Thalore Service Cooperative Bank Ltd. v. ITO

Case Laws Analysis
REFERRED Mavilayi Service Co-operative Bank Ltd. v. CIT 2021 TaxPub(DT) 0273 (SC)
REFERRED Chirakkal Service Co-Operative Bank Ltd. v. Commissioner of Income Tax 2016 TaxPub(DT) 1770 (Ker-HC)
REFERRED U.P. Co-Operative Cane Union Federation Ltd. v. CIT 1999 TaxPub(DT) 0090 (SC)

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The Tax Publishers2023 TaxPub(DT) 3225 (Coch-Trib) IN THE ITAT COCHIN SANJAY ARORA, A.M. & ABY T. VARKEY, JM Thalore Service Co-operative Bank Ltd. v. ITO I.T.A. No. 32/Coch/2023 And I.T.A. No. 33/Coch/2023, SP. No. 08/Coch/2023 Arising out of ITA. No.32/Coch/2023 And SP. No. 09/Coch/2023 Arising out of ITA. No. 33/Coch/2023 19 May, 2023 Assessee by: M. Ramdas, (CA) Revenue by: J. M Jamuna Devi, (Sr. AR) ORDER *Aby T. Varkey, J.M.* These are appeal preferred by the Thalore Service Co-operative Bank Ltd against the order of the Learned Commissioner (Appeals) /NFAC dated 26-1-2022 for Assessment Year 2009-10 & Assessment Year 2014-15. The assessee has also filed Stay Petitions. However, since both parties agree for hearing the appeals on merit, we proceed to hear the appeal on merit. Since the issues involved in these appeals are common, they are heard together and are being disposed of by this common order. 2. The facts being similar and the issue being the same, the appeals are decided together and the lead case is taken as Assessment Year 2009-10, so the facts pertaining to the Assessment Year 2009-10 is considered and the decision of it will be followed for Assessment Year 2014-15.The main grievance of the assessee is against the action of the Learned Commissioner (Appeals) in confirming the action of the Assessing Officer denying deduction Under Section 80P(2)(a)(i) of the Income Tax Act, 1961 (hereinafter the Act). The assessee society claims to be a Primary Agricultural Credit Society (hereinafter PACS) on the strength of a certificate issued by the Registrar of the Co-operative Societies as PACS. According to the assessee society it provides credit only to its members and consequently it claimed that the credit facility provided to the members amounting to Rs.1,00,08,043 are eligible for deduction Under Section 80P(2)(a)(i) of the Act. However, the Assessing Officer denied the claim of the assessee inter-alia on the reason that the Primary Agricultural Credit Societies are permitted only to provide financial accommodation to its members and that also for agriculture purposes; and for purposes connecting with agriculture activity only. According to Assessing Officer, since the assessee provides banking facilities to general public it is a Co-operative Bank, and therefore, by virtue of section 80P(4) of the Act, deduction under section 80P of the Act is not available; and thus he denied the claim of deduction Under Section 80P of the Act to the tune of Rs.1,00,08,043 which was added to the total income of the assessee. Aggrieved, assessee preferred an appeal before the Learned Commissioner (Appeals) who was pleased to dismiss the same by stating that merely because certificate has been issued by Registrar of Co-operative Societies, it cannot be the only factor for being eligible for the benefit Under Section 80P of the Act and observed the principle that substance over form needs to be examined to find out whether assessee society was PACS and he accepted the view of Assessing Officer that assessee is not a PACS; and he also found fault with the assessee for not filing of return of income Under Section 139(1) within time for Assessment Year 2009-10; and found that assessee had filed the return only in response to the Department notice Under Section 148 of the Act on 15-6-2016, which is belated. And therefore, he upheld the action of the Assessing Officer. Aggrieved by the aforesaid action of the Learned Commissioner (Appeals), the assessee has preferred the appeal before us for both Assessment Year 2009-10 as well as Assessment Year. 2014-15. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2023 TaxPub(DT) 3225 (Coch-Trib)

IN THE ITAT COCHIN

SANJAY ARORA, A.M. & ABY T. VARKEY, JM

Thalore Service Co-operative Bank Ltd. v. ITO

I.T.A. No. 32/Coch/2023 And I.T.A. No. 33/Coch/2023, SP. No. 08/Coch/2023 Arising out of ITA. No.32/Coch/2023 And SP. No. 09/Coch/2023 Arising out of ITA. No. 33/Coch/2023

19 May, 2023

Assessee by: M. Ramdas, (CA)

Revenue by: J. M Jamuna Devi, (Sr. AR)

ORDER

Aby T. Varkey, J.M.

These are appeal preferred by the Thalore Service Co-operative Bank Ltd against the order of the Learned Commissioner (Appeals) /NFAC dated 26-1-2022 for Assessment Year 2009-10 & Assessment Year 2014-15. The assessee has also filed Stay Petitions. However, since both parties agree for hearing the appeals on merit, we proceed to hear the appeal on merit. Since the issues involved in these appeals are common, they are heard together and are being disposed of by this common order.

2. The facts being similar and the issue being the same, the appeals are decided together and the lead case is taken as Assessment Year 2009-10, so the facts pertaining to the Assessment Year 2009-10 is considered and the decision of it will be followed for Assessment Year 2014-15.The main grievance of the assessee is against the action of the Learned Commissioner (Appeals) in confirming the action of the Assessing Officer denying deduction Under Section 80P(2)(a)(i) of the Income Tax Act, 1961 (hereinafter the Act). The assessee society claims to be a Primary Agricultural Credit Society (hereinafter PACS) on the strength of a certificate issued by the Registrar of the Co-operative Societies as PACS. According to the assessee society it provides credit only to its members and consequently it claimed that the credit facility provided to the members amounting to Rs.1,00,08,043 are eligible for deduction Under Section 80P(2)(a)(i) of the Act. However, the Assessing Officer denied the claim of the assessee inter-alia on the reason that the Primary Agricultural Credit Societies are permitted only to provide financial accommodation to its members and that also for agriculture purposes; and for purposes connecting with agriculture activity only. According to Assessing Officer, since the assessee provides banking facilities to general public it is a Co-operative Bank, and therefore, by virtue of section 80P(4) of the Act, deduction under section 80P of the Act is not available; and thus he denied the claim of deduction Under Section 80P of the Act to the tune of Rs.1,00,08,043 which was added to the total income of the assessee. Aggrieved, assessee preferred an appeal before the Learned Commissioner (Appeals) who was pleased to dismiss the same by stating that merely because certificate has been issued by Registrar of Co-operative Societies, it cannot be the only factor for being eligible for the benefit Under Section 80P of the Act and observed the principle that substance over form needs to be examined to find out whether assessee society was PACS and he accepted the view of Assessing Officer that assessee is not a PACS; and he also found fault with the assessee for not filing of return of income Under Section 139(1) within time for Assessment Year 2009-10; and found that assessee had filed the return only in response to the Department notice Under Section 148 of the Act on 15-6-2016, which is belated. And therefore, he upheld the action of the Assessing Officer. Aggrieved by the aforesaid action of the Learned Commissioner (Appeals), the assessee has preferred the appeal before us for both Assessment Year 2009-10 as well as Assessment Year. 2014-15.