Ita/599/2013 Of The Commissioner Of Income Tax v. M/S. Bangalore Commercial Transport Credit

1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 27 DAY OF JUNE, 2014 PRESENT THE HON’BLE MR. JUSTICE N KUMAR ANTI THE HON’BLE MR. JUSTICE B MANOHAR| ITA No. 599/2013 BETWEEN: Ll.Commissioner ot Income JTax-IV C.R. Building, Queens Road, Bangalore. iaIncome Tax Officer. Ward-3(3), C.R. Building, Queens Road, Bangalore. ..Appellants. (By Sri G. Kamaladhar, Adv.) AND: M/s. Bangalore Commercial TransportCredit Co-operative Society LimitedNo.2, I Cross, Chikkanna Garden, o Chamrajpet, Bangalore 560 018. ...Respondent (By Sri A. Shankar, Sri S. Annamalai& Sri M. Lava, Advs.) KREEKKRERERRE This ITA filed under Section 2600-A of I.T. Act, 1961arising out of order dated O7.06.2013 passed in ITA|No.1649/Bang/2012, for the Assessment year 2009-10,|praying to (i) formulate the substantial questions of law|stated therein; (11) allow the appeal and set aside the order|dated 07.06.2013 passed by the ITAT, Bangalore in ITA No.1649/Bang/2012 confirming the order of the Appellate.Commissioner and confirm the order passed by the Income|Tax Officer, Ward-3(3), Bangalore. This ITA coming on for hearing this day,N, KUMAR Jdelivered the following: JU DBGMENT Thisappeal1SpreferredbytheTEVENUC challenging the order passed by the Tribunal, wherein it is held that sub-section (4) of Section 8O0P of the Income Tax Act, 1961 is applicable only to co-operative banks.and not to credit co-operative societies. | 3 2 |The substantial questions of law which are| raised in the appeal are as under: (1)EWhether the ‘TJribunal was correct iupholding the CIT(A)’s order directing theassessing officer to grant deduction under|Section8OP(2) (a) (iot the.Actot Rs./70,98,6024/- for assessment year 20010 by relying on the earlier order of ITAT|on identical issue without appreciating|that the revenue had not accepted the saidorder and an appeal under Section 260A|is pending before this Hon’ble Court for|adjudication? (11)Whether the Tribunal is correct in holding|that the assessee is not a Co-operative|Bank but only a Co-operative society|engaged in providing credit facilities to its|members?that the assessee is not a Co-operative|Bank but only a Co-operative society|engaged in providing credit facilities to its|members? (111)Whether the Tribunal was correct in not.appreciating the facts that the main mottoof the co-operative society is lending for itsmembers which is in the nature otfappreciating the facts that the main mottoof the co-operative society is lending for itsmembers which is in the nature otf (iv) 162 banking transaction, treated on par as per|the new clause introduced in the definition of income to section 2(24)(viia) and comes|under the purview of 8O0P sub-section (4)of the Act as inserted in Finance Act 2006with effect from 01.04.2007? Whether the Tribunal was correct insholding that the provision of sub-section|(4) of Section 8O0OP of the Income-tax Acare applicable only to co-operative banks|and not to credit co-operative societies,which are engaged in business of banking,including providing credit facilities to theirmembers? Whether the Tribunal was correct ineholding that the assessee is a c-operative|society and not a co-operative bank in|terms of sub-section (4) of Section 80P ofthe Income Tax Act without considering|the meaning of Co-operative Bank as/envisagedunderPartVOT BankingRegulation Act, 1949 wherein it is defined|that Co-operative Bank includes primary|co-operativeBank,which|1S further 5 defined as co-operative society with the|primary object of transactions of Banking|business?” 3.|The Tribunal in its order has set out the'difference between the co-operative bank and society as under: w Whether the Tribunal was correct ineholding that the assessee is a c-operative|society and not a co-operative bank in|terms of sub-section (4) of Section 80P ofthe Income Tax Act without considering|the meaning of Co-operative Bank as/envisagedunderPartVOT BankingRegulation Act, 1949 wherein it is defined|that Co-operative Bank includes primary|co-operativeBank,which|1S further 5 defined as co-operative society with the|primary object of transactions of Banking|business?” 3.|The Tribunal in its order has set out the'difference between the co-operative bank and society as under: w 4This Court had an occasion to consider the|said question inITA No.5006/2013' dated05.02.2014in the case oftTHE COMMISSIONER OF INCOME TAXvs. SRI BILURU GURUBASAVA PATTINA SAHAKARISANGHANIYAMITHA,BAGALKOT,where,afterreferring to the relevant provisions of the Income TaxAct, and the banking Regulation Act, held as under: “TtaCo-operativeBank|1S|exclusivelycarrying banking business, then the incomederived from the said business cannot be'deducted in computing the total income ofthe assessee. The said income is liable for|tax. A Co-operative bank as defined underthe Banking Regulation Act includes theprimary agricultural credit society or aprimaryco-operativeagricultural rural development bank. The Legislature did notwant to deny the said benefit to a primaryagricultural credit society or a primary co- operative agricultural and rural developmentbank. They did not want to extend the saidbenefit to a co-operative bank which is|exclusively carrying on banking businessi1.e., the purport of the amendment. If theassessee 1S not a Co-operative bank carryingon exclusively banking business and if itdoes not possess a license from the Reserve|Bank of India to carry on business, then it isnot a Co-operative bank. It is a Co-operative|society which also carries on the business oflending money to its members which isCOVeTEdunderSectionS8OP(2)(a) (11.€.,carrying on the business of banking forproviding credit facilitates to its members.The object of the aforesaid amendment is notto exclude the benefit extended tmundesection 8O0P(i) to the society.” Therefore, the said issue was held in favour of theassessee and against the revenue. 0 5The said judgment answers the issues inthis case also. Accordingly, we pass the following order. Theappeal1Sdismissed.Thesubstantialquestions of law are answered in favour of the assesseeand against the revenue. (SD/-)JUDGE| (SD/-)JUDGE| VP/-