The Bundi Central Cooperative Bank Ltd. ... vs Assessee

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 486/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2008-09

Bundi Central Co-operative Bank cuke A.C.I.T., Circle-1, Ltd., Bundi. Vs. Kota.

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABAT 4227 G vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : None (Adj.application rejected) jktLo dh vksj ls@ Revenue by : Smt. Neena Jeph (JCIT)

lquokbZ dh rkjh[k@ Date of Hearing : 06/05/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 05/06/2015

vkns'k@ ORDER

PER: T.R. MEENA, A.M.

This is an appeal filed by the assessee against the order dated

27/03/2012 passed by the learned CIT(A), Kota for A.Y. 2008-09. The

sole ground of appeal is against not allowing the deduction of dividend

income U/s 80P(2)(d) of the I.T. Act and thereby sustaining the addition

of Rs. 17,15,705/-.

2 ITA 486/JP/2012_ Bundi Central Cooperative Bank Vs. ACIT

2. The ld Assessing Officer observed that the assessee filed original

return declaring income of Rs. 26,02,280/- on 29/09/2008, which was

revised on 29/03/2010 declaring NIL income. The case was scrutinized

U/s 143(3) of the Income Tax Act, 1961 (in short the Act). The ld

Assessing Officer gave show cause notice on claim of deduction U/s

80P(2)(d) of the Act which was replied by the assessee on dividend

received by the bank. It was submitted by the assessee as under:-

a) That it is having advances to the rural people, agro sector directly to the kisans & for regulating them small societies (PACS) are developed in the villages, for indentifying the person, recovery etc. thus the advances are direct, not through any other bank.

b) That in sec. 80P(4) the exemption is not debarred to the primary coop. & Agro development Bank as per explanation

(b) stated above.

c) That this is a Cooperative bank and engaged in primary Coop. Banking for rural & Agro advances, you have mentioned the definition as per sec. 56(cci) of banking Regulation Act, 1949 which is defining the different Coop.

Bank. It has no relation and impact on the deduction granted u/s 80P(2)(d) of IT Act.

3 ITA 486/JP/2012_ Bundi Central Cooperative Bank Vs. ACIT

He requested to allow the deduction U/s 80P(2)(d) of the Act and the ld

Assessing Officer after considering the assessee's reply held that the

assessee is engaged in the banking business, therefore, provisions of

Section 80P(2)(d) of the Act is not applicable on the bank. The assessee

submitted that the definition of Section 50C(iic) has no relation for

deduction U/s 80P(2)(d) of the Act but the Assessing Officer held that

Section 80P(2)(d) of the Act clearly said that deduction U/s 80P shall

not apply in case of cooperative bank and also mentioned that M/s

Jhalawar Kendriya Shakari Bank Ltd. is also paying tax on income,

therefore, claim of Bundi Central Cooperative Bank is not as per law. He

also reproduced object of bank:

"ftysdh lgdkjh laLFkkvksa ls ysu nsu djuk muds fy, cSyfsa lax lsUVj ds :i esa dk;Z djuk rFkk mUgsa _.k miyc/k djokukA"

Since the bank is not a primary bank hence deduction is not available to

the bank. Accordingly, he disallowed the deduction claimed by the

assessee U/s 80P(2)(d) of the Act at Rs. 17,15,705/-.

3. Being aggrieved by the order of the learned Assessing Officer, the

assessee carried the matter before the learned CIT(A), who had

confirmed the addition by considering that Section 80P(4) of the Act

and held that Section 80P(4) is available to:

4 ITA 486/JP/2012_ Bundi Central Cooperative Bank Vs. ACIT

1) Primary agricultural credit society.

2) Primary Co-operative agricultural and rural development bank.

Now assessee is not a Co-operative society. Assessee is a Co-operative bank. Let us see whether it is covered by definition of "Primary Co-operative agricultural and rural development bank" as given in explanation do section 80P(4).

As per the definition two things are necessary for treating assessee as a primary co-operative agriculture and rural development bank:-

1) The area of operation should be a taluk.

2) Principal object is to provide for long term credit for agricultural and rural development activities.

Taluk word is not defined.

The assessee's area of operation is "Bundi" district and it can be presumed that the area of operation was confined to a "Taluk".

However, the principal objects of the assessee, as per objects filed by assessee are as under:-

^^¼1½ ftys dh lgdkjh laLFkkvksa esa ysunsu djuk] muds fy, cSyfUlax lsUVj ds :i esa dk;Z djuk rFkk mUgsa _.k miyC/k djkuk A ¼2½ ftys dh lgdkjh laLFkkvksa dk mUur djuk mudh ek=k vuqeku yxkuk vkSj muds fy, O;oLFk cukuk A ¼3½ cSd a dh vof'k"V iwWt a h dk mfpr rkSj ij yxkus ds fy, eufeUV izkeljksa fMcsUplZ vkfn [kjhnuk cspuk] ifjofrZr djuk fladjkUx

5 ITA 486/JP/2012_ Bundi Central Cooperative Bank Vs. ACIT

ewd =lqt djuk vFkok ,sls dk;Z djuk tks bl rjg ds dkjksckj ls feys tqyrs gks A ¼4½ fenoh vekurnkjksa dks mudh fl;knh vekurksa dh tekur ij _.k nsukA ¼5½ vf/kfu;e vFkok fu;eksa ds vuqlkj ,oa fjtoZ cSd a ] ukckMZ ,oa 'kh"kZ cSd a dh uhfr ds vuqlkj leLr izdkj dk cSfdax O;olk; djuk A ¼6½ ftys esa lgdkjh vkUnksyu dk izpkj ,oa izlkj djuk A ¼7½ mifu;eksa esa fufnZ"V mn~n';ksa dks izkfIr gsrq vius dk;Z{ks= esa Lohd`r ;kstuk ds vuqlkj 'kk[kk, vFkok is&vkWfQl [kksyuk A ¼8½ nh?kZdkyhu _.k gsrq ukckMZ@jkT; ljdkj }kjk funsZf'kr mn~ns';ksa ds fy, 'kh"kZ cSd a }kjk fu/kkZfjr uhfr ds vuqlkj vko';d dk;Zokgh djuk A ¼9½ vU; ,sls dk;Z djuk tks mijksDr mn~n's ;ksa dh iwfrZ ds fy, vko';d gks rFkk lnL;ksa ds fy, ykHknk;d gks A ¼10½ cSfa dax jsxqys'ku ,DV] 1949 ¼lgdkjh laLFkkvksa ds fy, ykxw½ ds izko/kku ds vuqlkj cSfa dax dk;Z djuk A ¼11½ O;fDr] QeZ ,oa laLFkk dks uksfeuy lnL; cukdj vf/kfu;e vUrxZr ,oa _.k fufr vuqlkj _.k miyC/k djkuk A ¼12½ cpr ;kstukvksa dks laHkkfor ,oa izkRs lkgu djuk A ¼13½ vius Lo;a ds rFkk lnL;ksa ds cgqeq[kh fodkl gsrq LorU= 'kks/k o fodkl laxBu dh LFkkiuk djuk bl dk;Z gsrq va'knku djuk A dk;Ziz.kkyh ds lq/kkj gsrq i;Zo{s k.k] ekxZn'kZu ,oa lykg miyC/k djkuk A ¼14½ vius dkjksckj lapkyu ds fy, py@vpy lEifRr dks Lohdh;@vFkok iV~Vs ij vFkok vU;Fkk ikfjr djuk rFkk mUgsa cpuk A^^ 6 ITA 486/JP/2012_ Bundi Central Cooperative Bank Vs. ACIT

From the above, it can be seen that the principal object of assessee is not to provide long term credit for agricultural and rural development activities.

Secondly, assessee is not a primary bank but a nodal bank which works as a balancing center for other co-operative banks working in the area.

The assessee distributed loans of Rs. 78.38 (76.85%) crores through co-operative societies and only Rs. 23.61 (23.15%) crore were distributed directly. From these figures it can be deduced that assessee was not a "primary bank" but a "central cooperative bank" acting as a nodal bank for many co-operative societies and banks.

In view of above, it is held that assessee is no entitled for deduction U/s 80P(2)(d) of the I.T. Act.

Addition of Rs. 17,15,705/- is confirmed."

On the date of hearing, the assessee filed the adjournment application

but number of adjournments had already been granted in this case.

Therefore, the same is decided after considering the submission made

by the assessee. At the outset the ld DR vehemently supported the

order of the ld CIT(A).

4. We have heard the ld DR and perused the material available on

the record. In the original return, the assessee has not claimed

deduction U/s 80P(2)(d) of the Act but claimed in revised return. He 7 ITA 486/JP/2012_ Bundi Central Cooperative Bank Vs. ACIT

also enclosed the copy of the object of the cooperative bank, which

prima facie shows that these loans are given to the agriculturists. It also

enclosed details of loans distributed through the society directly for F.Y.

2007-08. There was also certificate from the M.D. which shows that the

Bundi Central Cooperative Bank has jurisdiction to provide finance/loan

to small professionals and agriculturists living in the village and towns.

It gives direct loan also which comes in primary loan. Whatever loan

given through the cooperative society, which is debited in the name of

society but given directly to the customers and also regulated through

the society for interest and recovery purposes. Therefore, bank was

providing loans at primary level as well as at the level of village/town

for farmers as well as customers. Therefore, it is entitled to allow

deduction U/s 80P(2)(d) of the Act. On the basis of evidence enclosed

by the assessee, it is fact that the assessee has been advancing loan to

the farmers and villagers as a primary loan. It is not clear from the

record that from where the assessee was getting dividends, therefore,

matter is set aside to the Assessing Officer for de novo and decide the

case by providing the reasonable opportunity of being heard to the

assessee.

8 ITA 486/JP/2012_ Bundi Central Cooperative Bank Vs. ACIT

5. In the result, the assessee's appeal is allowed for statistical

purposes only.

Order pronounced in the open court on 05/06/2015.

Sd/- Sd/- ¼vkj-ih-rksykuh½ ¼Vh-vkj-ehuk½ (R.P.Tolani) (T.R. Meena) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur

fnukad@Dated:- 05th June, 2015 *Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- Bundi Central Co-operative Bank Ltd., Bundi.

2. izR;FkhZ@ The Respondent- The A.C.I.T., Circle-1, Kota.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr¼vihy½@The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 486/JP/2012)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar