DCIT, Circle - Nadia, Nadia V. Nadia Dist. Central Cooperative Bank Ltd., Nadia

ITA 963/KOL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2466 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 03-06-2009
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Assessee Lawyers: S K GHOSH
• Keywords: Business income

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA ( (( ( ) )) ) . .. . . . . . , ,, , ! ! ! ! '#$ '#$ '#$ '#$ . .. .% %% % . . . . &' &' &' &', , , , () () () () [BEFORE HONBLE SHRI G. D. AGRAWAL, VP & HONBLE SR I D. K. TYAGI, JM] $* $* $* $* / ITA NO. 963 /KOL/2009 +, #-. +, #-. +, #-. +, #-./ // / ASSESSMENT YEAR : 2004-05 DEPUTY COMMISSIONER OF INCOME-TAX, -VS- NADIA DIS T. CENTRAL CO-OP. BANK LTD. CIRCLE NADIA.. (PA NO. AAALN 0139 M) (01 / APPELLANT ) (2&01/ RESPONDENT ) FOR THE APPELLANT: / SRI P. K. MISHRA FOR THE RESPONDENT: / SHRI S. K. GHOSH (%3 / ORDER PER D. K. TYAGI, JM ( . . . . % %% % . . . . &' &' &' &', () ) THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER OF THE LD. CIT(A), KOLKATA DATED 29.01.2009 FOR THE ASSESSMEN T YEARS 2004-05 ON THE FOLLOWING SOLE GROUND : THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, C IT(A) ERRED IN LAW IN HOLDING THAT DEDUCTION U/S. 80P OF THE INCOME TAX ACT IS ALLOWAB LE TO THE ASSESSEE IN RESPECT OF INTEREST INCOME, INTEREST INCOME FROM NOMINAL MEMBE RS AND INTEREST INCOME FROM TRADING IN GOVT. SECURITIES AND OTHER INTEREST. 2. THE APPEAL FILED BY THE REVENUE IS DELAYED BY 17 DAYS AND A CONDONATION PETITION HAS BEEN FILED. AFTER HEARING BOTH THE SIDES, WE C ONDONE THE DELAY OF 17 DAYS AND THE APPEAL OF THE REVENUE IS ADMITTED FOR HEARING ON ME RITS. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AO AFTER EXAMINING IN DETAIL THE ADMISSIBILITY OF DEDUCTION U/S. 80P OF THE I. T. AC T, IN RESPECT OF INTEREST INCOME FROM MEMBERS, NON-MEMBERS, SLR INVESTMENTS, NON-SLR INVE STMENTS AND INCOME FROM NON- STATUTORY INVESTMENTS LIKE TRADING IN GOVT. SECURIT IES ETC. AND CAME TO THE CONCLUSION THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80 OF THE I. T. ACT IN RESPECT OF INCOME FROM MEMBERS, INCOME FROM SLR INVESTMENTS, INCOME F ROM DIVIDEND AND INCOME FROM LOCKER RENT. ACCORDINGLY THE AO REJECTED THE DEDUCT ION OF SECTION 80P OF THE ACT IN RESPECT OF INCOME FROM NON-MEMBERS, INCOME FROM NOM INAL MEMBERS, INCOME FROM NON-SLR INVESTMENTS AND INCOME FROM GOVT. SECURITIE S AND OTHER NON-SLR INVESTMENTS. IN APPEAL, THE LD. CIT(A) FOLLOWING TH E ORDER OF THE ITAT, KOLKATA BENCH DIRECTED THE AO TO ALLOW THE DEDUCTION U/S. 80P OF THE INCOME TAX ACT ON THE BUSINESS INCOME OF THE ASSESSEE I.E. INCOME FROM NON-MEMBERS , INCOME FROM NOMINAL MEMBERS, INCOME FROM NON SLR INVESTMENTS, INCOME FROM GOVT. AND OTHER SECURITIES. AGGRIEVED BY THE SAID ORDER, NOW THE REVENUE IS IN APPEAL BEF ORE US. 2 4. AT THE TIME OF HEARING, THE LD. DR HEAVILY RELIE D ON THE ORDER OF THE AO AND SUBMITTED THAT ACCORDING TO THE PROVISION OF SEC. 8 0P(2)(A)(I) OF THE INCOME TAX ACT, 1961, A CO-OPERATIVE SOCIETY ENGAGED IN CARRYING ON THE BUSINESS OF BANKING OR PROVIDING CREDIT FACILITIES TO ITS MEMBERS CAN AVAI L ITSELF THE BENEFIT OF DEDUCTION UNDER THIS SECTION. BANKING ACTIVITIES OF CO-OPERATIVE B ANK IS CLEARLY DEFINED IN THE BANKING REGULATION ACT, 1949 AND WEST BENGAL CO-OPERATIVE S OCIETIES ACT TO BE ELIGIBLE FOR CLAIMING DEDUCTION U/S. 80P(2)(A)(I) OF THE I. T. A CT, 1961. THE LD. CIT(A) WAS NOT JUSTIFIED IN ALLOWING DEDUCTION U/S. 80P(2)(A)(I) O F THE I. T. ACT, 1961 IN RESPECT OF ALL INCOMES APART FROM THE CORE BUSINESS AS MENTIONED I N THE PREAMBLE OF THE W.B. COOPERATIVE SOCIETIES ACT I.E. INCOME FROM NON-MEMB ERS, NOMINAL MEMBERS, NON SLR INVESTMENT ETC. HE, THEREFORE, URGED BEFORE THE BEN CH TO SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF AO. 5. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE AT THE TIME OF HEARING BEFORE US RELIED ON THE ORDER OF THE LD. CIT(A) AND ALSO S UBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE VIDE ITS OWN CASE IN ITA NOS . 28, 29 & 30/KOL/2008 FOR AY 2002-03 TO 2004-05 DATED 29.2.2008. WHICH WAS PASSE D FOLLOWING THE EARLIER ORDER OF THE ITAT IN ITA NOS. 28 TO 30/KOL/2008, DCIT V. THE WEST BENGAL STATE COOPERATIVE BANK LTD. FOR AYS 2002-03 TO 2004-05 DATED 29.2.200 8. 6 WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOT H THE SIDES, PERUSED THE MATERIAL PLACED BEFORE US AND ALSO THE CASE LAW CIT ED BY THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THAT THE LD. CIT(A) WHILE GIVING RELIEF TO THE ASSESSEE HAS OBSERVED AS UNDER : 4. I HAVE CAREFULLY CONSIDERED THE ABOVE. I HAVE ALSO GONE THROUGH THE ORDERS OF THE HIGH COURTS AND ITAT REFERRED TO BY THE APPELLANT. I HAVE ALSO PERUSED ORDER OF THE ITAT, KOLKATA BENCH IN ITA NO. 28, 29 AND 30/KOL/20 08 DATED 02.02.2008 IN THE CASE OF WEST BENGAL STATE CO-OPERATIVE BANK. THE FACTS OF THE CASE OF THE APPELLANT ARE SAME AS THOSE IN THE CASE OF THE WEST BENGAL STATE CO-OP ERATIVE BANK. THE RELEVANT PORTION OF THE ITAT ORDERS REFERRED TO ABOVE ARE EXTRACTED BELOW : CIT VS. BARODA PEOPLES CO-OPT. BANK LTD. [2006] 280 ITR 282 (GUJ.) THE ASSESSEE A CO-OPERATIVE BANK EARNED INTEREST FR OM INVESTMENTS IN (I) IDBI BONDS; (II) SBI BONDS; (III,) SARDAR SAROVAR NARMAD A BONDS; AND (IV) KISAN VIKAS PAATRA. THE ASSESSING OFFICER TREATED ALL THE AFORESAID INVESTMENTS AS FIXED CAPITAL AND HELD THAT THE INVESTMENTS WERE NOT AVAILABLE FOR NORMAL BANKING BUSINESS. THEREFORE, THE ENTIRE INCOME WAS TAXABLE. THE SPECIAL BENCH OF THE TRIBUNAL HELD THAT THE INCOME WAS ENTITLED T O SPECIAL DEDUCTION U/S. 80P. ON APPEAL TO THE HIGH COURT: HELD DISMISSING THE APPEAL, THAT THE TRIBUNAL WAS R IGHT IN ALLOWING DEDUCTION U/S. 80P(2)(A)(I) OF THE ACT ON INTEREST INCOME AS BEING ATTRIBUTABLE TO THE BUSINESS OF BANKING. 3 MILLI CO-OP. URBAN BANK LTD VS. ITO [2007] 291 ITR (AT) 163 [HYD] HELD, THAT TO BE ELIGIBLE FOR EXEMPTION U/S.80P(2) (A)(I), CO-OPERATIVE HANK NEED NOT DEAL ONLY WITH ITS MEMBERS. EXEMPTION UNDER THE SEC TION HAS NOR BEEN GRANTED ON THE PRINCIPLE OF MUTUALITY ALONE. AS SUCH, A SEPARATE EXEMPTION PROVISIONS IS NOT REQUIRED FOR RECEIPTS THAT SATISFY: THE PRINCIPLE OF MUTUALI TY. SUCH RECEIPTS ARE NOT INCOME AND ARE OUTSIDE THE SCOPE OF SECTION 4 OF THE ACT. THERE WA S NO REASONS WHY THE CONJUNCTION OR EACH BECOMES A SEPARATE ENTITY BY ITSELF AND T HE PRINCIPLE OF EJUSDEM GENERIS CANNOT BE APPLIED. HENCE IN ORDER TO BE ELIGIBLE TO CLAIM EXEMPTION U/S. 80P(2)(A)(I), A COOPERATIVE BANK NEED NOT CARRY ON THE BUSINESS OF BANK ONLY WITH ITS MEMBERS. INCOME ATTRIBUTABLE TO BANKING ACTIVITIES CARRIED ON WITH NON-MEMBERS WILL ALSO BE ENTITLED TO SPECIAL DEDUCTION UNDER THIS SECTION. AS BOTH FACTUALLY AS WELL LEGALLY THE COUNTER ARGUM ENTS OF THE LD. A.R. ARE APPEARED TO HE SOUND AND REASONABLE HACKED BY THE AFORESAID CAS E LAWS, WE DO NOT HAVE ANY HESITATION TO REJECT THE GROUNDS OF THE APPEAL. ACC ORDINGLY, THE GROUNDS IN APPEALS FOR ALL THE THREE YCARS ARE HEREBY REJECTED. IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE APPELLAN T IS ELIGIBLE FOR DEDUCTION U/S 80P OF THE ACT IN RESPECT OF INTEREST INCOME FROM NON-MEMBERS, INTEREST INCOME FROM NOMINAL MEMBERS AND INTEREST INCOME FROM TRADING IN GOVERNM ENT SECURITIES AND OTHER INVESTMENTS. RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT, KOLKA TA BENCH REFERRED TO ABOVE I DIRECT THE. ASSESSING OFFICER TO ALLOW THE DEDUCTION U/S 8 0P OF THE INCOME TAX ACT ON THE BUSINESS INCOME OF THE APPELLANT I.E. INCOME FROM N ON-MEMBERS, INCOME FROM NOMINAL MEMBERS, INCOME FROM NON SLR INVESTMENTS, INCOME FR OM GOVERNMENT AND OTHER SECURITIES. SINCE THE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESS EE BY PLACING RELIANCE ON THE ORDER OF THE ITAT, COPY OF WHICH WAS FILED DURING THE HEARIN G AND IS AVAILABLE ON RECORD, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AN D THE SAME IS HEREBY UPHELD. THE APPEAL OF THE REVENUE IS, THEREFORE, DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 16.7.10 SD/- SD/- . .. . . . . . , , , , ! ! ! ! . . . . % %% % . . . . &' &' &' &', , , , () (G. D. AGRAWAL) (D. K. TYAGI) VICE PRESIDENT JUDICIAL MEMBER ( (( (4 4 4 4) )) ) DATED : 16 TH JULY, 2010 #56 +7 +8# JD.(SR.P.S.) 4 (%3 9 2++: %:-;- COPY OF THE ORDER FORWARDED TO: 1. 01 /APPELLANT DCIT, CIRCLE - NADIA 2 2&01 / NADIA DIST. CENTRAL CO-OP. BANK LTD., M. M. GHOSH STREET, KRISHNAGAR, DIST. NADIA, WEST BENGAL. .. . 3. +3/ THE CIT, KOLKATA 4. +3 ()/ THE CIT(A), KOLKATA 5. #B+' 2+ / DR, KOLKATA BENCHES, KOLKATA &: 2+/ TRUE COPY , (%3C/ BY ORDER , $ / DEPUTY REGISTRAR .