The iTO, Ward-2(3), Trivandrum V. Manickal Service Co-op Bank Ltd, Trivandrum

MA 117/COCH/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8838 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-01-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 19-08-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRITUNJAYA SHARMA
• Section: 80P; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI CHANDRA POOJAR I, AM & SHRI GEORGE GEORGE K, JM MA NO. 117 /COCH/201 9 : ASST.YEAR 2014 - 2015 (ARISING OUT OF ITA NO. 99 /COCH/201 9 ) THE INCOME TAX OFFICER WARD 2(3), RANGE 3 TRIVANDRUM. VS. M/S. MANICKAL SERVICE CO - OPERATIVE BANK LIMITED, PIRAPPANCODE, VENJARAMOOD TRIVANDRUM 695 607. PAN : AADAM1119J ( APPLICANT ) (RESPONDENT) REVENUE BY : SRI.MRITUNJAYA SHARMA , SR.DR ASSESSEE BY : SRI. SANTHOSH P.ABRAHAM DATE OF HEARING : 1 0.0 1 .20 20 DATE OF PRONOUNCEMENT : 10 .01.2020 O R D E R PER GEORGE GEORGE K., JM THIS MISCELLANEOUS APPLICATION AT THE INSTANCE OF THE REVENUE IS SEEKING TO RECALL THE TRIBUNAL ORDER DATED 30.04.2019 IN ITA NO.99/COCH/2019. 2. THE ASSESSEE IS A CO - OPERATIVE SOCIETY. THE CLAIM OF DEDUCTION U/S 80P(2)(A)(I) OF THE I.T.ACT IN RESPECT OF INTEREST INCOME RECEIVED BY THE ASSESSEE ON INVESTMENT MADE WITH SUB - TREASURY, DISTRICT CO - OPERATIVE BANKS, OTHER BANKS ETC. WAS DENIED BY THE ASSE SSING OFFICER BY TREATING THE SAID INCOME AS `INCOME FROM OTHER SOURCES. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL TO THE FIRST APPELLATE AUTHORITY. THE CIT(A) FOLLOWING THE ORDER OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF KIZHATHADIYOOR SERVICE CO - OPERATIVE BANK LTD. FOR M A NO. 117 / COCH /201 9 . M/S. MANICKAL SCB LTD. 2 ASSESSMENT YEAR 2009 - 2 010 IN ITA NO.525/COCH/2014 (ORDER DATED 20.07.2016) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE CIT(A) HELD THAT INTEREST INCOME EARNED ON INVESTMENT MADE WITH TREASURY AND BANKS ARE PART OF THE BUSINESS ACTIVITY OF THE ASSESSEE AND THEREFORE, THE SA ID INCOME WAS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE I.T.ACT. 4. THE REVENUE BEING AGGRIEVED BY THE ORDER OF THE CIT(A) DIRECTING THE A.O. TO GRANT THE BENEFIT OF DEDUCTION U/S 80P OF THE I.T.ACT IN RESPECT OF INTEREST INCOME RECEIVED ON INVESTME NTS MADE WITH SUB - TREASURY, DISTRICT CO - OPERATIVE BANKS, OTHER BANKS ETC. FILED APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ORDER DATED 30.04.2019 FOLLOWING THE JUDGMENT OF THE HONBLE TELANGANA & ANDHRA PRADESH HIGH COURT IN THE CASE OF VAVERU CO - OPERAT IVE RURAL BANK LTD. V. CIT [(2017) 396 ITR 371] HELD THAT THE ASSESSEE - SOCIETY IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80P OF THE I.T.ACT. 5. AGGRIEVED BY THE ORDER OF THE TRIBUNAL DATED 30.04.2019 IN ITA NO.99/COCH/2019, THIS MISCELLANEOUS APPLICATI ON HAS BEEN FILED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELYING ON THE LARGER BENCH OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF THE MAVILAYI SERVICE CO - OPERATIVE BANK LTD. V. CIT [ITA NO.97/2016 ORDER DATED 19 TH MARCH, 2019] CONTENDED THAT GRANT OF DEDUCTION U/S 80P (2)(A)(I) OF THE I.T.ACT IS NOT AUTOMATIC . IT WAS SUBMITTED THAT EVEN IF THE FINDING IS THAT INTEREST INCOME IS TO BE ASSESSED AS INCOME FROM BUSINESS FOR GRANTING DEDUCTION U/S 80P(2)(A)(I) OF THE I.T.ACT, M A NO. 117 / COCH /201 9 . M/S. MANICKAL SCB LTD. 3 NECESSARILY THE ACTIVITIES OF THE ASSESSEE SOCIETY HAS TO BE EXAMINED IN THE LIGHT OF THE FULL BENCH JUDGMENT OF THE HONBLE KERALA HIGH COURT IN THE CASE OF THE MAVILAYI SERVICE CO - OPERATIVE BANK LTD. V. CIT (SUPRA). IT WAS SUBMITTED THAT THE ACTIVITIES OF THE ASSESSEE S OCIETY WAS NOT EXAMINED TO DETERMINE WHETHER THE ASSESSEE WAS A PRIMARY AGRICULTURAL SOCIETY OR NOT. T HEREFORE IT WAS SUBMITTED THAT THE ORDER OF THE TRIBUNAL DATED 30.04.2019 NEEDS TO BE RECALLED. THE LEARNED AR, ON THE OTHER HAND, STRONGLY RELIED ON THE ORDER OF THE TRIBUNAL 30.04.2019. 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE FIRST APPELLATE AUTHORITY AND THE TRIBUNAL HAD ALLOWED THE CLAIM OF DEDUCTION U/S 80P OF THE I.T.ACT BY FOLLOWING THE JUDGMENT O F THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO - OPERATIVE BANK LTD. (SUPRA). CERTAIN ISSUES DECIDED IN THE CASE OF CHIRAKKAL SERVICE CO - OPERATIVE BANK LTD. (SUPRA) WAS REVERSED BY THE LARGER BENCH OF THE HONBLE KERALA HIGH COURT IN THE CASE OF THE MAVILAYI SERVICE CO - OPERATIVE BANK LTD. V. CIT (SUPRA). THE LARGER BENCH OF THE HONBLE KERALA HIGH COURT HAD HELD THAT EACH ASSESSMENT YEAR IS SEPARATE AND FOR EACH OF TH E ASSESSMENT YEAR NECESSARILY AN INQUIRY HAS TO BE CONDUCTED BY THE A.O. INTO THE FACTUAL SITUATION WHETHER THE CO - OPERATIVE SOCIETIES ARE CARRYING ON THE ACTIVITIES IN ACCORDANCE WITH THE ACTIVITIES MENTIONED UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT, 1 969. IT WAS HELD BY THE LARGER BENCH OF THE HONBLE KERALA HIGH COURT THAT THE CHARACTERIZATION OF A CO - OPERATIVE SOCIETY AS A PRIMARY M A NO. 117 / COCH /201 9 . M/S. MANICKAL SCB LTD. 4 AGRICULTURAL CREDIT SOCIETY WOULD NOT SUFFICE AND IN EACH OF THE ASSESSMENT YEAR THE ACTIVITIES OF ASSESSEES SHOULD BE EX AMINED TO DETERMINE WHETHER THEY WERE ACTUALLY A CO - OPERATIVE SOCIETY OR CO - OPERATIVE BANK. IN THE CIT(A)S ORDER AND THE TRIBUNALS ORDER, NO EXAMINATION OF THE ACTIVITIES OF THE ASSESSEE WAS CARRIED OUT. THE TRIBUNAL HAD DIRECTED TO GRANT DEDUCTION U/S 8 0P OF THE I.T.ACT BY MERELY PERUSING THE CERTIFICATE ISSUED BY THE REGISTRAR OF CO - OPERATIVE SOCIETIES CHARACTERIZING THE ABOVE ASSESSEE AS A PRIMARY AGRICULTURAL CREDIT SOCIETY. 7 .1 THE HONBLE KERALA HIGH COURT IN THE CASE OF KIL KOTAGIRI TEA & COFFEE ESTATES CO. LTD. V. ITAT REPORTED IN 174 ITR 579 HAD HELD THAT WHEN AN AUTHORITY HAS DECIDED ON THE BASIS OF A DECISION OF THE HIGH COURT WHICH IS SUBSEQUENTLY REVERSED, THERE WOULD BE A RECTIFIABLE MISTAKE COMING WITHIN THE SECTION 154 OF THE INCOME - TAX A CT. THE LARGER BENCH OF THE HONBLE KERALA HIGH COURT HAS REVERSED THE DICTUM LAID DOWN BY THE JUDGMENT OF THE HONBLE KERALA HIGH COURT IN THE CASE OF CHIRAKKAL SERVICE CO - OPERATIVE BANK LTD. (SUPRA) BY HOLDING THAT THE ACTIVITIES OF THE ASSESSEE HAS TO B E EXAMINED TO DETERMINE WHETHER THE ASSESSEE IS CO - OPERATIVE SOCIETY OR CO - OPERATIVE BANK. IN THE LIGHT OF THE LARGER BENCH JUDGMENT OF THE HONBLE KERALA HIGH COURT, THE TRIBUNAL ORDER DATED 30.04.2019 IN ITA NO. 99/COCH/2019 , SUFFERS FROM A MISTAKE APPARE NT ON RECORD AND THE SAME NEEDS TO BE RECALLED. ACCORDINGLY THE ORDER OF THE TRIBUNAL DATED 30.04.2019 IS RECALLED AND THE SAME IS POSTED FOR HEARING ON 04.02.2020 . M A NO. 117 / COCH /201 9 . M/S. MANICKAL SCB LTD. 5 8 . IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS ALLOWED. ORDER PRONOUNCED ON THIS 10 TH DAY OF JANUARY, 2020 . SD/ - SD/ - ( CHANDRA POOJARI ) ( GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN ; DATED : 10 TH JANUARY, 2020 . DEV A DAS G * COPY OF THE ORDER FORWARDED TO : BY ORDER, AR - ITAT - COCHIN 1. THE APPLICANT S . 2. THE RESPONDENT. 3. THE CIT(A) TRIVANDRUM. 4. THE PR.CIT, TRIVANDRUM. 5. DR, ITAT, COCHIN 6 . GUARD FILE.