ITO 20(3)(4), MUMBAI V. KEM HOSPITAL AND SHETH GSM COLLEGE EMPLOYEES CO-OP. CREDIT SOCIETY LTD., MUMBAI

ITA 864/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6883 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 07-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DEVDATTA MAINKAR
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, H MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.864/MUM/2017 ASSESSMENT YEAR: 2013-14 INCOME TAX OFFICER-20(3)(4), ROOM NO.616, 6 TH FLOOR, PIRAMAL CHAMBER, PAREL, MUMBAI-400012 / VS. KEM HOSPITAL & SHETH GMS COLLAGE EMPLOYEES CO-OP. CREDIT SOCIETY LTD. GROUND FLOOR, KEM HOSPITAL BUILDING, PAREL, MUMBAI-400012 ( / REVENUE) ( #$% & /ASSESSEE) PAN. NO . AAAAT5055H ' ( & ) / DATE OF HEARING : 20/06/2018 ( & ) / DATE OF ORDER: 20/06/2018 ! / REVENUE BY SHRI RAJAT MITTAL-DR #$% & ! / ASSESSEE BY SHRI DEVDATTA MAINKAR ITA NO.864/MUM/2017 KEM HOSPITAL & SHETH GMS COLLAGE EMPLOYEES CO-OP. CREDIT SOCIETY LTD. 2 / O R D E R PER JOGINDER SINGH(JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 25/11/2016 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, IN ALLOWING DEDUCTION UNDER SECTION 80P OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) WITH RESPECT TO THE ASSE SSEE SOCIETY IGNORING THE FACT THAT THE ASSESSEE WAS CARRYING ON BANKING BUSINESS AND FURTHER SECTION 80P(4)(VIIA) AND ALSO THE DECISION IN THE CASE OF TOTGAR CO.OP. SALES SOCIETY LTD. (322 ITR 285). 2. DURING HEARING, SHRI RAJAT MITTAL, LD. DR, ADVANCED ARGUMENT WHICH IS IDENTICAL TO THE GROUND RAISED BY DEFENDING THE ADDITION MADE BY THE LD. ASSESSING OFFICER. ON THE OTHER HAND, SHRI DEVDATTA MAINKAR, LD. COUNS EL FOR THE ASSESSEE, CLAIMED THAT THE IMPUGNED ISSUE IS CO VERED IN FAVOUR OF THE ASSESSEE IN ITA NO.4986/MUM/2016 IN I TS OWN CASE FOR ASSESSMENT YEAR 2012-13. THIS FACTUAL MATR IX WAS NOT CONTROVERTED BY THE REVENUE. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION ITA NO.864/MUM/2017 KEM HOSPITAL & SHETH GMS COLLAGE EMPLOYEES CO-OP. CREDIT SOCIETY LTD. 3 FROM THE AFORESAID ORDER DATED 15/03/2012 FOR ASSES SMENT YEAR 2012/13 FOR READY REFERENCE AND ANALYSIS:- 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF INCOME TAX ACT IS DIRECTED AGAINST THE COMMON ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-32, MUMBAI, [F OR SHORT THE LD. CIT(A)] DATED 27.05.2016 FOR ASSESSME NT YEAR 2012-2013. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 80P TO THE ASSESSEE EVEN THOUGH ASSESSEE CARRIES ON THE BANKING BUSINESS AND OTHER BUSINESS IN THE NAME OF A CO- OPERATIVE CREDIT SOCIETY? 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 80P(2)(A)(I) WITHOUT CONSIDERING INSERTED SECTION 8 0P(4) AND SUB-CLAUSE (VIIA) TO SECTION 2(24) VIDE FINANCE ACT, 2006 W.E.F. 01.04.2007? 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE IN LAW, THE LD. CIT(A) HAS ERRED IN FINDING THE DECISI ON OF THE SUPREME COURT IN THE CASE OF M/S. TOTGAR CO.OP SALE S SOCIETY LTD. (322 ITR 285) WHEREIN INTEREST RECEIVE D BY A CO-OPERATIVE SOCIETY FROM INVESTMENT OF SURPLUS FUN DS IS ASSESSABLE AS 'INCOME FROM OTHER SOURCES' AND THUS NOT ELIGIBLE FOR DEDUCTION U/S. 80P OF THE IT ACT, 1961 .' 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO- OPERATIVE CREDIT SOCIETY REGISTERED UNDER THE PROVI SIONS OF MAHARASHTRA STATE CO-OPERATIVE SOCIETIES ACT. THE ASSESSEE SOCIETY IS PROVIDING CREDIT FACILITIES TO ITS MEMBERS. THE ASSESSEE FILED ITS RETURN OF INCOME FO R ASSESSMENT YEAR 2012-13 ON 27.09.2012 DECLARING NIL INCOME. THE ASSESSMENT WAS COMPLETED ON 30.03.2015 ITA NO.864/MUM/2017 KEM HOSPITAL & SHETH GMS COLLAGE EMPLOYEES CO-OP. CREDIT SOCIETY LTD. 4 UNDER SECTION 143(3) OF THE ACT. THE ASSESSING OFFI CER WHILE PASSING THE ASSESSMENT ORDER DENIED THE DEDUC TION UNDER SECTION 80P(2)(A)(I) FOR RS. 90,000/- AND TRE ATED THE SAME AS INCOME FROM OTHER SOURCES. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE WAS ALLOWED DEDUCTION UNDER SECTION 80P(2)(A)(I). THUS, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BE FORE US. THE SOLE GROUND OF APPEAL BEFORE US IS WHETHER THE ASSESSEE IS ENTITLED FOR THE DEDUCTION UNDER SECTIO N 80P(2)(A)(I) OF THE ACT. 3. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE ( AR) OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. DR FOR THE REVENUE SUBMITS THAT THE ASSESSING OFFICER HAS NOT MADE COMPLETE ENQUIRY REGARDING THE NATURES OF CREDIT FACILITIES AND OTHE R ACTIVITIES CARRIED OUT BY THE ASSESSEES SOCIETY. T HE LD. DR FOR THE REVENUE PRAYED TO RESTORE THE MATTER BACK T O THE FILE OF ASSESSING OFFICER FOR PROPER ENQUIRIES IN S UPPORT OF HIS SUBMISSION. THE LD. DR FOR THE REVENUE RELIED U PON THE DECISION OF HON'BLE DELHI HIGH COURT IN CASE OF CIT VS JANSAMPARK ADVERTISING & MARKETING (P.) LTD. [2015] 56 TAXMANN.COM 286(DELHI). ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). THE LD. AR OF THE ASSESSEE ARGUED THAT ASSESSEE IS A CO-OPERAT IVE SOCIETY AND NOT A CO-OPERATIVE BANK. THE ASSESSEE I S NOT HAVING ANY LICENCE UNDER THE BANKING REGULATION ACT , 1949 TO CARRY OUT BANKING BUSINESS AND THE ASSESSEE CANN OT BE CLASSIFIED AS CO-OPERATIVE BANK. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT THE LD. CIT(A) GRANTED THE REL IEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF JURISDICT IONAL HIGH COURT IN QUEPEM URBAN CO-OPERATIVE CREDIT SOCI ETY LTD[2015] 58 TAXMANN.COM 113(BOM). THE LD AR FOR TH E ASSESSEE FURTHER RELIED AND THE DECISION OF SINGLE MEMBER ITA NO.864/MUM/2017 KEM HOSPITAL & SHETH GMS COLLAGE EMPLOYEES CO-OP. CREDIT SOCIETY LTD. 5 BENCH OF MUMBAI TRIBUNAL IN CASE OF ITO VS. M/S ASH IRWAD CO-OP. CREDIT SOCIETY LTD. IN ITA NO. 5069/MUM/2017 . 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW. THERE IS NO DISPUTE THAT ASSESSEE IS A CO-OPERATIVE SOCIETY OF EMPLOYEES OF KEM HOSPITAL AND SHETH GSM COLLEGE. THE ASSESSEE IS REGISTERED UNDER THE MAHARASHTRA ST ATE CO-OPERATIVE SOCIETIES ACT. THE ASSESSEE IS PROVIDI NG CREDIT FACILITIES TO ITS MEMBERS ONLY. THE ASSESSIN G OFFICER AFTER COMPARING THE PROVISION OF BANKING REGULATION ACT AS WELL AS MAHARASHTRA STATE CO-OPERATIVE SOCIETIES ACT, TOOK THE VIEW THAT THE ASSESSEES SOCIETY SQUARELY FALL WITHIN THE DEFINITION OF CO-OPERATIVE BANK AND THER EFORE, HIT BY THE PROVISIONS OF SECTION 80P(4) OF THE ACT. THEREFORE, THE ASSESSING OFFICER DENIED THE DEDUCTI ON UNDER SECTION 80P(2)(A)(I) AND TREATED THE DIVIDEND RECEIVED FROM MUMBAI DISTRICT CENTRAL CO-OPERATIVE BANK AS INCOME FROM OTHER SOURCES. DURING THE FIRST APPE LLATE STAGE THE LD. CIT(A) OBSERVED THAT THE ASSESSING OF FICER HAS NOT EXAMINED THE CORE INGREDIENTS OF BANKING BUSINESS. MERELY, THE ASSESSEES HAVE BEEN ACCEPTING THE DEPOSIT AND ADVANCE/LOAN TO ITS MEMBER CANNOT BE HE LD AS ENGAGED IN THE BUSINESS OF BANKING. THE ASSESSEE S SOCIETY HAS NO LICENCE UNDER THE BANKING REGULATION ACT. THE LD. CIT(A) AFTER FOLLOWING THE DECISION OF NAGP UR AND PANAJI BENCH IN CASE OF ACIT VS. BULDANA URBAN C-OP . CREDIT SOCIETY LTD. (32 TAXMAN 69) AND DCIT VS. JAY ALAXMI MAHILA VIVIDODESHAGALA SOUHARDA SAHAKARI LTD. (23 TAXMAN 313) AND THE HON'BLE JURISDICTIONAL HIGH COU RT IN QUEPEM URBAN CO-OPERATIVE CREDIT SOCIETY LTD. (SUPR A) HELD THAT THE ASSESSEE CANNOT BE TREATED AS A CO- OPERATIVE BANK AND THUS, THE DEDUCTION CANNOT BE DE NIED. WE HAVE NOTED THAT SIMILAR VIEW HAS BEEN TAKEN BY S INGLE MEMBER BENCH OF THIS TRIBUNAL IN M/S ASHIRWAD CO-OP . CREDIT SOCIETY LTD. (SUPRA) (AUTHORED BY LD. ACCOUN TANT ITA NO.864/MUM/2017 KEM HOSPITAL & SHETH GMS COLLAGE EMPLOYEES CO-OP. CREDIT SOCIETY LTD. 6 MEMBER). WE HAVE NOTED THAT THE LD. CIT(A) HAS FOLL OWED THE DECISION OF JURISDICTIONAL HIGH COURT WHILE GRA NTING RELIEF TO THE ASSESSEE. NO CONTRARY DECISION IS BRO UGHT TO OUR NOTICE TO TAKE THE DIFFERENT VIEW. THE DECISION RELIED BY LD DR IS NOT HELPFUL TO THE REVENUE AS THE SOLE GROUND OF APPEAL RAISED BY THE REVENUE IS COVERED BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN QUEPEM URBAN CO- OPERATIVE CREDIT SOCIETY LTD (SUPRA). IN THE DECISI ON OF JANSAMPARAK ADVERTISING (P) LTD, THE REVENUE AUTHOR ITIES HAVE NOT EXAMINED THE FACT PROPERLY AND THE ADDITIO NS WERE DELETED, HERE THE SOLE ISSUES IS WHETHER THE ASSESSEE-SOCIETY IS CO-OPERATIVE SOCIETY OR CO-OPER ATIVE BANK, WHICH HAS BEEN EXAMINED BY LD CIT(A). THUS, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER P ASSED BY LD. CIT(A). 5. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMISSED . WE FIND THAT IN THE AFORESAID ORDER HAS DULY CONSI DERED THE FACTUAL MATRIX AND EVEN BEFORE US, THERE IS NOT DIS PUTE THAT THE ASSESSEE IS A COOPERATIVE SOCIETY OF THE EMPLOY EES OF KEM HOSPITAL AND SETH GSM COLLAGE AND ALSO REGISTERED U NDER THE MAHARASHTRA STATE COOPERATIVE SOCIETY ACT. THE ASSE SSEE IS PROVIDING CREDIT FACILITIES TO ITS MEMBERS ONLY. TH E TRIBUNAL HAS ALREADY CONSIDERED THE FACTUAL AS WELL AS LEGAL POSITION AND FOLLOWED THE DECISION FROM HON'BLE JURISDICTION AL HIGH COURT IN QUEPEM URBAN CO-OP. CREDIT SOCIETY LTD. (2 015) 58 TAXMAN.COM 113(BOM.) AND VARIOUS OTHER DECISIONS, THEREFORE, FOLLOWING THE AFORESAID ORDER, WE FIND N O INFIRMITY ITA NO.864/MUM/2017 KEM HOSPITAL & SHETH GMS COLLAGE EMPLOYEES CO-OP. CREDIT SOCIETY LTD. 7 IN THE CONCLUSION OF THE FIRST APPELLATE AUTHORITY, RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT T HE CONCLUSION OF HEARING ON 20/06/2018. SD/- SD/- ( MANOJ KUMAR AGGARWAL ) (JOGINDER SINGH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER ' MUMBAI; + DATED : 20/06/2018 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./ / THE APPELLANT (RESPECTIVE ASSESSEE) 2. 01./ / THE RESPONDENT. 3. 2 2 3& ( - ) / THE CIT, MUMBAI. 4. 2 2 3& / CIT(A)- , MUMBAI, 5. 56 0&# , 2 -) # 7 , ' / DR, ITAT, MUMBAI 6. 8$ 9' / GUARD FILE. ! / BY ORDER, /! (DY./ASSTT. REGISTRAR) , ' / ITAT, MUMBAI