ITO, V. M/s Somavamsha Sahasrajuna Kshatriya,

ITA 1144/BANG/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80793 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-12-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 17-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR K SHANKAR PRASAD J
• Assessee Lawyers: C R NULVI
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE , ACCOUNTANT MEMBER STAY PETN.NO. 19 6 /BANG/201 4 (IN ITA NO. 1010 /BANG/20 14 ) (ASSESSMENT YEAR: 20 10 - 11 ) ITA NO.1010 & 1203/ BANG/2014 (ASSESSMENT YEAR: 2010 - 11) AND CROSS OBJN.NO.107/BANG/2013 (IN ITA NO.1144/BANG/2013) (ASSESSMENT YEAR: 2010 - 11) SOMAVAMSHA SAHASRARJUNA KSHATRIYA SOCIETY LTD. NO.43, G.K.TEMPLE STREE T , CHICKPET CROSS, BANGALORE - 560053 PETITIONER/ APPELL ANT/ CROSS OBJECTOR VS. INCOME - TAX OFFICER, WARD 5(3), BANGALORE. RESPONDENT AND ITA NO.1144/BANG/2013 (ASSESSMENT YEAR: 2010 - 11) INCOME - TAX OFFICER, WARD 5(3), AP P ELLANT BANGALORE. VS. SOMAVAMSHA SAHASRARJUNA KSHATRIYA SOCIETY LTD. BANGALORE - 560053 RESPONDENT ASSESSEE BY: SHRI C.R.NULVI, CA. RE VENUE BY: DR.K.SHANKAR PRASAD, JCIT(DR). DATE OF HEARING : 04/12/2014. DATE OF PRONOUNCEMENT: 16 /12/2014. ITA NO S . 1144/B/2013, 1010&1203/B/2014 SOMAVAMSHA SAHASRARJUNA KSHATRIYA CO - OP. SOCIETY LTD., PAGE 2 OF 7 O R D E R PER BENCH: ALL THESE APPEALS (EXCEPT ITA NO.1010/BANG/2010) AND THE CROSS - OBJECTIONS FILED BY THE ASSESSEE/REVENUE ARE AGAINST THE ORDER OF THE CIT(A) - II, BANGALORE, DATED 08/04/2013 . ITA NO.1010/BANG/201 0 IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - II, BANGALORE, DATED 01/06/2014 . ALL THE APPEALS AND THE CROSS OBJECTIONS ARE FOR THE ASSESSMENT YEAR 2010 - 11. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY CARRYING ON THE BUSINESS OF BANKING. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME - TAX ACT, 1961[HEREINAFTER REFERRED TO AS 'THE ACT'] FOR THE RELEVANT ASSESSMENT YEAR, THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 8 0P(2)( A)(I) OF THE ACT. THE AO OBSERVED THAT THE ASSESSEE IS CARRYING ON BANKING ACTIVITIES AND THEREFORE THE PROVISIONS OF SEC.80P(4) ARE ATTRACTED AND THE ASSESSEE IS THEREFORE NO T ELIGIBLE FOR EXEMPTION U/S 80P OF THE ACT. 3. AGGRIEVED, THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO HELD THAT THOUGH THE ASSESSEE IS CARRYING ON THE BUSINESS OF BANKING , SINCE IT IS A CO - OPERATIVE SOCIETY, IT IS ELIGIBLE FOR DEDUCTION U/S 80P(2)(A)(I) OF THE ACT. FOR COMING TO THIS CONCLUSION, H E PLACED REL IANCE UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF M/S.JAYALAKSHMI MAHILA VIVIDO D ESHAGALA SOUHARDA SAHAKARI LTD. IN ITA NO.03/PNJ/2012 DATED 30/03/2012 AS WELL AS IN THE CASE OF M/S.YESHWANTHPUR CREDIT CO - OPERATIVE SOCIETY LTD. AS REGARDS THE INTEREST INCOME EARNED FROM ITA NO S . 1144/B/2013, 1010&1203/B/2014 SOMAVAMSHA SAHASRARJUNA KSHATRIYA CO - OP. SOCIETY LTD., PAGE 3 OF 7 DEPOSITS MADE BY THE ASSESSEE IN BANK S OR ON GOVERNMENT SECURIT IES, SHE HELD THAT IT IS NOT ELIGIBLE FOR DEDUCTION UNDER THE SAID SECTION . FOR THIS PURPOSE, RELIANCE WAS PLACED UPON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF TOTGAR S CO - OPERATIVE SALE SOCIETY LTD. , IN WHICH IT WAS HELD THAT THE INCOME EARNED BY THE ASSESSEE BY LENDING MONEY TO ITS MEMBERS SHALL BE ELIGIBLE FOR EXEMPTION U/S 80P(2)(A)(I) OF THE ACT. THUS HOLDING, THE CIT(A) OBSERVED THAT THE AMOUNT OF INCO ME EARNED BY WAY OF INTEREST FROM ITS DEPOSITS WITH BANK S AND GOVERNMENT SECURITIES HAS NOT BEEN QUANTIFIED IN THE ASSESSMENT ORDER AND SHE ACCORDINGLY SET ASIDE THE ISSUE TO THE FILE OF THE AO. 4. AGAINST THE RELIEF GIVEN BY THE CIT(A) HOLDING T HAT THE ASSESSEE IS A CO - OPERATIVE SOCIETY AND NOT A CO - OPERATIVE BANK, THE REVENUE IS IN APPEAL BEFORE US IN ITA NO.1144/BANG/2013 AND AGAINST THE DIRECTION OF THE CIT(A) TO THE AO TO QUANTIFY THE INTEREST EARNED FROM DEPOSITS WITH BANKS AND GOVERNMENT SE CURITIES, THE ASSESSEE IS IN APPEAL BEFORE US IN ITA NO.1203/BANG/2014 . THE APPEAL OF THE ASSESSEE (ITA NO.1203/BANG/2014) IS FILED WITH A DELAY OF 464 DAYS AND THE ASSESSEE HAS FILED AN APPLICATION ALONG WITH AN AFFIDAVIT FOR CONDONATION OF THE SAID DELAY . THE AO, WHILE GIVING EFFECT TO THE ORDER OF THE CIT(A), MODIFIED THE COMPUTATION OF INCOME VIDE ORDER DATED 30/04/2013 WITHOUT ACTUALLY QUANTIFYING THE INTEREST EARNED FROM D EPOSITS IN VARIOUS BANKS. AGAINST THIS ORDER, THE ASSESSEE FILED AN APPLICATIO N U/S 154 OF THE ACT FOR RECTIFICATION WHICH WAS DISMISSED BY THE AO AND THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AGAINST THE DISMISSAL OF THE APPLICATION U/S 154. THE CIT(A) DISMISSED THE APPEAL HOLDING THAT THE ASSESSEE IS ONLY SEEKING REVIEW OF H ER APPELLATE ORDER DATED 08/04/2013 WHICH IS NOT PERMISSIBLE. ITA NO S . 1144/B/2013, 1010&1203/B/2014 SOMAVAMSHA SAHASRARJUNA KSHATRIYA CO - OP. SOCIETY LTD., PAGE 4 OF 7 AGAINST THE SUBSEQUENT ORDER OF THE CIT(A) DATED 01/06/2014, THE ASSESSEE IS IN APPEAL BEFORE US IN ITA NO.1010/BANG/2014. THE ASSESSEE HAS ALSO FILED CROSS - OBJECTIONS BEARING NO.107/BANG/2013 IN ITA NO.1144/BANG/20143 STATING THAT THE APPEAL OF THE DEPARTMENT IS TIME - BARRED WHICH IS FILED AFTER 60 DAYS OF THE RECEIPT OF THE CIT(A) S ORDER WITHOUT A PETITION FOR CONDONATION OF DELAY. HOWEVER, AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS WITHDRAWN THE CROSS - OBJECTION OF THE ASSESSEE AND ACCORDINGLY, THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS WITHDRAWN. 5. COMING TO THE ASSESSEE S APPEAL (ITA NO.1203/BANG/2014 ) AGAINST THE ORDER OF THE CIT(A), WE FIND THAT THERE IS A DELAY OF 464 DAYS IN FILING OF THE APPEAL AND THE REASON GIVEN FOR THE DELAY IS THAT THE ASSESSEE HAS BEEN PURSUING THE ISSUE WITH THE AO IN THE REMAND PROCEEDINGS AND SUBSEQUENTLY BEFORE THE CIT(A) FOR QUANTIFICATION OF THE INTEREST EARNED ON SECURIT IES AND DEPOSITS AND IT IS ONLY SUBSEQUENTLY THAT THE PRESENT APPEAL IS FILED AS AN ABUNDANT CAUTION RESULTING IN THE DELAY. THE LEARNED DEPARTMENTAL REPRESENTATIVE, OPPOSED THE CONDONATION OF DELAY. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND TH E MATERIAL ON RECORD AS WELL AS IN THE INTERESTS OF JUSTICE , WE ARE OF THE OPINION THAT THE DELAY WAS CAUSED AS THE ASSESSEE WAS PURSUING THE REMEDY BEFORE THE AO AND THE CIT(A) IN THE REMAND PROCEEDINGS AND WAS NOT NEGLIGENT AND THEREFORE INCLINED TO COND ONE THE DELAY OF 464 DAYS. COMING TO THE MERITS OF THE DIRECTIONS OF THE CIT(A) AND THE SUBSEQUENT ORDER OF THE AO GIVING EFFECT TO THE ORDER OF THE CIT(A), WE FIND THAT THE CIT(A) HAD DIRECTED THE AO TO ITA NO S . 1144/B/2013, 1010&1203/B/2014 SOMAVAMSHA SAHASRARJUNA KSHATRIYA CO - OP. SOCIETY LTD., PAGE 5 OF 7 COMPUTE INTEREST EARNED ON SECURITIES AND DEPOSITS FOR DISALLOWANCE. IT IS WELL SETTLED LAW THAT ONLY THE INTEREST EARNED FROM FIXED DEPOSITS PARKED BY THE ASSESSEE WITH OTHER CO - OPERATIVE SOCIETIES OR MEMBERS IS ALLOWABLE U/S 80P(20(A)(I) OF THE ACT AND NOT THE INTEREST EARNED FROM THE GOVERNMENT SECURI TIES AND OTHER BANKS. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED THE STATEMENT OF INTEREST EARNED DURING THE FINANCIAL YEAR 2009 - 10 ACCORDING TO WHICH THE TOTAL INTEREST EARNED ON ALL DEPOSITS IS RS.51,33,768/ - WHEREAS INTEREST EARNED ON STATUTORY/COMPULSORY DEPOSITS IS RS.30,14,675/ - AND THE DIFFERENCE BETWEEN THE TWO IS RS.21,19,093/ - OUT OF WHICH INTEREST RECEIVED FROM CO - OPERATIVE SOCIETY/BANK IS RS.21,11,763/ - . THUS, THE ASSESSEE HAS WORKED OUT THE INTEREST EARNED FROM SCHE DULED BANKS AND GOVERNMENT SECURITIES WHICH IS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES AT RS.7,330/ - . WE FIND THAT NONE OF THE AUTHORITIES BELOW HAVE ACTUALLY VERIFIED THESE FIGURES FURNISHED BY THE ASSESSEE. IN VIEW OF THE SAME, WE DEEM IT FI T AND PROPER TO REMAND THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE DETAILS FILED BY THE ASSESSEE AND COMPUTE THE DISALLOWANCE OF INTEREST FROM GOVERNMENT SECURITIES AND BANKS OTHER THAN CO - OPERATIVE SOCIETIES/BANKS. THE ASSESSEE S APPEA L IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES . 7. AS REGARDS THE REVENUE S APPEAL, WE FIND THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. M/S.VASAVI CREDIT CO - OPERATIVE SOCIETY LTD., IN ITA NO.118/2012 DATED 27/06/2014 WHEREIN IT WAS HELD THAT A CO - OPERATIVE SOCIETY CARRYING ON BANKING BUSINESS CANNOT BE CONSIDERED AS CO - OPERATIVE ITA NO S . 1144/B/2013, 1010&1203/B/2014 SOMAVAMSHA SAHASRARJUNA KSHATRIYA CO - OP. SOCIETY LTD., PAGE 6 OF 7 BANK AND HENCE THE PROVISIONS OF SECTION 80P(4) ARE NOT APPLICABLE. THEREFORE, THE REVENUE S APPEAL IS ACCORDINGLY DISMISSED. 8. SINCE THE ORIGINAL ORDER OF THE CIT(A) HAS BEEN SET ASIDE AND THE ISSUE HAS BEEN REMITTED TO THE FILE OF THE AO FOR VERIFICATION AND QUANTIFICATION OF DISALLOWANCE OF INTEREST FROM GOVERNMENT SECURITIES AND BANKS O THER THAN CO - OPERATIVE SOCIETIES/BANK, THE ASSESSEE S APPEAL BEARING ITA NO.1010/BANG/2014 BECOMES INFRUCTUOUS AND IS DISMISSED AS SUCH. 9. THE ASSESSEE HAS FILED THE STAY PETITION NO.196/BANG/2014 IN ITA NO.1 010 /BANG/2014 FOR STAY OF THE OUTSTANDING D EMAND OF TAX. AS T HE APPEAL ITSELF HAS BEEN DISPOSED OF BY US IN PARA. 8 ABOVE, THE STAY PETITION BECOMES INFRUCTUOUS AND IS D ISMISSED AS SUCH . 10. IN THE RESULT, THE ASSESSEE S APPEAL (ITA N O .1203/BANG/2014 ) IS ALLOWED . THE REVENUE S APPEAL (ITA NO. 1144/BANG/2014) AND THE ASSESSEE S APPEAL AND THE CROSS OBJECTION VIZ., ITA 1010/BANG/2014 AND C.O. NO.196/BANG/2013 ARE DISMISSED. PRON OUNCED IN THE OPEN COURT ON 16 TH OF DECEMBER , 201 4. S D/ - SD/ - ( ABRAHAM P GEORGE ) ( SMT. P.MADHAV I DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU ITA NO S . 1144/B/2013, 1010&1203/B/2014 SOMAVAMSHA SAHASRARJUNA KSHATRIYA CO - OP. SOCIETY LTD., PAGE 7 OF 7 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX A PPELLATE T RIBUNAL BANGALORE