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Income Tax Appellate Tribunal, MUMBAI BENCHES, ‘H’ MUMBAI
Before: Shri Joginder Singh, & Shri Manoj Kumar Aggarwal
आदेश / O R D E R Per Joginder Singh(Judicial Member) The Revenue is aggrieved by the impugned order dated 25/11/2016 of the Ld. First Appellate Authority, Mumbai, in allowing deduction under section 80P of the Income Tax Act, 1961 (hereinafter the Act) with respect to the assessee society ignoring the fact that the assessee was carrying on banking business and further section 80P(4)(viia) and also the decision in the case of Totgar Co.op. Sales Society Ltd. (322 ITR 285).
2. During hearing, Shri Rajat Mittal, ld. DR, advanced argument which is identical to the ground raised by defending the addition made by the Ld. Assessing Officer.
On the other hand, Shri Devdatta Mainkar, ld. counsel for the assessee, claimed that the impugned issue is covered in favour of the assessee in in its own case for Assessment Year 2012-13. This factual matrix was not controverted by the Revenue.
2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion
KEM Hospital & Sheth GMS Collage Employees Co-op. Credit Society Ltd. from the aforesaid order dated 15/03/2012 for Assessment Year 2012/13 for ready reference and analysis:-
This appeal by Revenue under section 253 of Income Tax Act is directed against the common order of Ld. Commissioner of Income-Tax (Appeals)-32, Mumbai, [for short the ld. CIT(A)] dated 27.05.2016 for Assessment Year 2012-2013. The Revenue has raised the following grounds of appeal: 1. "On the facts and in the circumstances of the case in law, the Ld. CIT(A) has erred in allowing deduction u/s. 80P to the assessee even though assessee carries on the banking business and other business in the name of a co- operative credit society? 2. "On the facts and in the circumstances of the case in law, the Ld. CIT(A) has erred in allowing deduction u/s. 80P(2)(a)(i) without considering inserted section 80P(4) and sub-clause (viia) to section 2(24) vide Finance Act, 2006 w.e.f. 01.04.2007? 3. "On the facts and in the circumstances of the case in law, the Ld. CIT(A) has erred in finding the decision of the Supreme Court in the case of M/s. Totgar Co.op Sales Society Ltd. (322 ITR 285) wherein interest received by a co-operative society from investment of surplus funds is assessable as "Income from Other Sources" and thus not eligible for deduction u/s. 80P of the IT Act, 1961."
Brief facts of the case are that the assessee is a Co- operative Credit Society registered under the provisions of Maharashtra State Co-operative Societies Act. The assessee society is providing credit facilities to its members. The assessee filed its return of income for Assessment Year 2012-13 on 27.09.2012 declaring Nil income. The assessment was completed on 30.03.2015
KEM Hospital & Sheth GMS Collage Employees Co-op. Credit Society Ltd. under section 143(3) of the Act. The Assessing Officer while passing the assessment order denied the deduction under section 80P(2)(a)(i) for Rs. 90,000/- and treated the same as Income from Other Sources. On appeal before the Ld. CIT(A), the assessee was allowed deduction under section 80P(2)(a)(i). Thus, aggrieved by the order of Ld. CIT(A), the Revenue has filed the present appeal before us. The sole ground of appeal before us is whether the assessee is entitled for the deduction under section 80P(2)(a)(i) of the Act.
3. We have heard the Ld. Departmental Representative (DR) for the Revenue and Ld. Authorized Representative (AR) of the assessee and perused the material available on record. The Ld. DR for the Revenue submits that the Assessing Officer has not made complete enquiry regarding the natures of credit facilities and other activities carried out by the assessee’s society. The Ld. DR for the Revenue prayed to restore the matter back to the file of Assessing Officer for proper enquiries in support of his submission. The Ld. DR for the Revenue relied upon the decision of Hon'ble Delhi High Court in case of CIT Vs Jansampark Advertising & Marketing (P.) Ltd. [2015] 56 taxmann.com 286(Delhi). On the other hand, the Ld. AR of the assessee supported the order of Ld. CIT(A). The Ld. AR of the assessee argued that assessee is a Co-operative society and not a Co-operative Bank. The assessee is not having any licence under the Banking Regulation Act, 1949 to carry out banking business and the assessee cannot be classified as Co-operative Bank. The Ld. AR of the assessee further submits that the Ld. CIT(A) granted the relief to the assessee by following the decision of jurisdictional High Court in Quepem Urban Co-operative Credit Society Ltd[2015] 58 taxmann.com 113(Bom). The ld AR for the assessee further relied and the decision of Single Member KEM Hospital & Sheth GMS Collage Employees Co-op. Credit Society Ltd. bench of Mumbai Tribunal in case of ITO Vs. M/s Ashirwad Co-op. Credit Society Ltd. in ITA No. 5069/Mum/2017.
4. We have considered the rival submission of the parties and have gone through the orders of authorities below. There is no dispute that assessee is a Co-operative Society of employees of KEM Hospital and Sheth GSM College. The assessee is registered under the Maharashtra State Co-operative Societies Act. The assessee is providing credit facilities to its members only. The Assessing Officer after comparing the provision of Banking Regulation Act as well as Maharashtra State Co-operative Societies Act, took the view that the assessee’s society squarely fall within the definition of Co-operative Bank and therefore, hit by the provisions of section 80P(4) of the Act. Therefore, the assessing officer denied the deduction under section 80P(2)(a)(i) and treated the dividend received from Mumbai District Central Co-operative Bank as Income from Other Sources. During the first appellate stage the Ld. CIT(A) observed that the Assessing Officer has not examined the core ingredients of banking business. Merely, the assessees have been accepting the deposit and advance/loan to its member cannot be held as engaged in the business of banking. The assessee’s society has no licence under the Banking Regulation Act. The Ld. CIT(A) after following the decision of Nagpur and Panaji Bench in case of ACIT Vs. Buldana Urban C-op. Credit Society Ltd. (32 Taxman 69) and DCIT Vs. Jayalaxmi Mahila Vividodeshagala Souharda Sahakari Ltd. (23 Taxman 313) and the Hon'ble jurisdictional High Court in Quepem Urban Co-operative Credit Society Ltd. (supra) held that the assessee cannot be treated as a Co- operative Bank and thus, the deduction cannot be denied. We have noted that similar view has been taken by Single Member Bench of this Tribunal in M/s Ashirwad Co-op. Credit Society Ltd. (supra) (authored by Ld. Accountant
KEM Hospital & Sheth GMS Collage Employees Co-op. Credit Society Ltd. Member). We have noted that the Ld. CIT(A) has followed the decision of jurisdictional High Court while granting relief to the assessee. No contrary decision is brought to our notice to take the different view. The decision relied by ld DR is not helpful to the revenue as the sole ground of appeal raised by the revenue is covered by the decision of Hon’ble Bombay High Court in Quepem Urban Co- operative Credit Society Ltd (supra). In the decision of Jansamparak Advertising (P) Ltd, the revenue authorities have not examined the fact properly and the additions were deleted, here the sole issues is whether the assessee-society is Co-operative Society or Co-operative Bank, which has been examined by ld CIT(A). Thus, we do not find any illegality or infirmity in the order passed by Ld. CIT(A).
5. In the result, appeal filed by Revenue is dismissed.” We find that in the aforesaid order has duly considered the factual matrix and even before us, there is not dispute that the assessee is a cooperative society of the employees of KEM Hospital and Seth GSM Collage and also registered under the Maharashtra State Cooperative Society Act. The assessee is providing credit facilities to its members only. The Tribunal has already considered the factual as well as legal position and followed the decision from Hon'ble jurisdictional High Court in Quepem Urban Co-op. Credit Society Ltd. (2015) 58 taxman.com 113(Bom.) and various other decisions, therefore, following the aforesaid order, we find no infirmity
KEM Hospital & Sheth GMS Collage Employees Co-op. Credit Society Ltd. in the conclusion of the First Appellate Authority, resultantly, the appeal of the Revenue is dismissed.
Finally, the appeal of the Revenue is dismissed.
This Order was pronounced in the open court in the presence of Ld. representative from both sides at the conclusion of hearing on 20/06/2018.
Sd/- Sd/- (Manoj Kumar Aggarwal) (Joginder Singh) लेखा सद�य / ACCOUNTANT MEMBER �या�यक सद�य /JUDICIAL MEMBER मुंबई Mumbai; �दनांक Dated : 20/06/2018 f{x~{tÜ? P.S/.�न.स. आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant (Respective assessee) 2. ��यथ� / The Respondent. 3. आयकर आयु�त(अपील) / The CIT, Mumbai. 4. आयकर आयु�त / CIT(A)- , Mumbai, 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, मुंबई / DR, ITAT, Mumbai 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,