M/s Sri Jihveshwara Credit Co-operative Society Ltd , Bangalore V. Income Tax Officer Ward-2(2)(5), Bangalore

CO 98/BANG/2017

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3328 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 13-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHOK KULKARNI
• Keywords: Opportunity of being heard; Question of law
• Section: 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NOS. & ASSESSMENT YEAR APPELLANT RESPONDENT 1624/BANG/2017 2013-14 INCOME TAX OFFICER, WARD-2(2)(5), BENGALURU. M/S. SRI JIHVESHWARA CREDIT CO- OPERATIVE SOCIETY LTD., NO.125, SWAKULASALI SANGHA BUILDING, B V K IYENGAR ROAD CROSS, BENGALURU 560 053. PAN NO : AABAS 7092 Q 1625/BANG/2017 2014-15 -DO- -DO- C.O. NOS. & ASSESSMENT YEAR APPELLANT RESPONDENT 98/BANG/2017 2013-14 (IN ITA NO.1624/BANG/2017) INCOME TAX OFFICER (EXEMPTIONS), WARD-2(2)(5), BENGALURU. M/S. SRI JIHVESHWARA CREDIT CO-OPERATIVE SOCIETY LTD., PAN NO : AABAS 7092 Q 99/BANG/2017 2014-15 (IN ITA NO.1625/BANG/2017) -DO- -DO- REVENUE BY : SHRI. M. RAJASEKHAR, ADDL. CIT ASSESSEE BY : SHRI. ASHOK KULKARNI, CA DATE OF HEARING : 28.11.2017 DATE OF PRONOUNCEMENT : 14 . 1 2 .201 7 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THESE APPEALS AND COS ARE PREFERRED BY THE ASSESSE E AS WELL AS REVENUE AGAINST THE RESPECTIVE ORDERS OF THE CIT(A). SINCE THESE APPEALS AND COS WERE HEARD TOGETHER, THEY ARE BEING DISPOSED OFF THROUGH THIS CONSOLIDATED ORDER. ITA NOS. NO.1624 & 1625/BANG/2017 CO NOS. 98 & 99/BANG/2017 PAGE 2 OF 4 GROUNDS OF APPEAL: 1. THE ORDER OF LD. CIT(A) IS CLEARLY OPPOSED TO LA W AS FAR AS THE FINDINGS ARE PERVERSE, CONTRARY TO THE FACTS AND CIRCUMSTANCE OF THE CASE AND HENCE NOT SUSTAINABLE. 2. THE LD. CIT(A) ERRED IN TREATING THE ASSESSEE AS A CO-OPERATIVE SOCIETY INVOLVED IN EXTENDING CREDIT FACILITIES TO ITS MEMB ERS WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS A CO-OPERATIVE BANK AND T HAT THE MAIN ACTIVITY OF THE CO-OPERATIVE SOCIETY IS TO LEND CREDIT FACILITIES T O ITS MEMBERS IN THE NATURE OF BANKING TRANSACTIONS WHICH COMES UNDER THE PURVIEW OF INSERTED SUB-SECTION (4) TO SECTION 80P W.E.F. 01.04.07. 3. THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE INSERTED PROVISION OF SEC 5(I)(CCII) IN THE PART V OF THE BANKING REGULATION ACT UNDER SECTION 56 WHEREIN THE CO-OPERATIVE CREDIT SOCIETY IS DEFINED. GROUNDS OF CO: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APP EALS) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT T O HAVE APPRECIATED THAT THE INTEREST EARNED ON DEPOSITS WITH CO-OPERATIVE B ANKS IS EXEMPT U/S 80P(2)(D) IN FULL. 3. THE CROSS OBJECTOR CRAVES FOR LEAVE TO, ADD TO, DELETE FROM OR AMEND THE GROUNDS OF CROSS OBJECTIONS. 2. DURING THE COURSE OF HEARING, THE LEARNED DR HAS CO NTENDED THAT THE ISSUE IS SQUARELY COVERED BY THE ORDERS OF THE TRIB UNAL, THUS THE ISSUE CAN BE SENT BACK TO THE AO TO READJUDICATE THE ISSUE IN TH E LIGHT OF THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF PR.CIT VS. VIJAY SOUHARDA CREDIT SAHAKARI LTD., IN WHICH THE MATTER HAS BEEN RESTORE D BACK TO THE FILE OF THE AO IN THE LIGHT OF JUDGMENT OF THE APEX COURT IN THE C ASE OF CITIZEN CO-OPERATIVE SOCIETY LIMITED VS. ASSISTANT COMMISSIONER OF INCOM E TAX IN CIVIL APPEAL NO.10245/2017 DISPOSED OF ON 08.08.2017. ITA NOS. NO.1624 & 1625/BANG/2017 CO NOS. 98 & 99/BANG/2017 PAGE 3 OF 4 THE LEARNED COUNSEL FOR THE ASSESSEE HOWEVER AGREED TO THE PROPOSITION OF THE LEARNED DR. 3. HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTH ORITIES BELOW IN THE LIGHT OF THE RIVAL SUBMISSION, WE FIND THAT IN IDEN TICAL CIRCUMSTANCES, THE JURISDICTIONAL HIGH COURT HAS RESTORED THE MATTER B ACK TO THE AO TO READJUDICATE THE ISSUE IN THE LIGHT OF THE JUDGMENT OF THE APEX COURT IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY LIMITED (SUPRA). R ELEVANT OBSERVATION OF THE HONBLE APEX COURT IS EXTRACTED HEREUNDER FOR THE S AKE OF REFERENCE: 6. THE SOLE SUBSTANTIAL QUESTION OF LAW RAISED BY THE APPELLANTS REQUIRES TO BE ANSWERED ON THE DETERMINATION OF THE CRUCIAL QUESTION WHETHER THE RESPONDENT-ASSESSEE IS A CO-OPERATIVE SOCIETY O R A CO-OPERATIVE BANK. IN THE JUDGMENT REFERRED TO BY THE LEARNED COUNSEL FOR THE REVENUE IN THE CITIZEN CO-OPERATIVE SOCIETY LIMITED, SUPRA, A CATEGORICAL FINDING WAS GIVEN BY THE ASSESSING OFFICER THAT THE RESERVE BANK OF INDIA HA S ITSELF CLARIFIED THAT BUSINESS OF THE APPELLANT DOES NOT AMOUNT TO THAT O F A CO-OPERATIVE BANK, THE APPELLANTS THEREFORE WOULD NOT COME WITHIN THE MISC HIEF OF SUB-SECTION (4) OF SECTION 80P. IT WAS HELD THAT THE ACTIVITIES OF TH E APPELLANTS THEREIN WAS TO CATER TWO DISTINCT CATEGORIES OF PEOPLE NAMELY, NOM INAL MEMBERS AND THE ORDINARY MEMBERS. THE ACTIVITIES OF THE ASSESSEE T HEREIN WAS CONSTRUED TO BE FINANCIAL BUSINESS CONTRARY TO THE PROVISIONS OF TH E CO-OPERATIVE SOCIETIES ACT. AS SUCH, IT WAS HELD THAT, THE SAID ASSESSEE WAS NO T ENTITLED TO DEDUCTION UNDER SECTION 80P(2)(A)(I) OF THE ACT. 7. A CURSORY VIEW OF THE ORDER IMPUGNED HEREIN WOU LD INDICATE THAT NO FINDING IS FORTHCOMING REGARDING THE ASPECT OF T HE ACTIVITIES CARRIED OUT BY THE RESPONDENT-ASSESSEE, WHETHER AS A CO-OPERATIVE SOCIETY OR NOT. IN THE ABSENCE OF SUCH FACTUAL FINDING, THE LEGAL PROPOSIT IONS RENDERED BY THE HONBLE APEX COURT CANNOT BE APPLIED. AS SUCH, WE ARE OF T HE CONSIDERED OPINION THAT THE MATTER REQUIRES RECONSIDERATION BY THE ASSESSIN G OFFICER TO THE EFFECT WHETHER THE RESPONDENT-ASSESSEE COMES WITHIN THE RE ALM OF CO-OPERATIVE SOCIETY TO GET ENTITLEMENT OF DEDUCTION UNDER SECTI ON 80P(2)(A)(I) OF THE ACT. 8. HENCE, WE REMAND THE MATTER TO THE ASSESSING OF FICER TO ANSWER THIS QUESTION AND THEN DECIDE THE MATTER IN THE LIG HT OF THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CITIZEN CO-OPERAT IVE SOCIETY LIMITED, SUPRA, AS EXPEDITIOUSLY AS POSSIBLE. THUS, WITHOUT RENDER ING ANY FINDING ON THE ITA NOS. NO.1624 & 1625/BANG/2017 CO NOS. 98 & 99/BANG/2017 PAGE 4 OF 4 SUBSTANTIAL QUESTION OF LAW RAISED, ORDER OF THE IN COME TAX APPELLATE TRIBUNAL IMPUGNED HEREIN, IS SET ASIDE. WE DIRECT THE ASSES SING OFFICER TO RECONSIDER THE MATTER IN THE LIGHT OF THE OBSERVATIONS AFORESA ID. 4. IN THE LIGHT OF THE JUDGMENT OF THE JURISDICTION AL HIGH COURT, I FEEL IT PROPER TO RESTORE THE MATTER TO THE FILE OF THE AO FOR READJUDICATION OF THE ISSUE AFRESH AFTER AFFORDING OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. 5. ACCORDINGLY, I SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE AO IN TERMS INDICATED ABOVE. 6. IN THE RESULT, APPEALS AND COS OF THE ASSESSEE A S WELL AS THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 14 TH DECEMBER, 2017. SD/- ( SUNIL KUMAR YADAV ) JUDICIAL MEMBER BANGALORE. DATED: 14 TH DECEMBER, 2017. /NS/* COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGALORE.