Income Tax Appellate Tribunal - Jaipur
Sikar Sahakari Bhoomi Vikas Bank Ltd., ... vs Assessee on 11 August, 2015
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM
vk;dj vihy la-@ITA No. 177/JP/2013
fu/kZkj.k o"kZ@Assessment Year : 2009-10
M/s Sikar Sahkari Bhoomi Vikas cuke Income Tax Officer,
Bank Limited, Vs. Ward-1, Sikar.
Basant Vihar, Jaipur Road, Sikar.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABSA 0923 N
vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Mahendra Gargiya (Adv)
jktLo dh vksj ls@ Revenue by : Mrs. Neena Jeph (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 24/06/2015
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 11/08/2015
vkns'k@ ORDER
PER: T.R. MEENA, A.M. This is an appeal filed by the assessee against the order dated 27/11/2012 passed by the learned C.I.T.(A)-III, Jaipur for the A.Y. 2009-10. The respective grounds of assessee's appeal are as under:-
"1.1 71,62,624/-: the ld. CIT(A) erred in law as well as on the facts of the case in confirming the denial of the claim of deduction made by the Society U/s 2 ITA 177/JP/2013_ M/s Sikar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO 80P(2)(a)(i) of the Act. The claim of deduction so confirmed/denied, being totally contrary to the provisions of law and facts kindly be allowed as claimed.
1.2 The ld CIT(A) erred in law as well as on the facts of the case in further confirming invoking and misinterpreting the provisions of Sec. 80P(4) of the Act and consequently, denying the claim of deduction made by the Society U/s 80P(2)(a)(i) of the Act. The claim of deduction so confirmed/denied, being totally contrary to the provisions of law and facts kindly be allowed as claimed.
2. The A.O. & ld. CIT(A) further erred in law as well as on the facts of the case in charging interest U/s 234A, 234B, 234C and 234D of the Act and as also in withdrawing interest U/s 244A of the Act. The appellant totally denies its liability of charging and withdrawal of any such interest. The interest so charged/withdrawn, being contrary to the provisions of law and facts, kindly be deleted in full.
3. The appellant prays you honour indulgence to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing"
2. The assessee filed its return on 30/09/2009 in the status of Society/AOP declaring total income of Rs. NIL. The case was scrutinized U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The assessee is a society and engaged in the business of banking. During 3 ITA 177/JP/2013_ M/s Sikar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO the year under consideration, the assessee earned income of Rs. 71,62,624/-. Against this income, the assessee cooperative society claimed deduction U/s 80P of the same amount and declared NIL income. The ld Assessing Officer further observed that the assessee claimed before him that the assessee is a primary agricultural credit society and primary cooperative agricultural and rural development bank. As per Section 80P(4) of the Act w.e.f. 01/4/2007 only primary agricultural credit society of primary cooperative agricultural and rural development bank are entitled for deduction. The Assessing Officer gave reasonable opportunity of being heard on this issue and asked to clarify whether the assessee falls under the definition of a primary agricultural credit society or a primary cooperative agricultural and rural development bank. The assessee submitted that the assessee is covered under the definition of primary cooperative agricultural and rural development bank vide its letter dated 19/09/2011 but vide letter dated 23/09/2011, it was claimed that the assessee is a primary agricultural credit society and is therefore entitled for deduction U/s 80P of the Act. The ld Assessing Officer considered the definition of primary agricultural credit society as given in Bank Regulation Act, 1949, which is reproduced as under:-
4 ITA 177/JP/2013_ M/s Sikar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO (1) the primary object or principal business of which is to provide financial accommodation to its members for a agricultural purposes or for purposes connected with agricultural activities (including the marketing of crops); and (2) the bye-laws of which do not permit admission of any other co-operative society as a member:
The ld Assessing Officer further observed that the primary object of the assessee is to provide financial accommodation to its members for agricultural purposes or purposes connected with agricultural activities.
The assessee society's main function is of banking and providing long term financial term of 3 to 15 years for the development of land. For granting long terms finance, the bank accept hypothecation of land/residential building or any immovable property of the borrower.
The ld Assessing Officer concluded that the assessee is not a primary agricultural credit society. Secondly, a primary agricultural credit society's bye laws should not permit admission of any other cooperative society as a member but Section 12 of the bye laws of M/s Sikar Sahakari Bhoomi Vikas Bank Ltd. provide for four types of members.
This provision also keeps the assessee away from the ambit of the
5 ITA 177/JP/2013_ M/s Sikar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO definition of a primary agricultural credit society. Thirdly, the assessee is also not covered in the definition of a primary cooperative agricultural and rural development bank as is given in Explanation (b) to Section 80P(4) of the Act. The assessee bank's area of operation is neither confined to a taluk not its principal object is to provide for long term credit for agricultural and rural development activities. The principal object of the assessee is to provide long term finance for the development of land as per Section 67 of the Rajasthan Cooperative Society Act, 2001 and therefore, is not primarily engaged in providing loans for agricultural activities and rural development. The ld Assessing Officer also reproduced the Board's circular dated 20/09/2010 on page 4 of assessment order. It is further held that after insertion of Sub- Section (4) of Section 80P only primary agricultural credit society of primary cooperative agricultural and rural development bank are entitled for deduction U/s 80P of the Act. Further the definition of cooperative bank and primary agricultural credit society primary cooperative agricultural and rural development bank has also been defined in the Act just below the Sub-section (4) of Section 80P. The assessee is neither primary agricultural credit society or primary cooperative agricultural and rural development bank engaged in the 6 ITA 177/JP/2013_ M/s Sikar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO activities as defined in explanation to sub-section (4) of Section 80P, therefore, the deduction of Rs. 71,62,624/- claimed by the assessee bank U/s 80P(2)(a)(i) of the Act is not allowable and same was added in the income of the assessee.
3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the learned CIT(A), who had upheld the order of the Assessing Officer by observing as under:-
"It is evident from records that identical issue in the case of the appellant was decided by CIT(A) for A.Y. 2008-09 in ITA No. 314/JPR/10-11 vide order dated 29/08/2011. It was held therein that the appellant is not eligible for deduction U/s 80P after the amendment made w.e.f. 01/04/2007. Since the facts are same in the instant year i.e. A.Y. 2009-10, the disallowance of deduction U/s 80P is confirmed for the reasons given in the appellant order of A.Y. 2008-09."
4. Now the assessee is in appeal before us. The ld. A.R. for the assessee has submitted that a bare reading of the provisions contained U/s 80P of the Act, it is explicitly clear that if a co-operative society is engaged in carrying on the business of banking or providing credit facilities to its members and its gross total income includes any income 7 ITA 177/JP/2013_ M/s Sikar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO therefrom, such co-operative society is entitled for the deduction U/s 80P(2)(a)(i) of the Act. The assessee is a cooperative society and is engaged in providing credit facility to its members and deduction U/s 80P(2) had all alone been granted on that basis only. The assessee is neither a cooperative bank nor a primary cooperative bank nor even a regional rural bank.. The assessee is not engaged in the business of banking inasmuch as it has not obtained the license required U/s 22 read with 56(a) of banking Regulation Act for doing such business from the NABARD or Reserve Bank of India. Thus the assessee is covered by Section 80P(2)(a)(i) of the Act. Sub-section (4) of Section 80P was inserted by the Finance Act, 2006 w.e.f. 01/4/2007 i.e. for A.Y. 2007-
08. However, despite amendment, the Assessing Officer allowed the deduction U/s 80P(2)(a)(i) as claimed and argued that the assessee's case is covered from the scrutiny assessment for A.Y. 2007-08 vide order dated 30/03/2009. It is further argued that the doctrine of res judicata do not apply to income tax proceeding yet however, unless there is a change in the facts and circumstances, the view taken earlier should normally be taken consistently. He relied on the decision in the case of Sardar Kehar Singh Vs. CIT (1992) 195 ITR 769 (Raj.) and a very recent decision in the case of CIT Vs. Excel Industries Ltd. (2013) 8 ITA 177/JP/2013_ M/s Sikar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO 358 ITR 295 (SC). The burden lies on the revenue to establish that the assessee is a cooperative bank, which has not been discharged by the revenue. Further the assessee is not a State/Central Cooperative Bank. He has further drawn our attention of difference between cooperative bank and cooperative society. The intention of the legislation was also to disentitle only those cooperative banks, who were and are working at par with the other commercial bank, from getting the deduction. He has drawn our attention on Board's circular on it w.e.f. 01/4/2007. The definition of income U/s 2(24)(viia) also had been amended (including providing credit facilities) carried on by a cooperative society with its members. The assessee is a cooperative society and providing credit facilities to its members but not doing any banking business or is not a cooperative bank. In absence of banking license or otherwise still continued to be covered U/s 80P(2) of the Act. He further relied on the decision of Hon'ble Gujarat High Court decision in the case of CIT Vs. Jafari Momin Vikas Cooperative Credit Society Ltd. 362 ITR 331 wherein the Assessing Officer made similar addition U/s 80P of the Act and exclusion provided in sub-section (4) of Section 80P would not apply. He further relied on the decision of Hon'ble Karnataka High Court in the case of CIT Vs. Shree Biluru Gurubasave Pattina Sahkari Sangh 9 ITA 177/JP/2013_ M/s Sikar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO Niyamitha in ITA No. 5006/2013 dated 05/02/2014 wherein assessee's status was cooperative society and not a cooperative bank and exemption from the payment of tax U/s 80P(2)(a)(i) was held justified by the Hon'ble Court. The other case laws relied by the ld AR are as under:-
(i) CIT Vs. Bangalore Credit Cooperative Society Ltd. in ITA No. 598/2013 (Kar.)
(ii) Sagar Credit Cooperative Society Ltd. Vs. CIT (2014) 40 CCH 0036 (Bang Trib).
(iii) CIT Vs. Surat Vankar Sahakari Sangh Ltd. in Tax appeal No. 1150 of 2013 (Guj).
5. At the outset, the ld DR has vehemently supported the order of the ld CIT(A).
6. We have heard the rival contentions of both the parties and perused the material available on record. After going through the case laws cited by the assessee as well as byelaws of society, revealed that the assessee is not a cooperative bank but cooperative society. The exclusive provision to Sub-section (4) of Section 80P is not applicable in 10 ITA 177/JP/2013_ M/s Sikar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO the case of the assessee. The case law referred by the assessee in the case of CIT Vs. Jafari Momin Vikas Cooperative Credit Society Ltd. (supra) is squarely applicable. The Hon'ble Gujarat High Court has held as under:-
"From the above clarification, it can be gathered that sub-section (4) of section 80P will not apply to an assessee which is not a cooperative bank. In the case clarified by CBDT, Delhi Coop Urban Thrift & Credit Society Ltd. was under consideration.
Circular clarified that the said entity not being a cooperative bank, section 80P(4) of the Act would not apply to it. In view of such clarification, we cannot entertain the Revenue's contention that section 80P(4) would exclude not only the co-operative banks other than those fulfilling the description contained therein but also credit societies, which are not cooperative banks. In the present case, respondent assessee is admittedly not a credit so- operative bank but a credit co-operative society. Exclusion clause of sub-section (4) of section 80P, therefore, would not apply. In the result, Tax Appeals are dismissed."
The department itself has allowed deduction U/s 80P(2)(a)(i) of the Act in A.Y. 2007-08, which has not been reopened U/s 148 and no order U/s 263 was passed by the department. The ld Dr had not brought on record any evidence that in preceding year, the Assessing Officer's order in A.Y. 2007-08 had not been accepted by the department. By 11 ITA 177/JP/2013_ M/s Sikar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO respectfully following the decision of Hon'ble Gujarat High Court in the case of CIT Vs. Jafari Momin Vikas Cooperative Credit Society Ltd.(supra) on identical issue, we hold that the assessee is a cooperative society not a cooperative bank and is entitled for deduction U/s 80P(2)(a)(i) of the Act.
7. The second ground of appeal is against charging of interest U/s 234A, 234B, 234C and 234D of the Act. This ground is consequential to the above finding, therefore the Assessing Officer is directed to take decision as per law.
8. In the result, the assessee's appeal is allowed. Order pronounced in the open court on 11/08/2015.
Sd/- Sd/-
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(R.P.Tolani) (T.R. Meena)
U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur
fnukad@Dated:- 11th August, 2015
*Ranjan
vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:
1. vihykFkhZ@The Appellant- M/s Sikar Sahkari Bhoomi Vikas Bank Limited, Sikar.
2. izR;FkhZ@ The Respondent- The ITO, Ward-1, Sikar
3. vk;dj vk;qDr@ CIT 12 ITA 177/JP/2013_ M/s Sikar Sahkari Bhoomi Vikas Bank Ltd. Vs. ITO
4. vk;dj vk;qDr¼vihy½@The CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 177/JP/2013) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar