M/s.The Kidangoor Service Co-op Bank Ltd, Kottayam v. The ITO, Kottayam

ITA 300/COCH/2016 | 2012-2013
Pronouncement Date: 31-10-2016

Appeal Details

RSA Number 30021914 RSA 2016
Assessee PAN AAAJT0610M
Bench Cochin
Appeal Number ITA 300/COCH/2016
Duration Of Justice 3 month(s) 30 day(s)
Appellant M/s.The Kidangoor Service Co-op Bank Ltd, Kottayam
Respondent The ITO, Kottayam
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2016
Appeal Filed By Assessee
Bench Allotted DB
Tribunal Order Date 31-10-2016
Assessment Year 2012-2013
Appeal Filed On 01-07-2016
Judgment Text
ITA NO.300/COCH/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN . . . ! ! ! ! BEFORE S/SHRI B. P. JAIN AM & GEORGE GEORGE K. JM ' ' ' ' ./ I.TA NO.300/COCH/2016 ( #$ % /ASSESSMENT YEAR : 2012-13) THE KIDANGOOR SERVICE CO-OPERATIVE BANK LTD. NO.3431 KINDANGOOR KOTTAYAM. VS THE I.T.O. WARD-5 KOTTAYAM. ( &' &' &' &' /ASSESSEE APPELLANT) ( ( (( ( ) ) ) ) &' &'&' &' /REVENUE -RESPONDENT) & . . ' ./PAN NO. AAAJT 0610M &' * + /ASSESSEE BY SHRI JOSEPH P.A. CA ( ) &' * + /REVENUE BY SHRI A. DHANARAJ SR. DR - * ./ / DATE OF HEARING 29/09/2016 0 % * ./ /DATE OF PRONOUNCEMENT 31 ST / 10/2016 1 1 1 1 /ORDER PER GEORGE GEORGE K. JM 1. THIS APPEAL AT THE INSTANCE OF THE ASSESSEE IS DI RECTED AGAINST THE ORDER OF THE CIT(A) KOTTAYAMR DATED 20/01/2016. THE REL EVANT ASSESSMENT YEAR IS 2012-13. 2. THOUGH THERE ARE SEVERAL GROUNDS THAT HAVE BEEN RAI SED IN THE MEMORANDUM OF APPEAL THE SOLITARY ISSUE THAT WAS A RGUED WAS WHETHER THE ITA NO.300/COCH/2016 2 CIT(A) IS JUSTIFIED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE BENEFIT OF DEDUCTION U/S. 80P(2) OF THE ACT. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE AS FOLLOWS : THE ASSESSEE IS A PRIMARY AGRICULTURAL CRE DIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT 1969. FOR THE AS SESSMENT YEAR 2012-13 THE RETURN OF INCOME WAS FILED DECLARING NIL INCOME AFT ER CLAIMING DEDUCTION U/S. 80P OF THE INCOME TAX ACT. THE ASSESSING OFFICER P ASSED THE BEST JUDGMENT ASSESSMENT U/S. 144 OF THE ACT BY DENYING THE BENEF IT OF DEDUCTION U/S. 80P(2) OF THE ACT. THE ASSESSING OFFICER WAS OF THE VIEW THAT AS THE ASSESSEE-SOCIETY WAS PRIMARILY ENGAGED IN THE BUSINESS OF BANKING A ND IN VIEW OF THE PROVISIONS OF SECTION 80P(4) OF THE ACT THE ASSESSEE-SOCIETY IS NOT ENTITLED TO THE BENEFIT OF DEDUCTION U/S. 80P OF THE ACT. 4. AGGRIEVED BY THE DENIAL OF THE BENEFIT OF DEDUCTION U/S. 80P(2) OF THE ACT THE ASSESSEE PREFERRED APPEAL TO THE FIRST APPELLAT E AUTHORITY. THE FIRST APPELLATE AUTHORITY CONFIRMED THE VIEW TAKEN BY THE ASSESSING OFFICER. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE ASSES SEE IS IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN QUESTION WHETHER THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION U/S. 80P(2) OF THE ITA NO.300/COCH/2016 3 ACT IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE B Y THE JUDGMENT OF THE HONBLE HIGH COURT OF KERALA IN THE CASE OF CHIRAKK AL SERVICE CO-OP BANK LTD. REPORTED IN 384 ITR 490. 7. THE LD. DR PRESENT WAS DULY HEARD. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY THE ASSESSEE IS A PRIMARY AGRICULTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES ACT 1969. THE CERTIFICATE ISSUED BY THE REGISTRAR OF COOPERATIVE SOCIETIES TO THE ABOVE SAI D EFFECT IS PLACED ON RECORD. THE HONBLE HIGH COURT OF KERALA IN THE CA SE OF CHIRAKKLA SERVICE CO- OP BANK LTD. (SUPRA) HAD HELD THAT A PRIMARY AGRICU LTURAL CREDIT SOCIETY REGISTERED UNDER THE KERALA COOPERATIVE SOCIETIES A CT 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 CONSIDERATION THE TRIBUNAL IS CORRECT IN LAW IN DE CIDING AGAINST THE ASSESSEE THE ISSUE REGARDING ENTITLEMENT FOR EXEMPTION UNDER SECTION 80P IGNORING THE FACT THAT THE ASSESSEE IS A PRIMARY AGRICULTURAL CR EDIT SOCIETY? 7.1 IN CONSIDERING THE ABOVE QUESTION OF LAW THE HONBLE HIGH COURT RENDERED THE FOLLOWING FINDINGS: 15. APPELLANTS IN THESE DIFFERENT APPEALS ARE INDI SPUTABLY 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 ITA NO.300/COCH/2016 4 BOOKS CLEARLY SHOW THAT THEY HAVE BEEN CLASSIFIED AS PRIMARY AGRICULTURAL CREDIT SOCIETIES BY THE COMPETENT AUTHORITY UNDER T HE PROVISIONS OF THAT ACT. THE PARLIAMENT HAVING DEFINED THE TERM 'CO-OPERATI VE SOCIETY' FOR THE PURPOSES OF THE BR ACT WITH REFERENCE TO AMONG OTH ER THINGS THE REGISTRATION OF A SOCIETY U N DER ANY STATE LAW RELATING TO CO-OPERATIVE SOCIETIE S FOR THE TIME BEING; IT CANNOT BUT BE TAKEN THAT THE PURPOSE OF T HE SOCIETIES SO REGISTERED UNDER THE STATE LAW AND ITS OBJECTS HAVE TO BE UNDE RSTOOD AS THOSE WHICH HAVE BEEN APPROVED BY THE COMPETENT AUTHORITY UNDER SUCH STATE LAW. THIS WE VISUALISE AS DUE RECIPROCATIVE LEGISLATIVE EXERC ISE BY THE PARLIAMENT RECOGN I SING THE PREDOMINANCE OF DECISIONS RENDERED UNDER T HE RELEVANT STATE LAW. IN TH I S VIEW OF THE MATTER ALL THE APPELLANTS HAV I NG SBEEN CLASSIFIED AS PRIMARY AGRICULTURAL CRED I T SOC I ET I ES B Y THE COMPETENT AUTHOR I TY UNDE R TH E KCS ACT I T HAS NECESSAR IL Y TO BE HELD THAT THE PRINCIPAL OBJECT OF SUCH SOCI ETIES IS TO UNDERTAKE AGR I CULTURAL CREDIT ACTIVITIES AND 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 HAV I NG I TS AREA OF OPERATION CONFINED TO A VILLAGE PANCHAYAT OR A MUNICIPALITY. THIS IS THE CONSEQUENCE OF THE DEFINI TION CLAUSE IN SECTION 2(OAA) OF THE KCS ACT. THE AUTHORITIES UNDER THE IT ACT CA NNOT PROBE INTO ANY ISSUE OR SUCH MATTER RELATING TO SUCH APPLICANTS. 16. THE PO SITION OF 1AW BEING AS ABOVE WITH REFERENCE TO THE STATUTORY PROVISIONS THE APPELLANTS HAD SHOWN TO T HE AUTHORITIES AND THE TRIBUNAL THAT THEY ARE PRIMARY AGRICULTURA L CREDIT SOCIETIES IN TERMS OF CLAUSE (CCIV) OF SECTION 5 OF THE BR ACT HAVING REGARD TO THE PRIMARY OBJECT OR PRINCIPAL BUSINESS OF EACH OF THE APPELLANTS. IT IS ALSO CLEAR FROM THE MATERIALS ON RECORD THAT THE BYE-LAWS OF EACH OF THE APPELLAN TS DO . NOT PERMIT ADMISSION OF ANY OTHER CO-OPERATIVE SOCIETY AS MEMB ER EXCEPT MAY BE IN ACCORDANCE WITH THE PROVISO TO SUB - CLAUSE 2 OF SECTION 5(CCIV) OF THE BR ACT. THE DIFF ERENT ORDERS OF THE TRIBUNAL WHICH ARE IMPEACHED IN THESE APPEALS DO NO T CONTAIN ANY FINDING OF FACT TO THE EFFECT THAT THE BYE- 1AWS OF ANY OF THE APPELLANT OR ITS CLASS I FICATION BY THE COMPETENT AUTHORITY UNDER THE KCS ACT LS ANY THING DIFFERENT FROM WHAT WE HAVE STATED HEREIN ABOVE. FOR THIS REASON IT CA NNOT BUT BE HELD THAT THE APPELLANTS ARE ENTITLED TO EXEMPTION FROM THE PROVI SIONS OF SECTION 80P OF THE IT ACT BY VIRTUE OF SUB- SECTION 4 OF THAT SECT; ON. I N THIS VIEW OF THE MATTER THE APPEALS SUCCEED. 17. IN THE LIGHT OF THE AFORESAID WE ANSWER SUBSTA NTIA1 QUESTION 'A' IN FAVOUR OF THE APPELLANTS AND HOLD THAT THE TRIBUNAL ERRED IN LAW IN DECIDING THE ISSUE REGARDING THE ENTITLEMENT OF EXEMPTION UNDER SECTIO N 80P AGAINST THE APPELLANTS. WE HOLD THAT THE PRIMARY AGRICULTURAL C REDIT SOCIETIES REGISTERED AS SUCH UNDER THE KCS ACT; AND CLASSIFIED SO UNDER TH AT ACT INCLUDING THE APPELLANTS ARE ENTITLED TO SUCH EXEMPTION. ITA NO.300/COCH/2016 5 7.2 IN VIEW OF THE JUDGMENT OF THE HONBLE JUR ISDICTIONAL HIGH COURT IN THE CASE OF 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. NO OTHER ISSUES WERE ARGUED BY THE LD. COUNSEL FOR THE ASSES SEE. THEREFORE THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AS INDICATE D ABOVE. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESS EE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 31 ST OCT. 2016. SD/- SD/ - ( . . ) (B. P. JAIN) ( . ) (GEORGE GEORGE K.) ' /ACCOUNTANT MEMBER /JUDICIAL MEMBER & /PLACE: /COCHIN 2 /DATED: 31 ST OCTOBER 2016 GJ/ 1 * (.3 43%. /COPY TO: 1. &' /THE KIDANGOOR SERVICE CO-OPERATIVE BANK LTD. NO. 3431 KINDANGOOR KOTTAYAM . 2. THE I.T.O. WARD-5 KOTTAYAM. 3. 5 . ( )/THE COMMISSIONER OF INCOME-TAX(APPEALS) KOTTAYAM .I 4. 5 . /THE COMMISSIONER OF INCOME-TAX KOTTAYAM.. 5. 367 (. /THE DR/ITAT COCHIN BENCH. 6. 79 :- /GUARD FILE. 1 /BY ORDER ; /ASSISTANT REGISTRAR - .