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Income Tax Appellate Tribunal, ‘ C’ BENCH : CHENNAI
Before: SHRI ABRAHAM P. GEORGE & SHRI G. PAVAN KUMAR
आदेश / O R D E R
PER G.PAVAN KUMAR, JUDICIAL MEMBER
These appeals filed by the Revenue are directed against different orders of Commissioner of Income-tax (Appeals) Salem for the assessment year 2012-2013 passed u/s.143(3) and 250 of the Income Tax Act, 1961 (herein after referred to as ‘the Act’). Since the issue in these appeals is common in nature, hence these appeals are combined, heard together, and disposed of by a common order for the sake of convenience. We consider the facts as narrated in of assessment year 2012-13 for adjudication.
The grounds of appeal raised by the Revenue are under;- 2. 1.The CIT(A), Salem erred in, relying on the decisions of Hon'ble ITAT in the case of M/s S2 (SPL) 151, Karkudalpatty PACCS Ltd., and Mls S-1308 Ammapet PACB Ltd.,
2.The CIT (A) ought to have considered though State Co-opertative Act,1983 defines member inclusive of Associate Member or class 'B' member and in various section of the same Act, the word member used to denote the permanent member or class 'A' member only not the other class members like class B or Associate Members;
3. The CIT(A) ought to have considered the Hon'ble Apex Court in Union of India Vs Wood Papers Ltd reported AIR 1991 SC 249, the exemption provisions is like an exception and or normal principle of construction or interpretation of statutes it is construed strictly either because of the legislative intention or economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment State Revenue; , 1366 & 1481/16 :- 3 -: 4. The CIT (A) ought to have considered there is clear distinction between voting and non-voting member in the State Co-operative Societies Act itself. The classification among the members are integral part of the State Act based on which the Assessment order has been passed; 5.The CIT(A) ought to have considered the fact that the order of Hon'ble Punjab & Haryana High Court which relied upon by the ITAT is not at all relevant to the fact and circumstances of the present case; 6.In view of the above grounds and other grounds that may adduced at the time of hearing, the order passed by the CIT(A), Salem may be cancelled and the order passed by the Assessing Officer may be restored’’.
The Brief facts of the case are that the assessee is a Co- operative Society, engaged in banking business and trading in PDS commodities and filed return of income on 28.09.2012 admitting Nil income. The Return of income was processed u/sec. 143(1) of the Act and the case was selected for scrutiny under CASS. Further, notice u/s.143(2) was issued to the assessee. The ld. Assessing Officer on perusal found that assessee has claimed deduction under the provisions of section 80P of �72,354,463/. In response to notice, the ld. Authorised Representative of assessee appeared from time to time and produced details. The ld. Assessing Officer verified Books of accounts and considered the statements for claim of deduction. The Assessing Officer on further examination found that the assessee society claimed deduction u/s.80P(2) (a)(i), (c) & (d) of the Act in respect of business of banking and providing credit facilities to its , 1366 & 1481/16 :- 4 -:
members and complied stipulated conditions and also providing credit facilities to Members and Non Members and running public distribution shops for commodities. The ld. Assessing Officer observed the entire business activities of society as providing credit facilities and trading for both members and nonmembers and rejected the deduction. The ld. Assessing Officer verified the claim of deduction u/s.80P(2)(d) of the Act, were the assessee society received interest income from Salem District Central Co-operative Banks and not from other Co- operative society and perused the provisions u/s.80P(2) (d) of the Act and concluded that Deduction u/s.80P(2)(d) of the Act is not allowed as assessee society has received interest receipt from the Salem District Central Co-operative Bank and relied on jurisdictional High Court decision in the case of CIT vs. Madras Auto Rickshaw Driver Co- Operative Society 143 ITR 981 completed the assessment with assessed income of �73,10,630/-. Aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals).
In the appellate proceedings, The ld. Authorised 4.
Representative reiterated the submissions of assessment proceedings. The ld. Commissioner of Income Tax (Appeals) on perusal of grounds and arguments, the assessee society is working on the concepts of mutuality, principle but the ld. Assessing Officer has , 1366 & 1481/16 :- 5 -: rejected society, claim of deduction under provisions of Sec. 80P of the Act because the assessee society has not restricted activities to its members and also provided services on par with commercial banking.
The Commissioner of Income Tax (Appeals) on examination of the assessment records and material relied on the Co-ordinate Bench decision of Tribunal in the case of M/s. S-1308, Ammapet Primary Agricultural Co-Operative Bank Ltd in dated 23.09.2015 allowed the assessee appeal. Aggrieved by the order of the Commissioner of Income Tax (Appeals), the Revenue has assailed an appeal before the Tribunal.
Before us, the ld. Departmental Representative reiterated 5. the submissions on the grounds of appeal and contested the judicial decisions relied by the Commissioner of Income Tax (Appeals) were the department has filed an appeal in Jurisdictional Hon’ble High Court against ITAT order and prayed for set aside of the order of Commissioner of Income Tax (Appeals).
6. Contra, the ld. Authorised Representative relied on the order of the Commissioner of Income Tax (Appeals) and vehemently opposed to the grounds.
We heard the rival submissions, perused the material on record and judicial decisions cited. The ld. Departmental , 1366 & 1481/16 :- 6 -:
Representative argued and submitted that the decision of ITAT relied by the Commissioner of Income Tax (Appeals) was challenged by the Revenue and filled appeal u/sec. 260A of the Act in Madras High Court and the case is pending. We find the facts and circumstances of the present case are similar to decision of Co-ordinate Bench of Tribunal in the case of ITO vs. M/s. S-328, Kalapanaickenpatti PACCS Ltd in assessment year 2012-2013, dated 27.04.2016 were it was held at para 7 as under:-
‘’7. We heard the rival submissions and perused the material on record and judicial decisions. The ld. Departmental Representative contention that decision relied by the Commissioner of Income Tax (Appeals) has not reached finality and appeal has been filed before jurisdictional High Court and is pending and also urged that on definition of the member relying on the Audit report were the member means share holder and does not include associate member. The ld. Authorised Representative argued on membership of society and supported with Apex Court decision of M/s. U.P. C- operative Cane Union Federation Ltd, Lucknow vs. CIT (1999) 237 ITR 574(SC) and definition of member as the provision of T.N. Co- operative Societies Act 1983 and filed written submissions and explained that there is no cheque facility is available to members and the business of providing credit facilities to its members and activities of Primary agriculture co-operative credit society are not at par with co-operative banks and relied on ITO vs. S-1308, Ammapet Primary Agricultural Co-Operative Bank Ltd in ITA 825/Mds/2015. We considering the apparent facts and findings of the lower authorities on the grounds raised by the Revenue and the argument of the ld. Authorised Representative. Prime facie the assessee is registered as Co-operative society and engaged in banking business and trading in civil supplies goods. The Department has disputed on the activities of the society on par with any commercial banking. Therefore, we are inclined to set aside the order of Commissioner of Income Tax (Appeals) and remit the entire issue to the file of the Assessing Officer to verify the following:- (i) Loans are granted to non-members (ii) Any current accounts are opened for traders. (iii) Whether the society is a member of clearing house.
, 1366 & 1481/16 :- 7 -:
(iv) Whether bank issued guarantee on behalf of customers (v) Whether dealt in foreign exchange transactions. (vi) Verify inspection report of RBI if any. With these findings, the Assessing Officer is directed to verify and pass the order accordingly after providing adequate opportunity of being heard. The grounds of the Revenue is partly allowed for statistical purpose.
We respectfully following the decision, setaside the order of CIT(A) and remit the disputed issue to the file of the Assessing Officer on similar directions. The appeal of the Department is allowed for statistical purpose.
Similarly, the appeals of the Revenue in & 1481/Mds2016 are allowed for statistical purpose.
In the result, the appeals of the Department in 1366 & 1481/Mds/2016 allowed for statistical purpose.
Order pronounced on Wednesday, the 10th day of August, 2016, at Chennai.