Sri. Revanasiddeshwar Co-Opeative Credit Society, Bijapur V. ITO, Bijapur

ITA 843/BANG/2014

• Counselvise Citation: 84321114 RSA 2014
• Duration Of Justice: 1 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 26-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHASKAR REDDY
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH A, BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JM AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NO.843(B)/2014 (ASSESSMENT YEAR : 2010-11) SRI REVANASIDDESHWAR CO-OPERATIVE CREDIT SOCIETY, , MAIN ROAD, HORTI, INDI TALUK, BIJAPUR DISTRICT PAN NO.AABAS3319N APPELLANT VS THE INCOME-TAX OFFICER, WARD-2, BIJAPUR RESPONDENT ASSESSEE BY : SHRI SANDEEP, CA REVENUE BY : SHRI BHASKAR REDDY, JCIT DATE OF HEARING : 24-08-2015 DATE OF PRONOUNCEMENT : 31-08 -2015 O R D E R PER SMT ASHA VIJAYARAGHAVAN, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF CIT(A), BELGAUM DATED 16-04-2014 FOR THE ASSESSMENT YEAR 20 10-11. 2. THE ASSESSEE IS A CO-OPERATIVE SOCIETY REGISTERE D UNDER THE KARNATAKA STATE CO-OPERATIVE SOCIETIES ACT. THE MA IN OBJECT OF THE ASSESSEE WAS TO ACCEPT DEPOSITS AND TO PROVIDE FINA NCIAL ACCOMMODATION TO THE MEMBERS OF THE SOCIETY. IT WAS CLAIMED THAT TH E SOCIETY IS ENTITLED TO DEDUCTION U/S 890P(2)(A)(I) OF THE IT ACT, UNDER CH APTER VIA, AS IT IS A CO- ITA NO.843(BANG)2014 2 OPERATIVE SOCIETY. HOWEVER, THE CLAIM OF THE ASSES SEE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT A REJECTED BY THE AO VIDE H IS ORDER DATED 30-11-2012. THE AO DENIED THE DEDUCTION ON THE GROUND THAT THE ASSESSEE SOCIETY IS A CO-OPERATIVE SOCIETY AND HENCE NOT ENTITLED TO CLAI M DEDUCTION BY VIRTUE OF SEC.80P(4) OF THE IT ACT, 1961. 3. THE AO ALSO MADE DISALLOWANCE U/S 43B OF THE IT ACT, BY STATING AS FOLLOWS; DISALLOWANCE UNDER SECTION 43B: THE BALANCE SHE ET AS ON 31-03-2010 SHOWS GOVT. LIABILITY OF AUDIT FEES AT RS.2,08,450/- FOR THE ASSESSMENT YEAR 2010-11. THE ASSESSEE HAS PAID THE ABOVE LIABILITY ON 6-12-2010. THE ABOVE LIABILITY WAS NOT DISCHARGED BEFORE THE DUE D ATE FOR FILING THE RETURN OF INCOME U/S 139(1) OF THE IT AC T. THE SAME IS ADDED TO TOTAL INCOME AS PER 43B OF THE IT ACT. 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) BY RELYING ON THE DECISION OF JAYALAXMI MAHILA VIV IDODESHAGALA SOUHARDA SAHAKARI LTD.,(2012) 23 TAXMAN.COM 313 (PANAJI) OBS ERVED THAT THE ASSESSEE ACCEPTS DEPOSITS FROM PUBLIC THUSSATISFYIN G THE FIRST CONDITION AND IT ALSO SATISFIES THE OTHER TWO CONDITIONS LAID DOW N FOR CO-OPERATIVE SOCIETY IN THE DEFINITION AS GIVEN U/S.5(CCV) IN PARA-V OF THE BANKING REGULATION ACT, 1949 FOR BECOMING PRIMARY CO-OPERATIVE BANK. HENCE, THE CIT(A) HELD THAT THE ASSESSEE IS A CO-OPERATIVE BANK WIT HIN THE MEANING OF PARA-V OF BANKING REGULATION ACT, 1949. THEREFORE, THE CI T(A) HELD THAT THE ITA NO.843(BANG)2014 3 PROVISIONS OF SEC.80P(4) ARE APPLICABLE TO IT AND I T IS NOT ENTITLED TO DEDUCTION U/S 80P(2)(A(I) OF THE IT ACT, 1961. 5. FURTHER, THE CIT(A) HAD ALSO CONFIRMED THE ORDER OF THE AO WITH RESPECT TO DISALLOWANCE U/S 43B OF THE IT ACT, 1961 . 6. AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFOR E US RAISING THE FOLLOWING GROUNDS; 1. THAT THE ORDER OF THE LD.CIT(A) INSOFAR IT IS P REJUDICIAL TO THE INTEREST OF THE ASSESSEE IS BAD AND ERRONEOUS I N LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN NOT GRANTING DEDUCTION OF RS.34,04,147/- U/S 80P(2)(A)(I). 3. THAT THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE ASSESSEE IS A PRIMARY CO-OPERATIVE BANK AND NOT A CO- OPERATIVE SOCIETY AND SUCH A FINDING IS PERVERSE AS BEING CONTRARY TO THE MATERIALS ON RECORD AND NOT BEING S UPPORTED BY ANY MATERIAL AND EVIDENCES ON RECORD. 4. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN WRONG LY APPLYING THE PROVISIONS OF SEC.80P(4) TO THE ASSESSEE WHILE THE PROVISIONS WILL APPLY ONLY TO THE BANKING CO-OPERAT IVE INSTITUTIONS. 5. THE LD.CIT(A) ERRED IN LAW AND ON FACTS IN NOT F OLLOWING THE CBDT INSTRUCTIONS NO.F NO.123/06/2007-TPL DATED 9 TH MAY, 2008. 6. THE LD. CIT(A) ERRED IN LAW IN NOT FOLLOWING THE BINDING DECISION OF THE JURISDICTIONAL APPELLATE TRIBUNAL I .E INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH. 7. THE LD. CIT(A) ERRED IN LAW IN DISALLOWING RS.2, 08,450/- U/S 43B ON THE GROUND THAT AUDIT FEE PAYABLE TO CO- OPERATIVE ITA NO.843(BANG)2014 4 AUDITORS WAS NOT DISCHARGED BEFORE THE DUE DATE OF FILING RETURN ON INCOME U/S 139(1) OF THE IT ACT, 19161 EV EN THOUGH ITS NOT COVERED U/S 43B. 8 .EACH OF THE ABOVE GROUNDS IS WITHOUT PREJUDICE T ONE ANOTHER AND THE ASSESSEE CRAVES LEAVE OF THE HONBL E INCOME TAX APPELLATE TRIBUNAL, BANGALORE TO ADD, DELETE, A MEND OR OTHERWISE MODIFY ONE OR MORE OF THE ABOVE GROUNDS E ITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL . 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT BOTH THE ISSUES WHICH ARE AGITATED BEFORE THE HONBLE TRIBUN AL WHICH WAS COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBU NAL IN THE CASE OF M/S JAMAKHANDI CO-OPERATIVE CREDIT SOCIETY LTD., VS ITO IN ITA NOS.1358 & 1359(B)/2013 VIDE ORDER DATED 22-01-2015. 8. ON THE OTHER HAND, THE LEARNED DR DID NOT RAISE ANY OBJECTION. 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE RELATING TO DEDUCTION U/S 80P(2)(A)(I) OF THE OIT A CT STOOD DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA, BAGAL KOT IN ITA NO.5006(B)/2013 DATED 5.2.2014. ACCORDING TO THE LEARNED COUNSEL THE BYELAWS OF THE SOCIETY DID NOT PROHIBIT ANY OTHER S OCIETY FROM BECOMING A MEMBER IN SO FAR THE DISALLOWANCE U/S 43B OF THE IT ACT IS CONCERNED, THE LEARNED COUNSEL ALSO SUBMITTED THAT THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS SHREE WARNA SAHAKA RI SAKHAR KARKHANA LTD 253 ITR 226 WAS DIRECTLY ON THE ISSUE. ITA NO.843(BANG)2014 5 10. WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATE RIAL ON RECORD. FOLLOWING THE JUDGMENT OF THE JURISDICTIONAL HIGH C OURT IN THE CASE OF SRI BILURU GURUBASAVA PATTINA SAHAKARI SANGHA NIYAMITHA , BAGALKOT AND THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M /S JAMAKHANDI CO- OPERATIVE CREDIT CO-OPERATIVE SOCIETY LTD (SUPRA) W E DIRECT THAT THE DISALLOWANCE U/S 80P(2)(A)(I) OF THE IT ACT FOR THE IMPUGNED ASSESSMENT YEAR TO BE DELETED. 11. VIS--VIS THE SECOND ISSUE RAISED WITH RESPECT TO 43B OF THE IT ACT, WE FIND THAT THE CO-ORDINATE BENCH OF THE TRIB UNAL IN THE CASE OF M/S JAMAKHANDI URBAN MINORITY CO-OPERATIVE CREDIT SOCIE TY LTD. VS ITO, RELYING ON THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF SREE WARNA SAHAKARI SAKHAR KARKHANA LTD IN ITA NO.1 328(B)/2013 DATED 19-09-2014 HAS HELD THAT THE GOVERNMENT AUDIT FEES PAYABLE BY THE SOCIETY WAS NOT COVERED BY SEC.43B OF THE ACT. THEREFORE, THE DISALLOWANCE IN OUR OPINION, WAS NOT RIGHTLY DONE AND SUCH DISALLOWANCE STANDS DELETED. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 31 ST AUGUST, 2015. SD/- (ABRAHAM P GEORGE) SD/- (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BANGALORE: D A T E D : 31-08-2015 AM* ITA NO.843(BANG)2014 6 D A T E D : PLACE: BANGALORE AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE