Kararinakam Service Co-op Bank Ltd, Kannur V. ITO, Kannur

MA 108/COCH/2013

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2032 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-06-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 26-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 18-09-2013
• Court: TRIBUNAL
• Department Lawyers: K K JOHN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NO.402/COCH/2013 ASSESSMENT YEAR : 2009-10 THE I.T.O., WARD-1, KANNUR VS. THE KARARINAKAM SERVICE BANK LTD., KURUVA, KADLAYI, KANNUR. [PAN: AAAAK 9728] (REVENUE -APPELLANT) (ASSESSEE-RESPONDEN T) C.O. NO. 17/COCH/2013 (ARSG. OUT OF I.T.A. NO.402/COCH/2013) ASSESSMENT YEAR : 2009-10 THE KARARINAKAM SERVICE BANK LTD., KURUVA, KADLAYI, KANNUR. [PAN: AAAAK 9728] VS. THE I.T.O., WARD-1, KANNUR (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) M.P. NO. 108/COCH/2013 (ARSG. OUT OF I.T.A. NO.293/COCH/2013) ASSESSMENT YEAR : 2009-10 THE KARARINAKAM SERVICE BANK LTD., KURUVA, KADLAYI, KANNUR. [PAN: AAAAK 9728] VS. THE I.T.O., WARD-1, KANNUR (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY NONE REVENUE BY SHRI K.K. JOHN, SR. DR DATE OF HEARING 26/06/2014 DATE OF PRONOUNCEMENT 26/06/2014 I.T.A. NO. 402/COCH/2013, C.O. NO. 17/COCH/2013 & M.P. NO. 108/COCH/2013 2 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJE CTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT( A), KOZHIKODE DATED 28-03- 2013 FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE HAS ALSO FILED MISCELLANEOUS PETITION IN M.P. NO. 108/COCH/2013 FO R ASSESSMENT YEAR 2009-10 SEEKING RECALL OF THE EX PARTE ORDER OF THE TRIBUNA L IN I.T.A. NO. 293/COCH/2013 DATED 18/07/2013. 2. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY ADJOURNMENT APPLICATION FILED BEFORE THE TRIBUNAL. BEING SO, WE ARE INCLINED TO DISMISS THE CROSS OBJECTION FILED BY THE ASSESSEE A S WELL AS THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE BY PLACING RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF MULTIPLAN INDIA LIMITED VS. CIT, 38 ITD 320 (NEW DELHI) AND THE JUDGMENT OF HONBLE MADHYA PRADESH HIGH COURT IN TH E CASE OF LATE TUKOJIRAO HOLKAR, 223 ITR 480 (M.P.), WHEREIN IT WAS HELD THA T THE APPEAL FILED BY THE ASSESSEE CAN BE DISMISSED FOR WANT OF PROSECUTION. 3. COMING TO THE REVENUE APPEAL, THE REVENUE HAS RA ISED THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, HAS NOT THE COMMISSIONER OF INCOME TAX(APPEALS) ERRED I N LAW IN DECIDING THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTIO N U/S. 194A(3)(VIIA) WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE-SOCI ETY IS ENGAGED IN CARRYING ON THE BUSINESS OF BANKING? 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) OUGHT TO HAVE SEEN THAT THE ASSESSING OFFICER HAS CLEARLY ES TABLISHED IN PARA 7 TO 11 OF THE ASSESSMENT ORDER THAT THE ASSESSEE BAN K IS NEITHER A I.T.A. NO. 402/COCH/2013, C.O. NO. 17/COCH/2013 & M.P. NO. 108/COCH/2013 3 PRIMARY CREDIT SOCIETY NOR A PRIMARY AGRICULTURAL C REDIT SOCIETY AND THE ASSESSEE IS CARRYING ON THE BUSINESS OF BANKING . 3. THE HONBLE ITAT KOCHI IN THEIR ORDER IN I.T.A. NO. 311/COCH/2012 DATED 22-03-2013 IN THE CASE OF M/S. KARIVELLUR SER VICE CO-OP BANK LTD., KANNUR HAS HELD THAT IN VIEW OF THE ADMITTED FACT THAT THE TAX PAYER IS MAINTAINING SAVINGS BANK A/C, CURRENT A/C AND PROVIDING CHEQUE FACILITY TO ITS CUSTOMERS, IT IS OBVIOUS THA T THE TAX PAYER IS ENGAGED ITSELF IN THE BUSINESS OF BANKING AND CONF IRMED THE DISALLOWANCE MADE U/S. 40(A)(IA). 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF THE DECISION OF THE HONBLE ITAT IN I.T.A. NO. 311/COCH/2012 DATED 22-03-2013 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS RIGHT IN LAW IN ALLOWING ASSESSEES CL AIM FOR EXEMPTION UNDER SECTION 194A(3)(VIIA) SINCE FACTS OF THE CASE ARE IDENTICAL. 4. AFTER HEARING THE LD. DR, WE ARE OF THE OPIN ION THAT THIS ISSUE WAS DECIDED BY THIS TRIBUNAL IN THE CASE OF KARIVELLUR SERVICE CO-OP BANK LTD., WHEREIN THE TRIBUNAL HAS HELD IN PARA 11 AS FOLLOW S: 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE CASE OF KADACHIRA SERVICE CO-OPERATIVE BANK LTD. (SUPRA), T HIS TRIBUNAL FOUND THAT THE THE TAXPAYERS WERE NOT CARRYING ON ANY BAN KING ACTIVITY AND, THEREFORE, THEY ARE AGRICULTURAL CO-OPERATIVE SOCIE TIES. IN VIEW OF THE SPECIFIC PROVISIONS EXEMPTING THE AGRICULTURAL CO-O PERATIVE SOCIETIES FROM DEDUCTION OF TAX IN RESPECT OF AGRICULTURAL CO -OPERATIVE SOCIETIES THIS TRIBUNAL FOUND THAT SECTION 194A(3)(VIIA) IS N OT APPLICABLE TO AGRICULTURAL CO-OPERATIVE SOCIETIES. IN THIS CASE, IT APPEARS THAT THE TAXPAYER WAS ACCEPTING DEPOSITS AND MAINTAINING SAV INGS BANK ACCOUNT AND CURRENT BANK ACCOUNT. THE TAXPAYER IS PROVIDING CHEQUE FACILITIES TO ITS CUSTOMERS. APART FROM THIS, THE TAXPAYER IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF CEMENT, HAR DWARE, MEDICINE AND HOME APPLIANCES. THE LOAN APPEARS TO HAVE BEEN GIVEN ON PLEDGING OF GOLD JEWELLERY AND MORTGAGE OF LAND. I N VIEW OF THE ADMITTED FACT THAT THE TAXPAYER IS MAINTAINING SAVI NGS ACCOUNT, CURRENT ACCOUNT AND PROVIDING CHEQUE FACILITY TO IT S CUSTOMERS, IT IS OBVIOUS THAT THE TAXPAYER IS ENGAGED ITSELF IN THE BUSINESS OF BANKING APART FROM OTHER TRADING ACTIVITIES. EXEMPTION U/S. 194A(3)(VIIA) IS I.T.A. NO. 402/COCH/2013, C.O. NO. 17/COCH/2013 & M.P. NO. 108/COCH/2013 4 APPLICABLE ONLY IN RESPECT OF AGRICULTURAL COOPERAT IVE SOCIETIES. THE AGRICULTURAL CO-OPERATIVE BANKS ARE BOUND TO DEDUCT TAX. IN THIS CASE, ADMITTEDLY, THE TAX PAYER IS ENGAGED IN THE B ANKING ACTIVITY AND MAINTAINING SAVINGS BANK ACCOUNT, CURRENT ACCOUNT A ND PROVIDING CHEQUE FACILITY TO ITS CUSTOMERS. THEREFORE, THE TA XPAYER IS BOUND TO DEDUCT TAX IN RESPECT OF INTEREST ON THE DEPOSITS. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE DECI SION IN THE CASE OF KADACHIRA SERVICE CO-OPERATIVE BANK LTD.(SUPRA) MAY NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE. ACCOR DINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE CONFIRMED. 5. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE TRIBUNAL, WE ARE INCLINED TO DECIDE THIS ISSUE AGAINST THE ASSESSEE AND SO, T HIS GROUND OF THE REVENUE IS ALLOWED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED AND THE CROSS OBJECTION IN C.O. NO.17/COCH/2013 AND THE MISCELLAN EOUS PETITION IN M.P. NO. 108/COCH/2013 FILED BY THE ASSESSEE ARE DISMISSED. PRONOUNCED ACCORDINGLY ON 26-06-2014. SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 26 TH JUNE,2014 GJ COPY TO: 1. THE KARARINAKAM SERVICE BANK LTD., KURUVA, KADLA YI, KANNUR. 2. THE INCOME TAX OFFICER, WARD-1, KANNUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS), KOZHIKO DE. I.T.A. NO. 402/COCH/2013, C.O. NO. 17/COCH/2013 & M.P. NO. 108/COCH/2013 5 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T. COCHIN