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2015 Supreme(Bom) 547
In the High Court of Bombay at Goa
F.M. REIS & M.S. SANKLECHA, JJ.
M/s. The Quepem Urban Co-operative Credit Society Ltd. – Appellant
Versus
The Assistant Commissioner of Income-tax Circle 1- Respondent
Tax Appeals No. 22, 23 & 24 of 2015
Decided On : 17-04-2015
For the Appellant:K.K. Chythanya, Shailesh Redkar, Advocates.
For the Respondent:Asha Dessai, Advocate.
The main legal point established in the judgment is that the appellant, not meeting the criteria to be considered a primary Co-operative Bank, was entitled to the benefit of deduction under Section 80P(2)(a)(i) of the Income Tax Act.
Headnote:
Income Tax Act - Co-operative Bank - Section 80P(2)(a)(i), Banking Regulation Act 1949 Section 5 (CCV)
Fact of the Case:
The appellant, a Co-operative society, claimed deduction under Section 80P(2)(a)(i) of the Income Tax Act. The dispute arose when the Assessing Officer disallowed the claim, considering the appellant as a primary Co-operative Bank and thus excluded from the benefit of Section 80P(2)(a)(i). The Tribunal upheld the Assessing Officer's decision, leading to the present appeal.
Finding of the Court:
The court found that the appellant did not satisfy the conditions to be considered a primary Co-operative Bank as defined in the Banking Regulation Act 1949 Section 5 (CCV). The court held that the appellant was entitled to the benefit of deduction under Section 80P(2)(a)(i) of the Act.
Issues: The main issue was whether the appellant qualified as a primary Co-operative Bank and was thus excluded from the benefit of Section 80P(2)(a)(i) of the Act.
Ratio Decidendi: The court analyzed the definition of a primary Co-operative Bank under the Banking Regulation Act 1949 Section 5 (CCV) and concluded that the appellant did not meet the criteria to be considered a primary Co-operative Bank, thereby allowing the benefit of deduction under Section 80P(2)(a)(i) of the Act.
Final Decision: The court allowed the appeals, ruling in favor of the appellant and against the respondent-Revenue.
1. These three appeals filed under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') challenge the common order dated 26 November, 2014 passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'the Tribunal')relating to assessment years 2008-09, 2009-10 and 2011-12. By the impugned order the Tribunal allowed the Revenue's appeal holding that the appellant is not entitled to the benefit of Section 80P(2)(a)(i) of the Act, as it is a Primary Co-operative Bank, thus hit by the exclusion provided in Section 80P(4) of the Act.
2. All the three appeals were admitted on 25 March, 2014 on the following substantial question of law:
Whether on the facts and in the circumstances of the case, the Hon'ble Tribunal was right in law in holding that the Appellant is a Co-operative Bank and hence, it is not entitled to deduction under Section 80P(2)(a)(i) by virtue of Section 80P(4) of the Act?
3. The Appellant had taken out an application for interim reliefs. At that time it was noticed that the controversy is within a narrow compass, therefore at the request of the Counsel, it was decided to dispose of the appeal itself.
4. As the facts in all the three appeals are similar and the issues arising are identical it is agreed at the bar that the decision on facts for any one assessment year would answer the question framed for the other two years. Therefore, for the purpose of convenience we shall refer to the facts in Appeal No.22/2015 relating to assessment year 2008-09, which are as under:
(a) The appellant is Co-operative society registered under the Goa Co-operative Societies Act, 2001 (hereinafter referred to as 'Co-operative Act'). On 26 December, 2009 the appellant filed its return of income declaring gross total income of Rs.1.31crores. However, the appellant claimed deduction of its entire income under Section 80P(2)(a)(i) of the Act resulting in nil taxable income.
(b) By order dated 14 February, 2014, the Assessing Officer disallowed the appellant's claim for deduction under Section 80P(2)(a)(i) of the Act. This on the ground that the appellant was a primary Co-operative Bank and therefore, hit by the provisions of Section 80P(4) of the Act which excluded the benefit of Section 80P of the Act to cooperative banks. Consequently, the appellant was assessed to a income of Rs.1.65 crores by the order dated 14 February 2014 of the Assessing Officer under Section 143 of the Act.
(c) Being aggrieved by the order dated 14 February, 2014 of the Assessing Officer, the appellant preferred an appeal to the Commissioner of the Income Tax (hereinafter referred to as 'CIT(A)). By an order dated 15 July, 2014, the CIT(A) allowed the appellant's appeal holding that the appellant is not a Co-operative Bank but a Co-operative Credit Society. Thus, not hit by the exclusion provided under Section 80P(4) of the Act. Consequently, the Assessing Officer was directed to extend the benefit of deduction under Section 80P(2)(a)(i) of the Act to the appellant.
(d) Being aggrieved by the order dated 15 July, 2014 of the CIT(A), the Revenue preferred an appeal to the Tribunal. By the impugned order dated 26 November, 2014, the Tribunal allowed the appeal of the Revenue to the extent it held that the appellant is a Cooperative Bank and therefore, not entitled to the benefit of Section 80P(2)(a)(i) of the Act in view of the exclusion provided in Section 80P(4) of the Act. Thus restored the order dated 14 February 2014 of the Assessing Officer.
5. The appellant-Assessee is in appeal before us from the impugned order dated 26 November 2014 of the Tribunal . It is contented that it is entitled to the benefit of Section 80P(2)(a)(i) of the Act and not hit by the exclusion in Section 80P(4) of the Act. For the proper consideration of the rival submissions, it is necessary to reproduce the relevant provisions of Section 80P of the Act and also the definition of a primary Co-operative Bank and Banking as defined in chapter V o
