The ITO, wd-4, Kollam V. The Nadakkal Service Co-op Bank Ltd, Kollam

MA 150/COCH/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8990 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 10-01-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 25-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRITUNJAYA SHARMA
• Section: 80P; 201; 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI CHANDRA POOJAR I, AM & SHRI GEORGE GEORGE K, JM MA NO. 138 /COCH/2019 : ASST.YEAR 201 4 - 201 5 (ARISING OUT OF ITA NO. 117 /COCH/201 9) THE INCOME TAX OFFICER, WARD 2(1) TRIVANDRUM. VS. M/S. KERALA GAZETTED OFFICERS CO - OP. SOCIETY LTD., VAZHUTHACAUD, THYCAUD, TRIVANDRUM 695 014 . PAN : AACAE6865C . ( APPLICANT ) (RESPONDENT) MA NO.141/COCH/2019 : ASST.YEAR 2015 - 2016 (ARISING OUT OF ITA NO. 79 /COCH/201 9) THE INCOME TAX OFFICER, WARD 2(1) TRIVANDRUM. VS. M/S.THONNAKKAL SERVICE SOCIETY LTD., KUDAVUR P.O., THONNAKKAL TRIVANDRUM 695 313. PAN : AABAT0018R. ( APPLICANT ) (RESPONDENT) APPLICANT BY : SRI.MRITUNJAYA SHARMA , SR.DR RESPONDENT BY : --- NONE --- MA NO. 145 /COCH/2019 : ASST.YEAR 201 3 - 201 4 (ARISING OUT OF ITA NO. 1 44 /COCH/201 9) THE INCOME TAX OFFICER, WARD 2(2) TRIVANDRUM. VS. M/S. NARUVAMOODU SERVICE CO - OP. BANK LTD , NARUVAMOODU PO, PALLICHAL PANCHAYATH TRIVANDRUM 695 020 . PAN : AABAN8005G . ( APPLICANT ) (RESPONDENT) M A NO. 138 / COCH /201 9 & ORS. M/S. KERALA GAZETTED OFFICERS CO - OP SO.LTD. & ORS. 2 MA NO.142/COCH/2019 : ASST.YEAR 2013 - 2014 (ARISING OUT OF ITA NO. 75 /COCH/201 9) MA NO.143/COCH/2019 : ASST.YEAR 2015 - 2016 (ARISING OUT OF ITA NO. 76 /COCH/201 9) TH E INCOME TAX OFFICER, WARD 2(1 ) TRIVANDRUM. VS. M/S. VATTIYOORKAVU SERVICE CO - OP. BANK LTD, VATTIYOORKAVU, TRIVANDRUM 695 013 . PAN : AAAAV0521A . ( APPLICANT ) (RESPONDENT) MA NO.139/COCH/2019 : ASST.YEAR 2015 - 2016 (ARISING OUT OF ITA NO. 81 /COCH/201 9) THE INCOME TAX OFFICER, WARD 2(1) TRIVANDRUM. VS. M/S. ANDOORKONAM SERVICE CO - OP. BANK LTD, ANDOORKONAM TRIVANDRUM 695 584 . PAN : AAAAA5990N . ( APPLICANT ) (RESPONDENT) APPLICANT BY : SRI.MRITUNJAYA SHARMA, SR.DR RESPONDENT BY : SRI.SANTHOSH P.ABRAHAM MA NO.153/COCH/2019 : ASST.YEAR 2014 - 2015 (ARISING OUT OF ITA NO. 145 /COCH/201 9) THE INCOME TAX OFFICER, WARD 2(1) KOLLAM. VS. M/S.CHATHANNOR SERVICE CO - OP. BANK LTD, NO.O - 2544, CHATHANOOR PO KOLLAM 691 001. PAN : AAAAC1371K. ( APPLICANT ) (RESPONDENT) MA NO.152/COCH/2019 : ASST.YEAR 2015 - 2016 (ARISING OUT OF ITA NO. 114 /COCH/201 9) THE INCOME TAX OFFICER, WARD 4 KOLLAM. VS. M/S.KADAKKAL SERVICE CO - OP. BANK LTD, KADAKKAL P.O.,KOLLAM 691 536. PAN : AAAAT2910R. ( APPLICANT ) (RESPONDENT) APPLICANT BY : SRI.MRITUNJAYA SHARMA, SR.DR RESPONDENT BY : SRI.IYPE MATHEW , CA M A NO. 138 / COCH /201 9 & ORS. M/S. KERALA GAZETTED OFFICERS CO - OP SO.LTD. & ORS. 3 MA NO.150/COCH/2019 : ASST.YEAR 2011 - 2012 (ARISING OUT OF ITA NO. 129 /COCH/201 9) MA NO.151/COCH/2019 : ASST.YEAR 2012 - 2013 (ARISING OUT OF ITA NO. 130 /COCH/201 9) THE INCOME TAX OFFICER, WARD 4 KOLLAM. VS. M/S.THE NADAKKAL SERVICE CO - OP. BANK LTD, KALLUVATHUKKAL PO KOLLAM 691 578 PAN : AABAT3582G. ( APPLICANT ) (RESPONDENT) APPLICANT BY : SRI.MRITUNJAYA SHARMA, SR.DR RESPONDENT BY : SMT.SWATHY S., ADVOCATE MA NO.149/COCH/2019 : ASST.YEAR 2013 - 2014 (ARISING OUT OF ITA NO. 133 /COCH/201 9) THE INCOME TAX OFFICER, WARD 4 KOLLAM. VS. M/S.ULIYACOIL SERVICE CO - OP. BANK LTD, NO.Q1033 ULIYACOIL, KOLLAM 691 002. PAN : AAAAU8787B. ( APPLICANT ) (RESPONDENT) APPLICANT BY : SRI.MRITUNJAYA SHARMA, SR.DR RESPONDENT BY : SRI.K.M.V.PANDALAI DATE OF HEARING : 10.01.2020 DATE OF PRONOUNCEMENT : 10 .01.2020 O R D E R PER GEORGE GEORGE K. (JM) : THESE MISCELLANEOUS APPLICATIONS AT THE INSTANCE OF THE DEPARTMENT ARE DIRECTED AGAINST VARIOUS ORDER S OF THE TRIBUNAL. M A NO. 138 / COCH /201 9 & ORS. M/S. KERALA GAZETTED OFFICERS CO - OP SO.LTD. & ORS. 4 2 . COMMON ISSUE IS RAISED IN THESE MISCELLANEOUS APPLICATIONS, HENCE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 3. BRIEF FACTS OF THE CASE ARE AS FOLLOW: THE ASSESSEES ARE PRIMARY AGRICULTURAL CREDI T SOCIETIES, REGISTERED UNDER THE KERALA CO - OPERATIVE SOCIETIES ACT, 1969. IT IS CARRYING ON THE BUSINESS OF BANKING / PROVIDING CREDIT FACILITIES TO ITS MEMBERS. FOR THE ASSESSMENT YEARS UNDER CONSIDERATION, THE ASSESSMENTS WERE COMPLETED BY TREATING INTE REST INCOME RECEIVE D FROM INVESTMENT WITH TREASURY, CO - OPERATIVE BANKS AND OTHER BANK S AS INCOME FROM OTHER SOURCES; THEREBY DENYING THE CLAIM OF DEDUCTION U/S 80P(2)(A)(I) OF THE I.T.ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDERS COMPLETED, THE ASSESSEES PR EFERRED 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 ASSESSMENT YEAR 2009 - 2010 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 BANKING ACTIVITY OF ASSESSEE AND THEREFORE THE SAID INCOME WAS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF TH E I.T.ACT. 5. ON FURTHER APPEAL, THE TRIBUNAL BY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF KIZHATHADIYOOR SERVICE CO - OPERATIVE BANK LTD. [ITA NO.525/COCH/2014 - ORDER DATED M A NO. 138 / COCH /201 9 & ORS. M/S. KERALA GAZETTED OFFICERS CO - OP SO.LTD. & ORS. 5 20.07.2016] HELD THAT INTEREST INCOME RECEIVED BY THE ASSESSEES IN THESE CASES SHOULD BE ASSESSED AS INCOME FROM BUSINESS INSTEAD OF INCOME FROM OTHER SOURCES. HOWEVER, AS REGARDS THE GRANT OF DEDUCTION U/S 80P(2)(A)(I) OF THE I.T.ACT ON SUCH INTEREST INCOME, THE TRIBUNAL RESTORED THE ISSUE TO THE ASSESSING OFFICER TO FOLLOW THE LAW LAID DOWN BY 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] . THE RELEVANT FINDING OF THE TRIBUNAL IN RESTORING THE CASE TO THE ASSESSING OFFICER IN ONE OF THESE CASES, I.E., ITA NO.117/COCH/2019 READS AS FOLLOW: - 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAD MADE INVESTMENTS IN THE COURSE OF BANKING ACTIVITIES AND SUCH INTEREST INCOME WAS RECEIVED ON INVESTMENTS MADE WITH CO - OPERATIVE BANKS AND OTHER SCHEDULED BANKS. THE C O - ORDINATE BENCH ORDER OF THE TRIBUNAL IN THE CASE OF KIZHATHADIYOOR SERVICE CO - OPERATIVE BANK LIMITED (SUPRA) HAD HELD THAT SUCH INTEREST INCOME RECEIVED SHOULD BE ASSESSED AS `INCOME FROM BUSINESS INSTEAD OF `INCOME FROM OTHER SOURCES. IN VIEW OF THE C O - ORDINATE BENCH ORDER OF THE TRIBUNAL, WE HOLD THAT THE CIT(A) IS JUSTIFIED IN HOLDING THAT INTEREST INCOME RECEIVED SHOULD BE ASSESSED AS `INCOME FROM BUSINESS. HOWEVER, AS REGARDS THE GRANT OF DEDUCTION U/S 80P OF THE I.T.ACT ON SUCH INTEREST INCOME, T HE ASSESSING OFFICER SHALL FOLLOW THE LAW LAID DOWN BY 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] AND EXAMINE THE ACTIVITIES OF THE ASSESSEE - SOCIETY BEFORE GRANT OF DEDUCTION U/S 80P OF THE I.T.ACT. IT IS ORDERED ACCORDINGLY. 6. THE REVENUE BEING AGGRIEVED BY THE ORDERS OF THE ITAT, HAS FILED THESE MISCELLANEOUS APPLICATIONS. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE GROUNDS RAISED IN M A NO. 138 / COCH /201 9 & ORS. M/S. KERALA GAZETTED OFFICERS CO - OP SO.LTD. & ORS. 6 THE MISCELLANEOUS APPLICATIONS. THE LEARNED AR SUBMITTED THAT THERE IS NO MISTAKE APPARENT IN THE ORDER S OF THE TRIBUNAL, REQUIRING THE TRIBUNAL TO INTERFERE WITH THE SAME U/S 254(2) OF THE I.T.ACT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THESE CASES, THE ASSESSMENTS WERE COMPLETED BY TREATING THE INTEREST INCOME RECEIVED FROM INVESTMENTS MADE WITH TREASURY AND OTHER BANKS AS INCOME FROM OTHER SOURCES, THEREBY DENYING THE CLAIM OF DEDUCTION U/S 80P(2) (A)(I) OF THE I.T.ACT. ON FURTHER APPEAL, THE CIT(A) FOLLOWING THE ORDER OF THE COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF KIZHATHADIYOOR SERVICE CO - OPERATIVE BANK LTD. FOR ASSESSMENT YEAR 2009 - 2010 IN ITA NO.525/COCH/2014 (ORDER DATED 20.07.2016) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE CIT(A) HELD THAT THE INTEREST INCOME EARNED ON INVESTMENT MADE WITH TREASURY AND BANKS ARE PART OF THE BANKING ACTIVITY OF THE ASSESSEE, AND THEREFORE, THE SAID INCOME WAS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE I.T.ACT. THE TRIBUNAL IN THE IMPUGNED ORDER HAD HELD THAT INTEREST INCOME RECEIVED BY THE ASSESSEE SOCIETIES ARE OUT OF INVESTMENTS MADE IN THE COURSE OF BANKING BUSINESS / PROVIDING CREDIT FACILITIES TO ITS MEMBERS, HENCE, THE SAME REQUIRES TO BE ASS ESSED AS `INCOME FROM BUSINESS AND NOT `INCOME FROM OTHER SOURCES. HOWEVER, FOR GRANTING DEDUCTION U/S 80P(2)(A)(I) OF THE I.T.ACT, THE TRIBUNAL IN THESE CASES RESTORED THE ISSUES TO THE RESPECTIVE ASSESSING OFFICERS TO EXAMINE THE ACTIVITIES OF THE ASSESSEE SOCIETIES IN THE LIGHT OF FULL BENCH M A NO. 138 / COCH /201 9 & ORS. M/S. KERALA GAZETTED OFFICERS CO - OP SO.LTD. & ORS. 7 JUDGMENT OF THE HONBLE HIGH COURT IN THE CASE OF THE MAVILAYI SERVICE CO - OPERATIVE BANK LTD. V. CIT (SUPRA) AND GRANT DEDUCTION U/S 80P(2)(A)(I) OF THE I.T.ACT IN ACCORDANCE WITH LAW. SINCE THE TRIBUNAL IN THE APPEALS FILED BY THE DEPARTMENT HAD ENTERED INTO A CATEGORICAL FINDING THAT THE INVESTMENTS WERE MADE BY THE ASSESSEES IN THESE CASES IN THE COURSE OF ITS BANKING BUSINESS / PROV IDING CREDIT FACILITIES TO ITS MEMBERS AND THE INTEREST INCOME SHOULD BE A SSESSED AS INCOME FROM BUSINESS , W E FIND THERE IS NO MISTAKE APPARENT ON RECORD IN THE IMPUGNED ORDERS PASSED BY THE TRIBUNAL WARRANTING OUR INTERFERENCE U/S 256(2) OF THE I.T.ACT. I T IS ORDERED ACCORDINGLY. 8. IN THE RESULT, THE MISCELLANEOUS APPLICATIONS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 10 TH DAY OF JANUARY, 2020 . SD/ - SD/ - ( CHANDRA POOJARI ) ( GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIA L MEMBER COCHIN ; DATED : 10 TH JANUARY, 2020 . DEV A DAS G * COPY TO : 1. THE APPLICANTS. 2. THE RESP ONDENTS. 3. THE CIT(A), THIRUVANANTHAPURAM. 4. THE PR.CIT, THIRUVANANTHAPURAM. 5. THE DR, ITAT, COCHIN. 6. GUARD FILE. (ASSTT. REGISTRAR) ITAT, COCHIN