The ITO, Kollam V. The Mayyanad Regional Co-op Bank Ltd, Kollam

ITA 98/COCH/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2276 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 03-09-2018
• Assessment Year: 2013-2014
• Appeal Filed On: 24-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S BINDHU
• Assessee Lawyers: PRASAD VIDYADHARAN
• Keywords: Question of law; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI CHANDRA POOJAR I, AM & SHRI GEORGE GEORGE K, JM ITA NO. 98 / COCH/201 7 : ASST.YEAR 201 3 - 201 4 THE INCOME TAX OFFICER WARD 4 KOLLAM. VS. M/S.THE MAYYANAD REGIONAL CO - OPERATIVE BANK LIMITED, MAYYANAD KOLLAM PAN : AADAT7783M. (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.A.S.BINDHU RESPONDENT BY : SRI.PRASAD VIDYADHARAN DATE OF HEARING : 03.09.2018 DATE OF PRONOUNCEMENT : 03 .09.2018 O R D E R PER GEORGE GEORGE K, JM THIS APPEAL AT THE INSTANCE OF THE REVENUE IS DIRECTED AGAINST CIT(A)S ORDER DATED 12.01.2017 . THE RELEVANT ASSESSMENT YEAR IS 201 3 - 201 4 . 2. THE REVENUE HAS RAISED SEVERAL GROUNDS AND ADDITIONAL GROUNDS. ALL THE GROUNDS AND ADDITIONAL GROUND RELATING TO THE SOLITARY ISSUE WHETHER THE CIT(A) IS JUSTIFIED IN GRANTING DEDUCTION U/S 80P OF THE INCOME - TAX ACT. 3. BRIEF FACTS OF THE CASE ARE AS FOLLOWS: - THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969. IT IS ENGAGED IN THE BUSINESS OF PROVIDING CREDIT FACILITIES TO ITS MEMBERS. FOR THE ASSESSMENT YEAR 2013 - 2014, THE ITA NO. 98 / COCH /201 7 M/S. THE MAYYANAD REGIONAL CO - OP BANK LTD. 2 ASSESSMENT WAS COMPLETED VIDE ORDER DATED 30.03.2016, WHEREIN THE CLAIM OF DEDUCTION MADE U/S 80P(2) OF THE I.T.ACT WAS REJECTED. THE REASONING OF THE A.O. TO DISALLOW THE CLAIM OF DEDUCTION U/S 80P(2) OF THE I.T.ACT WAS THAT THE ASSESSEE WAS PRIMARILY ENGAGED IN THE BUSINESS OF BANKING AND BY VIR TUE OF INSERTION OF SUB - SECTION (4) TO SECTION 80P OF THE I.T.ACT WITH EFFECT FROM 01.04.2007, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S 80P(2) OF THE I.T.ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPE LLATE AUTHORITY. THE CIT(A) FOLLOWING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE CHIRAKKAL SERVICE CO - OPERATIVE BANK LTD. & ORS. V. CIT [(2016) 384 ITR 490 (KER.)] HELD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 80P(2) OF THE I.T.ACT. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE GROUNDS AND THE ADDITIONAL GRO UND RAISED. THE LEARNED AR , ON THE OTHER HAND, SUBMITTED THAT THE ISSUE IN QUESTION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF THE CHIRAKKAL SERVICE CO - OPERATIVE BANK LTD. & ORS. (SUPRA) . 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THE ASSESSEE IS A PRIMA RY AGRICULTURAL CREDIT SOCIETY. COPY OF THE CERTIFICATE ISSUED BY THE REGISTRAR OF CO - OPERATIVE SOCIETIES, EVIDENCING THAT THE ITA NO. 98 / COCH /201 7 M/S. THE MAYYANAD REGIONAL CO - OP BANK LTD. 3 ASSESSEE IS A PRIMA RY AGRICULTURAL CREDIT SOCIETY UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969, IS ON RECORD. THE HONBLE HIGH COURT OF KERALA IN THE CASE OF THE CHIRAKKAL SERVICE CO - OP BANK LTD. (SUPRA) HAD HELD THAT A PRIMARY AGRICULTURAL CREDIT SOCIETY, REGISTERED UN DER THE KERALA COOPERATIVE SOCIETIES ACT, 1969 IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S. 80P(2). THE HONBLE HIGH COURT WAS CONSIDERING THE FOLLOWING SUBSTANTIAL QUESTION OF LAW: A) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE UNDER CONSI DERATION, THE TRIBUNAL IS CORRECT IN LAW IN DECIDING AGAINST THE ASSESSEE, THE ISSUE REGARDING ENTITLEMENT FOR EXEMPTION UNDER SECTION 80P, IGNORING THE FACT THAT THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY? 6.1 IN CONSIDERING THE ABOVE QUESTIO N OF LAW, THE HONBLE HIGH COURT RENDERED THE FOLLOWING FINDINGS: 15. APPELLANTS IN THESE DIFFERENT APPEALS ARE INDISPUTABLY SOCIETIES REGISTERED UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969, FOR SORT, KCS ACT AND THE BYE - LAWS OF EACH OF THEM, AS MADE AVAILABLE TO THIS COURT AS PART OF THE PAPER BOOKS, CLEARLY SHOW THAT THEY HAVE BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE PROVISIONS OF THAT ACT. THE PARLIAMENT, HAVING DEFINED THE TERM 'CO - OPERATIVE SOCIETY' FOR THE PURPOSES OF THE BR ACT WITH REFERENCE TO, AMONG OTH ER THINGS, THE REGISTRATION OF A SOCIETY UNDER ANY STATE LAW RELATING TO CO - OPERATIVE SOCIETIES FOR THE TIME BEING; IT CANNOT BUT BE TAKEN THAT THE PURPOSE OF THE SOCIETIES SO REGISTERED UNDER THE STATE LAW AND ITS OBJECTS HAVE TO BE UNDERSTOOD AS THOSE WH ICH HAVE BEEN APPROVED BY THE COMPETENT AUTHORITY UNDER SUCH STATE LAW. THIS, WE VISUALISE AS DUE RECIPROCATIVE LEGISLATIVE EXERCISE ITA NO. 98 / COCH /201 7 M/S. THE MAYYANAD REGIONAL CO - OP BANK LTD. 4 BY THE PARLIAMENT RECOGNISING THE PREDOMINANCE OF DECISIONS RENDERED UNDER THE RELEVANT STATE LAW. IN THIS VIEW OF THE MATT ER, ALL THE APPELLANTS HAVING BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER THE KCS ACT, IT HAS NECESSARILY TO BE HELD THAT THE PRINCIPAL OBJECT OF SUCH SOCIETIES IS TO UNDERTAKE AGRICULTURAL CREDIT ACTIVITIES AN D TO PROVIDE LOANS AND ADVANCES FOR AGRICULTURAL PURPOSES, THE RATE 'OF INTEREST ON SUCH LOANS AND ADVANCES TO BE AT THE RATE FIXED BY THE REGISTRAR OF CO - OPERATIVE SOCIETIES UNDER THE KCS ACT AND HAVING ITS AREA OF OPERATION CONFINED TO A VILLAGE, PANCHAY AT OR A MUNICIPALITY. THIS IS THE CONSEQUENCE OF THE DEFINITION CLAUSE IN SECTION 2(OAA) OF THE KCS ACT. THE AUTHORITIES UNDER THE IT ACT CANNOT PROBE INTO ANY ISSUE OR SUCH MATTER RELATING TO SUCH APPLICANTS. 16. THE POSITION OF 1AW BEING AS ABOVE WITH REFERENCE TO THE STATUTORY PROVISIONS, THE APPELLANTS HAD SHOWN TO THE AUTHORITIES AND THE TRIBUNAL THAT THEY ARE PRIMARY AGRICULTURAL CREDIT SOCIETIES IN TERMS OF CLAUSE (CCIV) OF SECTION 5 OF THE BR ACT, HAVING REGARD TO THE PRIMARY OBJECT OR PRINCIPAL B USINESS OF EACH OF THE APPELLANTS. IT IS ALSO CLEAR FROM THE MATERIALS ON RECORD THAT THE BYE - LAWS OF EACH OF THE APPELLANTS DO NOT PERMIT ADMISSION OF ANY OTHER CO - OPERATIVE SOCIETY AS MEMBER, EXCEPT MAY BE, IN ACCORDANCE WITH THE PROVISO TO SUB - CLAUSE 2 OF SECTION 5(CCIV) OF THE BR ACT. THE DIFFERENT ORDERS OF THE TRIBUNAL WHICH ARE IMPEACHED IN THESE APPEALS DO NOT CONTAIN ANY FINDING OF FACT TO THE EFFECT THAT THE BYE - 1AWS OF ANY OF THE APPELLANT OR ITS CLASSIFICATION BY THE COMPETENT AUTHORITY UNDER T HE KCS ACT IS ANYTHING DIFFERENT FROM WHAT WE HAVE STATED HEREIN ABOVE. FOR THIS REASON, IT CANNOT BUT BE HELD THAT THE APPELLANTS ARE ENTITLED TO EXEMPTION FROM THE PROVISIONS OF SECTION 80P OF THE IT ACT BY VIRTUE OF SUB - SECTION 4 OF THAT SECT; ON. IN T HIS VIEW OF THE MATTER, THE APPEALS SUCCEED. 17. IN THE LIGHT OF THE AFORESAID, WE ANSWER SUBSTANTIA1 QUESTION 'A' IN FAVOUR OF THE APPELLANTS ITA NO. 98 / COCH /201 7 M/S. THE MAYYANAD REGIONAL CO - OP BANK LTD. 5 AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE REGARDING THE ENTITLEMENT OF EXEMPTION UNDER SECTI ON 80P AGAINST THE APPELLANTS. WE HOLD THAT THE PRIMARY AGRICULTURAL CREDIT SOCIETIES, REGISTERED AS SUCH UNDER THE KCS ACT; AND CLASSIFIED SO, UNDER THAT ACT, INCLUDING THE APPELLANTS ARE ENTITLED TO SUCH EXEMPTION. 6.2 IN VIEW OF THE JUDGMENT OF THE H ONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE CHIRAKKAL SERVICE CO - OP BANK LTD. (SUPRA), WE HOLD THAT THE ASSESSEE - SOCIETY IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S. 80P(2) OF THE ACT. IT IS ORDERED ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 03 RD DAY OF SEPTEMBER, 2018 . SD/ - SD/ - ( CHANDRA POOJARI ) ( GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIA L MEMBER COCHIN ; DATED : 03 RD SEPTEMBER, 2018 . DEVDAS* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) TRIVANDRUM 4. THE PR.CIT, TRIVANDRUM 5. DR, ITAT, COCHIN 7. GUARD FILE. BY ODER AR/ITAT/COCHIN