THE PRINCIPAL COMMISSIONER OF INCOME TAX V. M/S KITTUR RANI CHENNAMMA URBAN CREDIT

ITA/100200/2015

AI Insights

The case involves the Principal Commissioner of Income Tax and the Income Tax Officer, Belagavi as appellants, against M/s. Kittur Rani Chennamma Urban Credit Souharda Sahakari Ltd., the respondent. The core issue was whether the respondent, a cooperative society engaged in banking, qualifies as a 'Primary Co-operative Bank' under the Banking Regulation Act, 1949, which would influence the tax benefits under Section 80P(2)(a)(i) of the Income Tax Act. The Income Tax Appellate Tribunal had previously ruled in favor of the respondent, leading to this appeal by the Revenue. The High Court of Karnataka, referencing a similar case, upheld the Tribunal's decision, dismissing the Revenue's appeal.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 699824 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 06-01-2016
• Assessment Year: misc
• Other Referred Cases: CIT & Another v. Shri Mahalaxmi Urban Co-operative Credit Society Limited, Mudalagi, Gokak, CIT v. Biluru Gurubasava Pattina Sahakari Sangha Niyamitha
• Laws Referred To: Income Tax Act 1961, Banking Regulation Act 1949
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: Y V RAVIRAJ
• Keywords: Banking Business; Co-operative Society; Income Tax; Primary Co-operative Bank; Section 80P exemption
• Section: 260A; 80P(2)(a)(i); 80P(4); 5(ccv); 5(cci)

Judgement Text

": 1 : IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 6TH DAY OF JANUARY, 2016 PRESENT THE HON’BLE MR.JUSTICE H.BILLAPPA AND THE HON’BLE MR.JUSTICE P.S.DINESH KUMAR I.T.A. No.100200/2015 BETWEEN: 1. The Principal Commissioner of Income Tax, Dr.B.R.Ambedkar Veedhi, Belagavi. 2. The Income Tax Officer, Ward-1(2), Belagavi. .. APPELLANTS (By Sri.Y.V.Raviraj, Adv.) AND: M/s.Kittur Rani Chennamma Urban Credit Souharda Sahakari Ltd., Mrutynjay Nagar Cross, Belagavi Road, Bailhongal, Belagavi District. PAN : AAAAK 1682 M .. RESPONDENT --- This ITA is filed u/S.260A of the Income Tax Act 1961 praying to formulate the substantial question of law : 2 : stated above and allow the appeal and set aside the orders passed by the Income Tax Appellate Tribunal, Panaji Bench, Panaji, in ITA.No.42/PNJ/2015, dt.15.7.2015 and confirm the order passed by the Income Tax Officer, Ward- 1(2), Belagavi. This ITA coming on for orders this day, P.S.Dinesh Kumar, J., delivered the following: JUDGMENT Revenue, aggrieved by the order dated 15.07.2015 passed in I.T.A.No.42/PNJ/2015 by the Income Tax Appellate Tribunal, Panaji Bench, Panaji, (‘ITAT’ for short) has presented this appeal by raising certain questions of law: 1. Whether the Tribunal was right in law and on the facts and circumstances of the case in not appreciating that the respondent assessee society being a credit co-operative society engaged in banking business is a Primary Co-Operative Bank within the definition of Section 5(cci) read with section 5(ccv) of the Banking Regulation Act, 1949? : 3 : 2. Whether the Tribunal was right in law and on facts in not appreciating the fact that the assessee being a co-operative society fulfills all the three conditions of being held a Primary Co-operative Bank as given in section 5(ccv) of the Banking Regulation Act, 1949 and as such section 80P(4) of the Act is applicable to deny the benefit claimed under Section 80P(2)(a)(i)? 3. Whether the Tribunal was right in law and on facts relying upon the decision of Hon’ble Karnataka High Court in the case of Sri. Biluru Gurubasava Pattina Sahakari Sangha Niyamitha, Bagalkot wherein, the main issue related to an issue of exercise of revisional powers by the Commissioner of Income Tax under Section 263 of the Act and the Hon’ble High Court did not examine the applicability of Section 80P(4) and Explanation to the said section? 2. Heard Sri Y.V.Raviraj, learned Standing Counsel for the Income Tax Department. 3. The incontrovertible facts of this case are, respondent is a Co-operative Society primarily carrying on the business of lending money to its members. For the : 4 : assessment year 2011-2012, respondent claimed benefit under Section 80P(2)(a)(i) of the Income Tax Act (for short ‘the Act’). The Assessing Authority denied the said benefit. The appeal filed by the assessee before the Commissioner of Income Tax (Appeals) came to be allowed vide order dated 18.12.2014 holding that the assessee is entitled to the exemption under section 80(2)(a)(i) of the Act. Being aggrieved by the order passed by the CIT (Appeals), revenue preferred an appeal before the Income Tax Appellate Tribunal which came to be dismissed confirming the order passed by the CIT (Appeals). Hence, this appeal. 4. An identical case came up for consideration before this Court in I.T.A.No.100080/2014 in the case of CIT & Another v. Shri Mahalaxmi Urban Co-operative Credit Society Limited, Mudalagi, Gokak. After considering the earlier decision of this Court in CIT v. Biluru Gurubasava Pattina Sahakari Sangha Niyamitha (supra) and various other decisions mentioned therein, the questions of law : 5 : raised by the Revenue in the said appeal were answered in favour of the assessee by order dated 21.09.2015, by holding thus: “10. We are in respectful agreement with the general view taken as to the interpretation of the relevant provisions of law, by the co-ordinate bench of this court, in the above and several other judgments adopting the same view. However, it is to be noticed that there is a seriously disputed question of fact which the Authorities under the IT Act have taken upon themselves to interpret in the face of the BR Act prescribing that in the event of a dispute as to the primary object or principal business of any co-operative society referred to in clauses (cciv), (ccv) and (ccvi) of Section 56 of the BR Act, a determination thereof by the Reserve Bank shall be final, would require the dispute to be resolved by the Reserve Bank of India, before the authorities could term the assessee as a co-operative bank, for purposes of Section 80 P of the IT Act. Any opinion expressed therefore is tentative and is not final. The view expressed by this court, however, as to the assessee being a co-operative society and not a co-operative bank in terms of Section 80P (4) of the IT Act, shall hold the field and shall bind the authorities unless held otherwise by the Reserve Bank of India. : 6 : In the result, the above questions are answered in favour of the assessee and the present appeal of the revenue is dismissed.” 5. In the instant case also, the question that falls for consideration is as to: “Whether the Revenue has satisfactorily proved that the respondent-assessee may be construed as a Co-operative Bank, having fulfilled all the requirements contained in definition clause of Section 5(cci) read with Section 5(ccv) of the Banking Regulation Act, 1949 which would disentitle the asessee the benefit of Section 80P(2)(a)(i)?” 6. Having considered various previous judgments and the decision in the case of CIT v. Biluru Gurubasava Pattina Sahakari Sangha Niyamitha (supra) in extenso, this Court has disposed of the aforementioned ITA No.100080/2014 in the above terms. The issue involved in this appeal is identical to the issue in ITA No.100080/2014. We are in respectful agreement with the decision of this Court in the said appeal and do not find : 7 : any merit in the questions of law raised by the Revenue for consideration. Accordingly, we hold that this appeal deserves to be dismissed. 7. At this juncture, the learned counsel for the Revenue submitted that the issue involved in this appeal has been taken up in a Special Leave Petition and the same is pending adjudication before the Hon’ble Apex Court. On this premise, he prays for liberty to revive this appeal in the event of the Revenue succeeding in the appeal/s filed before the Hon’ble Apex Court. 8. Having noticed that the issue involved in this appeal is identical to the issue in ITA 100080/2014, we have held that this appeal lacks merit and deserves to be rejected without notice to the respondent. However, this decision shall be binding inter-party even if the Revenue succeeds before the : 8 : Hon’ble Apex Court. Therefore, we consider that the request made by the Revenue seeking leave to revive this appeal as reasonable. 9. In the result, the appeal stands dismissed with liberty to the Revenue to revive this appeal in the event, Revenue succeeds in the SLP filed before the Apex Court on the same issue. No costs. Sd/- JUDGE Sd/- JUDGE Bss. "