ASSISTANT COMMISSIONER OF INCOME -TAX 2(1), RAIPUR (CG) V. BASTAR DISTRICT CO -OPERATIVE, JAGDALPUR (CG)

ITA 94/BIL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85381 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 12-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Keywords: Business income

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL,BENCH -RAIPUR . .. . . .. . , ,, , ! ! ! !, ,, , . .. . . .. . BEFORE S/SH.H.L.KARWA,PRESIDENT AN D RAJENDRA,ACCOUNTANT MEMBER ./ ITA NO.94/BLPR/2011- # # # # / // / ASSESSMENT YEAR -2007-08 ASSTT. COMMISSIONER OF INCOME-TAX-2(1), BILASPUR. V/S. BASTAR DISTRICT CO-OPERATIVE AGRICULTURAL & RURAL DEVELOPMENT BANK, JAGDALPUR. PAN:AAATB 9143 P ( ) / // / APPELLANT ) ( *+) / RESPONDENT ) REVENUE BY : SH.D.K. JAIN, SR. DR ASSESSEE BY : NONE - /DATE OF HEARING : 23-12-2014 - /DATE OF PRONOUNCEMENT : 23-12-2014 # # # # , 1961 1961 1961 1961- - - - 254 254254 254( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM < << < = = = =, ,, , ! ! ! ! : CHALLENGING THE ORDER,DATED 28.03.2011,OF THE CIT(A ),RAIPUR,THE ASSESSING OFFICER(AO)HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. WHETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION OF ITS ENTIRE INCOME FROM TAX U/S. 80P(2)(A)(I) OF THE I.T. ACT, 1961. 2. THE ORDER OF LD. CIT(A) IS ERRONEOUS BOTH IN LAW AN D ON FACTS. ASSESSEE,A COOPERATIVE SOCIETY,ENGAGED IN THE BUSIN ESS OF PROVIDING FINANCE FACILITIES TO ITS MEMBERS FOR AGRICULTURE AND ALSO FOR RURAL DEVELOPM ENT,FILED ITS RETURN OF INCOME ON 31.10. 2007,DECLARING INCOME OF (-)63.17 LAKHS.THE AO FINA LISED THE ASSESSMENT ON 27.11.2009, U/S.143(3) OF THE ACT,DETERMINING THE TOTAL INCOME AT RS.52,01,235/-. 2. FIRST GROUND OF APPEAL IS DIRECTED ABOUT DEDUCTION U/S.80P(2)(A)(I)OF THE ACT.AFTER COMPLETION OF THE ASSESSMENT PROCEEDINGS,THE ASSESS EE FILED AN APPLICATION ON 27.07.2010, U/S.154 OF THE ACT BEFORE THE AO.IN THAT APPLICATIO N,THE ASSESSEE STATED THAT IT FELL UNDER THE CATEGORY OF PRIMARY CREDIT SOCIETY(PCS)OR A PRIMARY CREDIT AGRICULTURE AND RURAL DEVELOP - MENT BANK(PCARDB),THAT IT WAS ENGAGED IN PRIMARY LA NDING TO ITS MEMBER THROUGH ITS BRANCHES,THAT IT WAS NOT ENGAGED IN ANY NON BANKING ACTIVITIES,THAT IT WAS ENTITLED TO CLAIM U/S.80P(2)(A)(I)OF THE ACT.THE AO VIDE HIS ORDER DA TED 27.07.2010 STATED THAT THE ASSESSEE WAS A BANK AND DEEMED CO-OPERATIVE SOCIETY AS PER T HE CO-OPERATIVE SOCIETY ACT, THAT THE FUNCTIONARIES OF THE ASSESSEE WERE AS BANKING AND N OT AS PER CO-OPERATIVE SOCIETY , THAT IT WAS NOT ELIGIBLE FOR DEDUCTION U/S.80P(2) OF THE ACT.FI NALLY,HE REJECTED THE APPLICATION FILED BY THE ASSESSEE. 2.1. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM THE ASSESSEE SU BMITTED THAT IT WAS PROVIDING FINANCE FACILITIES TO ITS MEMBERS FOR AGRICULTURE AND RELAT ED OPERATIONS,THAT IT HAD PROPERLY MAINTAINED ITS BOOKS OF ACCOUNTS,THAT BOOKS WERE SUBJECT TO ST ATUTORY AUDIT,THAT AO HAD DENIED THE DEDUCTION ON THE INCORRECT PRESUMPTION THAT THE ASS ESSEE WAS A BANK AND DEEMED CO- 2 OPERATIVE SOCIETY. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,T HE ASSESSMENT ORDER AND THE ORDER PASSED BY THE AO U/S.154 OF THE ACT,THE FAA HELD THAT THE INTENTION OF THE LAW FRAMERS IN ENACTING SECTION 80P OF THE ACT WAS TO PROVIDE A PREFERENTIA L TREATMENT TO CO-OPERATIVE SOCITIES,THAT VARIOUS RELIEFS AND CONCESSION WERE ALLOWED TO THEM ,THAT SECTION 80P ALLOWED EXEMPTION TO THE EXTENT BUSINESS INCOME ARISES OUT OF CERTAIN KI ND OF ACTIVITIES,THAT EACH HEAD OF EXEMPTION WAS TO BE TREATED AS A SEPARATE AND DISTINCT HEAD O F EXEMPTION,THAT THEY WERE CUMULATIVE OR MUTUALLY SUPPLEMENTARY,THAT A WAS A VOLUNTARY AOP, THAT THE ASSESSEE WAS A CO-OPERATIVE SOCIETY REGISTERED UNDER MP CO-OPERATIVE SOCIETY A CT,1960, THAT LAND MORTGAGE BANKS AND PRIMARY AGRICULTURAL SOCIETIES WERE EXCLUDED FROM T HE AMBIT OF THE BANKING REGULATION ACT,THAT THE NOMENCLATURE OF THE ASSESSEE SUGGESTED THAT IT WAS A BANK,THAT IN FACT IT WAS A CO-OPERATIVE SOCIETY ENGAGED IN PROVIDING FINANCE /CREDIT FACILITIES TO ITS MEMBERS,THAT IT WAS PROVIDING FINANCE FOR RURAL DEVELOPMENT ALSO,TH AT IT HAD RIGHTLY CLAIMED THE DEDUCTION. 2.2. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)SUPPOR TED THE ORDER OF THE AO AND STATED THAT DEDUCTION WAS ALLOWABLE TO PCS ONLY AND NOT TO BANKS,THAT THE ASSESSEE WAS A BANK.THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT IT WAS NOT A BANK,THAT IT WAS ADVANCING LOANS TO ITS MEMBERS. WE HAVE CONSIDERED THE MATERIAL AVAILABLE ON RECORD .WE FIND THAT WHILE PASSING THE ORDER U/S.143(3)OF THE ACT,THE AO HIMSELF HAS HELD THAT T HE ASSESSEE WAS A CO-OPERATIVE SOCIETY AND WAS INVOLVED IN BANKING BUSINESS AND WAS WORKIN G AS PER THE GUIDELINES OF SCARDBS/ PCARDBS ISSUED BY THE RBI.THE AO HAS TAKEN TWO DIVE RGENT VIEWS WHILE PASSING ORDERS U/S.14(3) OF THE ACT AND WHILE PASSING RECTIFICATIO N ORDER.THE ASSESSEE IS A PCARDB AND IS DOING PRIMARY LENDING TO ITS MEMBERS IN THE DISTRIC TS OF JAGDALPUR AND BASTAR.AFTER CONSIDERING THE ABOVE WE ARE OF THE OPINION THAT TH E ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. UPHOLDING HIS ORDER,WE DECIDED EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSE D. > #>< @ A - ORDER PRONOUNCED IN THE OPEN COURT ON 23 ,DECE MBER,2014. - E 23 F ,2014 - . SD/- SD/- (H.L.KARWA/ . .. . . .. . ) ( ! ! ! ! / RAJENDRA) PRESIDENT/ = = = = /ACCOUNTANT MEMBER /RAIPUR. F DATE: 23.12.2014 - -- - *#GH *#GH *#GH *#GH IH IH IH IH / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / ) 2. RESPONDENT / *+) 3. THE CONCERNED CIT(A)/ J K , 4. THE CONCERNED CIT / J K 5. DR ITAT,RAIPUR BENCH/ H *## , . . . , 6. GUARD FILE/ . +H *# //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, RAIPUR