VIVIDHA URBAN CO-OPERATIVE CREDIT SOCIETY LIMITED,SANKHLIM, BICHOLIM, GOA vs. INCOME TAX OFFICER, WARD-2(3), PANAJI

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH : PANAJI (THROUGH VIRTUAL HEARING) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI G.D. PADMAHSHALI, ACCOUNTANT MEMBER ITA.No.55/PAN./2019 Assessment Year 2014-2015 Vividha Urban Cooperative The Income Tax Officer, Credit Society, Navelim, Ward – 2 (3), Aaykar Sanquelim, Bicholim, vs. Bhavan, Pato Plaza, Goa – 403 405. Panaji, Goa – 403 001. PAN AAAAV2508F (Appellant) (Respondent) For Assessee : Shri Sham Kamat For Revenue : Shri Prabhakar Anand DJ Date of Hearing : 11.07.2023 Date of Pronouncement : 19.07.2023 ORDER PER SATBEER SINGH GODARA, J.M. :

This assessee’s appeal for assessment year 2014- 2015, arises against the CIT(A) Panaji-1, Panaji’s order dated 10.01.2019, in case no.ITA.No. CIT(A), PNJ-1/10283/2016-17, in proceedings u/sec.143(3) of the Income Tax Act, 1961 (in short "the Act").

Heard both the parties. Case file perused.

2 ITA.No.55/PAN./2019 u/s 251 for remanding to AO or directing the AO to decide, subject to conditions, in accordance with directions; and accordingly the remarks be expunged in Para 8 of the impugned order that "Subject to satisfying the AO that it does not have nominal members by producing a certificate from the appellant itself to this effect, and also a certificate from the auditor stating that it does not have nominal members” while allowing the ground-1 after already holding “that the appellant is not a co-operative bank but a co-operative society.

2. In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has no jurisdiction u/s 251 for remanding to AO or directing the AO to decide, subject to conditions, in accordance with directions; and accordingly the remarks be expunged in Para 9 of the impugned order that "subject to the condition that the nominal members criteria be fulfilled i.e. the appellant should not have nominal members. Accordingly, as a result of verification by the AO, if the society is found to be a co-operative bank, then the provisions of section 40(a)(ia) will apply and the claim of assessee will fail. Alternatively, if it is found that the appellant is not having nominal members, then this ground will succeed. The AO may verify and give effect to the order accordingly.” while allowing ground-1.

3. In the facts and circumstances of the case, the Commissioner of Income Tax (Appeals) has erred in not considering, while deciding that the appellant is not a co- operative bank, the fact that the appellant cannot and does not have the facility; that "the mode by which the withdrawal of the deposit can be effected is by the issue of 3 ITA.No.55/PAN./2019 cheques, drafts, orders or otherwise, that is, by like methods", which is a sine qua non to constitute BANKING as held by the Apex Court and accordingly banking is not the primary object or principal business of the appellant.”

4 ITA.No.55/PAN./2019 4. We find no merit in the Revenue’s stand supporting the learned lower authorities action denying sec.80P(4) deduction to the assessee. It is also come on record that this assessee has all along been functioning as a co-operative society, duly registered under the state law(s) as well as the Banking Regulations Act, 1949. That being the case, we quote hon’ble apex court’s recent landmark decision in Mavilayi Service Co-operative Bank Ltd. vs. CIT [2021] 431 ITR 1 (SC), that the impugned deduction could not be denied either by treating a cooperative society as a cooperative bank nor taking into consideration the alleged nominal members. We accordingly accept it’s impugned deduction claim of sec.80P representing interest income of Rs.49,34,008/-.

No other ground or argument has been pressed before us.

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