Ita/249/2014 Of Cherthala Town Service Co-Operative Bank Ltd v. The Income Tax Officer

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC &THE HONOURABLE MR. JUSTICE SHAJI P.CHALY TUESDAY, THE 18TH DAY OF AUGUST 2015/27TH SRAVANA, 1937 ITA.No. 249 of 2014 -------------------------- AGAINST THE ORDER IN ITA 20/2014 of I.T.A.TRIBUNAL, COCHIN BENCH DATED 31-07-2014 APPELLANT IN ITA: ------------------------- CHERTHALA TOWN SERVICE CO-OPERATIVE BANK LTD NO 1345, CHERTHALA.P.O, CHERTHALA, ALAPPUZHA-688 524 REPRESENTED BY ITS SECRETARY. BY ADV. SRI.K.RAMANATHAN RESPONDENT IN ITA: ---------------------------- THE INCOME TAX OFFICER, WARD-1, ALAPPUZHA. R-R BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) R-R BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18-08-2015, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.No. 249 of 2014 APPENDIX PETITIONER'S ANNEXURES: ANNEUXRE A1: A TURE COPY OF THE BYE LAWS OF THE APPELLANTSOCIETY. ANNEXURE A2: A TRUE COPY OF THE CERTIFICATE DATED 3.12.2009ISSUED BY THE ASSISTANT REGISTRAR, CO-OPERATIVE SOCIETIES,(GENERAL), CHERTHALA. ANNEXURE A3: A TRUE COPY OF THE ASSESSMENT ORDER FOR THEFINANCIAL YEAR 2007-2008 DATED 24.12.2009. ANNEXURE A4: A TRUE COPY OF THE ORDER ISSUED BY THECOMMISSIONER OF INCOME TAX APPEALS IN ITA NO.29/ALP/CIT(A)IV/09-10 DATED 11.11.2013. ANNEXURE A5: A CERTIFIED COPY OF THE ORDER OF THE INCOMETAX APPELLATE TRIBUNAL IN ITA NO.20/COCH.2014 DATED31.7.2014. // TRUE COPY // P.A. TO JUDGE ANTONY DOMINIC & SHAJI P. CHALY, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -I.T.A.No.249 of 2014 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 18[th] day of August, 2015 Antony Dominic, J. JUDGMENT The appellant is a Primary Agricultural Credit Society registeredunder the Kerala Co-operative Societies Act. In the assessment year 2007-2008, the appellant had earned interest income of an amount ofRs.38,11,500/- from its fixed deposit in the District Treasury, Alappuzha.According to the appellant, said deposit was made out of the surplus fundsand hence it claimed that the income derived from the investment shouldbe regarded as an essential part of its banking activity. The AssessingOfficer held that the income cannot be regarded as an essential part of thebanking activity and on that basis, rejected the claim of the appellant forexemption under Section 80P of the Income Tax Act. The Assessing Officeralso held that the interest for unutilised funds invested in banks other thanCo-operative banks is not eligible for exemption under Section 80P of theIncome Tax Act. : 2 : 2. The assessment order was confirmed by the First Appellate Authority. Appeal was filed before the Tribunal. The said appeal wasconsidered along with a batch of appeals filed by other Co-operativeSocieties and by the impugned common order, the Tribunal held thatthe appellant is not entitled to exemption under Section 80P of theIncome Tax Act. It is aggrieved by this order of the Tribunal in ITA20/14 that the appellant has filed this appeal. 3. We heard the counsel for the appellant and learned SeniorCounsel appearing for the respondents. 4. Having heard both sides and also going through the order passed by the Tribunal, we notice that the Tribunal has only consideredwhether the appellant is entitled to exemption under Section 80P andthe Tribunal did not go into the main case of the appellant that it havingderived interest income from the investment which should be regardedas an essential part of its banking activity, entitling it for exemptionfrom tax. The Tribunal having not considered the case of the appellantin the proper perspective, we feel that the matter has to be remitted tothe Tribunal. : 3 : 5. Accordingly, setting aside the order of the Tribunal in ITA 3. We heard the counsel for the appellant and learned SeniorCounsel appearing for the respondents. 4. Having heard both sides and also going through the order passed by the Tribunal, we notice that the Tribunal has only consideredwhether the appellant is entitled to exemption under Section 80P andthe Tribunal did not go into the main case of the appellant that it havingderived interest income from the investment which should be regardedas an essential part of its banking activity, entitling it for exemptionfrom tax. The Tribunal having not considered the case of the appellantin the proper perspective, we feel that the matter has to be remitted tothe Tribunal. : 3 : 5. Accordingly, setting aside the order of the Tribunal in ITA 20/14, the matter is remitted to the Tribunal with a direction to hearthe appeal afresh and pass orders thereon in accordance with law. Appeal is disposed of. Sd/- ANTONY DOMINIC JUDGE jes Sd/- SHAJI P. CHALY JUDGE