPINION, 68/NAG/2012 (2008-09) 69/NAG/2012 (2007-08) 70/NAG/2012 (2008-09) 83/NAG/2012 (2009-10) 84/NAG/2012 (2009-10) 85/NAG/2012 (2009-10) 86/NAG/2012 (2009-10) 199/NAG/2012 (2009-10) 5 ASSESSEE CO-OPERATIVE SOCIETIES CANNOT BE DEPRIVED OF THE BENEFITS OF DEDUCTIONS AVAILABLE AS PER THE PROVISIONS OF SECTION 80P(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 FAAS THAT THE APPELLANTS ARE CREDIT CO-OPERATIVE SO CIETIES AND NOT CO-OPERATIVE BANKS AND THEREFORE THEY ARE ENTITLED TO CLAIM DEDU CTION AVAILABLE UNDER CHAPTER VIA OF THE ACT. AS POINTED OUT BY THE ARS OF THE ASSESS EES, WE HAVE PASSED SIMILAR ORDER IN THE CASE OF MEDICAL COLLEGE HOSPITAL EMPLOYEES C REDIT CO-OP. SOCIETY LTD., (SUPRA). FOLLOWING OUR OWN SAID ORDER, WE DECIDE TH E ALL THE GROUNDS OF APPEALS AGAINST THE AOS. AS A RESULT, ALL THE 08 APPEALS I.E., ITA NOS. 68/ NAG/2012 (2008-09); 69/NAG/2012 (2007-08); 70/NAG/2012 (2008-09); 83/NA G/2012 (2009-10); 84/NAG/2012 (2009-10); 85/NAG/2012 (2009-10); 86/NA G/2012 (2009-10) & 199/NAG/2012 (2009-10) STAND DISMISSED. ORDER PRONOUNCED BY E-BENCH AT MUMBAI ON THIS 1 ST DAY OF FEBRUARY, 2013 %& '() - &*+ , 1 ST FEBRUARY 2013 ! #$ !-' . . SD/- SD/- ( . . / R.K. GUPTA ) ( / RAJENDRA ) #( / JUDICIAL MEMBER #( / ACCOUNTANT MEMBER %& MUMBAI, .# DATE: 1 ST FEBRUARY, 2013 TNMM 68/NAG/2012 (2008-09) 69/NAG/2012 (2007-08) 70/NAG/2012 (2008-09) 83/NAG/2012 (2009-10) 84/NAG/2012 (2009-10) 85/NAG/2012 (2009-10) 86/NAG/2012 (2009-10) 199/NAG/2012 (2009-10) 6 COPY TO: 1. ITO WARD-6(3), AAYAKAR BHAVAN, R.NO. 403, 3 RD FLOOR, TELANGKEHI ROAD, CIVIL LINES, NAGPUR. 2. ITO WARD-6(3), AAYAKAR BHAVAN, R.NO. 403, 3 RD FLOOR, TELANGKEHI ROAD, CIVIL LINES, NAGPUR. 3. ITO WARD-6(3), AAYAKAR BHAVAN, R.NO. 403, 3 RD FLOOR, TELANGKEHI ROAD, CIVIL LINES, NAGPUR. 4. ITO WARD-7(1), MECL BUILDING, 5 TH FLOOR, R.NO. 514, SEMINARY HILLS, HIGH LAND DRIVE, NAGPUR-440 006. 5. ITO WARD-7(1), MECL BUILDING, 5 TH FLOOR, R.NO. 514, SEMINARY HILLS, HIGH LAND DRIVE, NAGPUR-440 006. 6. ITO WARD-7(1), MECL BUILDING, 5 TH FLOOR, R.NO. 514, SEMINARY HILLS, HIGH LAND DRIVE, NAGPUR-440 006. 7. ITO WARD-7(2), MECL BUILDING, 5 TH FLOOR, NAGPUR-440 006. 8. ITO WARD-4(1), 3 RD FLOOR, SARAF CHAMBERS, NAGPUR-440 001. 1. M/S. SHREE GOPALAKRISHNA URBAN CREDIT COOPERATIVE S OCIETY MARYADIT, SNEHDEEP COMPLEX, OPP: NATRAJ CINEMA, ZENDA CHOWK, NAGPUR-02. 2. M/S. PRAJWAL NAGARI SAHAKARI PAT SANSTHA, 219, ANAE E BUILDING, JAWAHAR NAGAR, MANEWADA ROAD, NAGPUR-24. 3. M/S. NAGPUR ZILLA PARISHAD PRIMARY TEACHERS CREDIT COOPERATIVE SOCIETY, 501, NEHRUNAGAR, NANDANVAN ROAD, NAGPUR-09 . 4. M/S. KALMESHWAR NAGRIK SAHAKARI PAT SANSTHA MARYADI T, KALMESHWAR, DIST. NAGPUR. 5. M/S. KTPS EMPLOYEES CREDIT CO-OPERATIVE SOCIETY, KO RADI, DIST. NAGPUR. 6. M/S. INDER COLLIERY EMPLOYEES CREDIT CO-OP SOCIETY LTD., TAHSIL PARSHIVANI, DIST. NAGPUR-441 404. 7. M/S. SHUBHALAXMI CREDIT CO-OP. SOCIETY LTD., PARDI, NAGPUR-440 008. 8. M/S. GIRNAR URBAN CREDIT CO-OP SOCIETY LTD., SANTA JI MATH, BHANDARA ROAD, NAGPUR-440 018. 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR, ITAT, NAGPUR 6. GUARD FILE /- 0 //TRUE COPY// BY ORDER, ASST. REGISTRAR, ITAT