Case Law Details

Case Name : The Income-tax Officer Vs. The Somavamsha Sahasrajuna Kshatriya Credit Co-operative Society (ITAT Bangalore)
Appeal Number : ITA No. 1367/Bang/2016
Date of Judgement/Order : 27/11/2017
Related Assessment Year : 2012- 13
Courts : All ITAT (5311) ITAT Bangalore (261)

ITO Vs. The Somavamsha Sahasrajuna Kshatriya Credit Co-operative Society (ITAT Bangalore)

The question for consideration and adjudication before us is whether the assesee, admittedly a credit co-operative society engaged in providing credit facilities, etc., to its members, is entitled to be allowed deduction claimed u/s 80P(2)(a)(i) of the Act or whether the said claim is hit by the provisions of sec. 80P(4) of the Act. We find that this issue stands squarely covered in favour of the assessee and against Revenue, by the decision of the co-ordinate bench of this Tribunal in its order in ITA No.1574/B ang/20 12 dated 19/12/2014 in the assesse’ s own case for asst. year 2009-10, wherein following the decision of the Hon’ble Karnataka High Court in the case of CIT Vs. Sri Biluru Gurubasava Pattina Sahakari Sanagha Niyamitha in ITA No.5006/2013 dated 5/2/20 14, it was held that a co-operative society providing credit etc., to its members cannot be treated as a ‘co-operative bank’ carrying on banking activities.

Full Text of the ITAT Order is as follows:-

This appeal by Revenue is directed against the order of the CIT(A)-2, Bangalore dated 26.5.2016 for Assessment Year 2012-13.

2. Briefly stated, the facts relevant for disposal of this appeal are as under:-

2.1 The assessee, admittedly a credit co-operative society providing credit/loan facilities to its members and accepting deposits from them, filed its return of income for asst. year 2012-13 on 25/9/20 12 declaring total income of Rs. 19,039/- after claiming deduction of Rs.2,57,77,021/- u/s 80P(2)(a)(i) of the Income-tax Act, 1961 (in short ‘the Act’). The return was processed u/s 143(1) of the Act and the case was subsequently taken up for scrutiny. The Assessing Officer (‘AO’), on examination of the assessee’s claim for deduction u/s 80P(2)(a)(i) of the Act, was of the view that the assessee credit co-operative society is in fact a bank as per sec. 5 (ccv) of the Banking Regulation Act,1949 and therefore as per the provisions of sec. 80P(4) of the Act which are attracted, the assessee was not entitled to the deduction claimed u/s 80P(2)(a)(i) of the Act. The assessment was accordingly concluded u/s 143(3) of the Act vide order dated 30/3/2015, wherein the assessee’s income was determined at Rs. 2,57,77,021/-. Aggrieved, the assessee preferred on appeal before the CIT(A)-2, Bangalore and in support of its claim for 80P(2)(a)(i) deduction, the assessee relied on the decision of the Hon’ble Karnataka High Court in ITA No. 187/2015 dated 8/9/2015, in the assessee’s own case for asst. year 2009-10 wherein the Hon’ble High Court had dismissed the Revenue’s appeal on the very same issue. The ld CIT(A) observed that the issue of whether a co-operative society engaged in providing credit etc., to its members can be treated as a ‘bank’, has already been decided by the Hon’ble High Court of Karnataka in, inter alia, the assessee’ s own case for asst. year 2009-10 in ITA No. 187/2015 dated 8/9/2015 holding that the assessee is a credit co-operative society and not a ‘bank’ to whom the provisions of sec. 80P(4) are attracted. In that view of the matter, the ld CIT(A) allowed the assessee’ s claim for deduction u/s 80P(2)(a)(i) of the Act in her order dated 26/5/2016.

3.1 Aggrieved by the order of the CIT(A)-2, Bangalore dated 26/5/2016 for asst. year 2012-13, Revenue has field this appeal before the Tribunal wherein it has raised the following grounds:-

“1. The order of Ld. CIT(A) is clearly opposed to law as far as the findings are perverse, contrary to the facts and circumstances of the case and hence not sustainable.

2. The Ld. CIT(A) erred in treating the assessee as a co-operative society involved in extending credit facilities to its, members without appreciating the fact that the assesse6 is a co-operative bank and that the main activity of the co-operative society involved in extending credit facilities to its members ‘in the nature of banking transactions which comes under the purview of inserted sub-section (4) to section 80P w.e.f. 01.04.2007.

3. The Ld. CIT(A) has erred in not appreciating the inserted provision of sec.5(i)(ccii) in the part V of the Banking Regulation Act under section 56 wherein Cooperative Credit Society is defined.”

3.2 The ld DR for Revenue was heard and he placed strong reliance on the order of the AO denying the assessee the deduction claimed u/s 80P(2)(a)(i) of the Act.

3.3 Per contra, the ld AR for the assessee submitted that the issue in dispute is squarely covered in favour of the assessee by the decisions of the co-ordinate bench of this Tribunal in the assessee’ s own case for asst. year 2009-10 in ITA No. 1574/Bang/2012 dated 19/12/2014. It is submitted that this order of co-ordinate bench has been upheld by the Hon’ble Karnataka High Court of Karnataka in its order in ITA No. 187/2015 dated 8/9/2015, wherein following its own decision in the case of CIT Vs. Biluru Gurubasava Pattina Sahakari Sangha Niyamitha in ITA No. 5006/2013 dated 5/2/2014, Revenue’s appeal against the aforesaid decision of the co-ordinate bench was dismissed. It is further submitted that the co-ordinate bench in its order in the assessee’s own case for asst. year 2010-11 in ITA Nos. 1010 & 1203/Bang/20114 dated 18/12/2014 has also decided this issue in favour of the assessee and against the Revenue.

3.4.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited (Supra). The question for consideration and adjudication before us is whether the assesee, admittedly a credit co-operative society engaged in providing credit facilities, etc., to its members, is entitled to be allowed deduction claimed u/s 80P(2)(a)(i) of the Act or whether the said claim is hit by the provisions of sec. 80P(4) of the Act. We find that this issue stands squarely covered in favour of the assessee and against Revenue, by the decision of the co-ordinate bench of this Tribunal in its order in ITA No.1574/B ang/20 12 dated 19/12/2014 in the assesse’ s own case for asst. year 2009-10, wherein following the decision of the Hon’ble Karnataka High Court in the case of CIT Vs. Sri Biluru Gurubasava Pattina Sahakari Sanagha Niyamitha in ITA No.5006/2013 dated 5/2/20 14, it was held that a co-operative society providing credit etc., to its members cannot be treated as a ‘co-operative bank’ carrying on banking activities. Similar view was upheld by a co-ordinate bench in the assessee’s own case for asst. year 2010-11 (Supra).

3.4.2 Subsequent thereto, the Hon’ble Karnataka High Court in the assessee’s own case for asst. year 2009-10, in its order in ITA No. 187/2015 dated 8/9/2015, while considering the very same issue of the assessee’ s claim for deduction u/s 80P(2)(a)(i) of the Act has dismissed Revenue’s appeal, following its own decision in the csae of CIT Vs. Sri Biluru Gurubasava Pattina Sahakari Sangha Niyamitha (Supra), and thereby affirmed the Tribunal’s order in the assessee’ s own case for asst. year 2009-10 (Supra). Respectfully following the decision of the Hon’ble Karnataka High Court in the assessee’ s own case for asst. year 2009-10 (Supra), we dismiss the grounds raised by Revenue.

4. In the result, Revenue’s appeal for Assessment Year 2011-12 is dismissed.

Order pronounced in the open court on 27th November, 2017.

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Tags : ITAT Judgments (5493) Section 80P (54)

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