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

ITA 1155/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5934 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 06-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABIRAMA KARTHIKEYAN IRS
• Keywords: Business income; Opportunity of being heard
• Section: 234B; 80P

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NOS. 1154 & 1155/BANG/2018 ASSESSMENT YEAR S : 2013 - 14 & 2014 - 15 M/S. SRI NAGENDRA CREDIT CO-OP SOCIETY LTD., NO. 368/A, 6 TH MAIN, NAGENDRA BLOCK, BSK 3 RD STAGE, BANGALORE 560 050. PAN: AALAS8044C VS. THE INCOME TAX OFFICER, WARD - 5 [2] [5], BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI RAVISHANKAR, ADVOCATE RESPONDENT BY : SHRI ABI RAMA KARTHIKEYAN, IRS (DR) DATE OF HEARING : 01 . 0 5 .2018 DATE OF PRONOUNCEMENT : 04 . 0 5 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THESE TWO APPEALS ARE FILED BY THE ASSESSEE WHICH A RE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. CIT(A)-5, BANGALORE BOTH DAT ED 12.01.2018 FOR ASSESSMENT YEARS 2013-14 AND 2014-15. BOTH THESE A PPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2013-14 IN ITA NO. 1154/BANG/2018 ARE AS UNDER. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX [APPEALS] - 5, BENGALURU IN SO FAR IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 2. THE APPELLANT DENIES ITSELF LIABLE TO BE ASSESSE D ON TOTAL INCOME OF RS.3,60,550/-AS AGAINST THE RETURNED INCOME BY THE APPELLANT OF RS.NIL/- AFTER CLAIMING ELIGIBLE DEDUCTION UNDER SE CTION 80 P [2][D] OF THE ACT, ON THE FACTS AND CIRCUMSTANCES OF THE C ASE. 3. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] IS NOT JUSTIFIED ITA NOS. 1154 & 1155/BANG/2018 PAGE 2 OF 6 IN LAW IN CONFIRMING THE DISALLOWANCE MADE BY THE L EARNED ASSESSING OFFICER OF RS. 3,60,550/- BEING THE INTEREST RECEIV ED BY THE APPELLANT FROM INVESTMENTS MADE AND CLAIMED DEDUCTION UNDER T HE PROVISIONS OF SECTION 80 P [2][D] OF THE ACT ON THE FACTS AND CIR CUMSTANCES OF THE CASE. 4. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN NOT APPR ECIATING THAT THE INTEREST EARNED FROM DEPOSITS MAINTAINED IN CO-OPER ATIVE BANKS WAS ATTRIBUTABLE TO THE BUSINESS OF THE APPELLANT AND W AS TO BE CONSIDERED AS BUSINESS INCOME AND ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE ACT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. WITHOUT PREJUDICE, THE LEARNED AUTHORITIES BELOW OUGHT TO HAVE ALLOWED THE CORRESPONDING EXPENDITURES PROPORTIONAT ELY ON INCOME EARNED BY THE APPELLANT FROM INVESTMENTS WHICH WAS CLAIMED AS DEDUCTION UNDER SECTION 80 P [2][D] OF THE ACT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] FAILED TO APPRECIATE THAT THE APPELLANT IS NOT A CO-OPERATIVE BANK WITHIN THE MEANING OF PART - V OF THE BANKING REGULATION ACT, 1949, TO WHICH THE EXPLANATION TO SECTION 80 P [4] OF THE ACT DRAWS RE FERENCE AND CONSEQUENTLY, THE PROVISIONS OF SECTION 80 P [4] OF THE ACT ARE NOT APPLICABLE TO THE CASE OF THE APPELLANT. 7. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] IS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT HAS VIOLATED THE BYE- LAWS AND THE KARNATAKA SOCIETIES REGISTRATIONS ACT, 1959 WITHOUT EVEN PROPERLY VERIFYING THE FACTS OF THE CASE OF THE APPELLANT AN D ERRONEOUSLY DENIED THE ELIGIBLE CLAIM OF DEDUCTION BY THE APPELLANT UN DER SECTION 80 P [2] [A] [I] OF THE ACT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. WITHOUT PREJUDICE, THE LEARNED CIT [A] FAILED TO APPRECIATE THAT THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF C ITIZENS CO- OPERATIVE SOCIETY IS NOT APPLICABLE TO THE INSTANT CASE SO FAR AS THE INCOME ATTRIBUTABLE TO THE MEMBERS UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER AS PER THE PARITY OF REASONING OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF KARANVIR SINGH 349 ITR 692, THE APPELLANT DENIES HE RSELF LIABLE TO BE CHARGED TO INTEREST UNDER SECTION 234B AND 234C OF THE INCOME TAX ACT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. FURTHER THE LEVY OF INTEREST UNDER SECTION 234B & 234C OF THE ACT IS AL SO BAD IN LAW AS THE PERIOD, RATE, QUANTUM AND METHOD OF CALCULATION ADOPTED ON WHICH INTEREST IS LEVIED ARE ALL NOT DISCERNIBLE AND ARE WRONG ON THE FACTS OF THE CASE. 10. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, SUBST ITUTE AND DELETE ANY OR ALL OF THE GROUNDS OF APPEAL URGED ABOVE. ITA NOS. 1154 & 1155/BANG/2018 PAGE 3 OF 6 11. FOR THE ABOVE AND OTHER GROUNDS TO BE URGED DUR ING THE HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL BE A LLOWED IN THE INTEREST OF EQUITY AND JUSTICE. 3. THE GROUNDS RAISED BY THE ASSESSEE FOR ASSESSMEN T YEAR 2014-15 IN ITA NO. 1155/BANG/2018 ARE AS UNDER. 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME- TAX [APPEALS] - 5, BENGALURU IN SO FAR IT IS AGAINST THE APPELLANT IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, FACTS AND CIRCUMSTANCES OF THE APPELLA NT'S CASE. 2. THE APPELLANT DENIES ITSELF LIABLE TO BE ASSESSE D ON TOTAL INCOME OF RS.4,78,953/-AS AGAINST THE RETURNED INCOME BY THE APPELLANT OF RS.NIL/- AFTER CLAIMING ELIGIBLE DEDUCTION UNDER SE CTION 80 P [2][D] OF THE ACT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE . 3. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] IS NOT JUSTIFIED IN LAW IN CONFIRMING THE DISALLOWANCE MADE BY THE LEAR NED ASSESSING OFFICER OF RS. 4,78,953/- BEING THE INTEREST RECEIV ED BY THE APPELLANT FROM INVESTMENTS MADE AND CLAIMED DEDUCTION UNDER T HE PROVISIONS OF SECTION 80 P [2][D] OF THE ACT ON THE FACTS AND CIR CUMSTANCES OF THE CASE. 4. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN NOT APPR ECIATING THAT THE INTEREST EARNED FROM DEPOSITS MAINTAINED IN CO-OPER ATIVE BANKS WAS ATTRIBUTABLE TO THE BUSINESS OF THE APPELLANT AND W AS TO BE CONSIDERED AS BUSINESS INCOME AND ELIGIBLE FOR DEDUCTION UNDER SECTION 80P OF THE ACT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. WITHOUT PREJUDICE, THE LEARNED AUTHORITIES BELOW OUGHT TO HAVE ALLOWED THE CORRESPONDING EXPENDITURES PROPORTIONAT ELY ON INCOME EARNED BY THE APPELLANT FROM INVESTMENTS WHICH WAS CLAIMED AS DEDUCTION UNDER SECTION 80 P [2][D] OF THE ACT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] FAILED TO APPRECIATE THAT THE APPELLANT IS NOT A CO-OPERATIVE BANK WITHIN THE MEANING OF PART - V OF THE BANKING REGULATION ACT, 1949, TO WHICH THE EXPLANATION TO SECTION 80 P [4] OF THE ACT DRAWS RE FERENCE AND CONSEQUENTLY, THE PROVISIONS OF SECTION 80 P [4] OF THE ACT ARE NOT APPLICABLE TO THE CASE OF THE APPELLANT. 7. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] IS NOT JUSTIFIED IN HOLDING THAT THE APPELLANT HAS VIOLATED THE BYE-LAW S AND THE KARNATAKA SOCIETIES REGISTRATIONS ACT, 1959 WITHOUT EVEN PROP ERLY VERIFYING THE FACTS OF THE CASE OF THE APPELLANT AND ERRONEOUSLY DENIED THE ELIGIBLE CLAIM OF DEDUCTION BY THE APPELLANT UNDER SECTION 8 0 P [2] [A] [I] OF THE ACT, ON THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NOS. 1154 & 1155/BANG/2018 PAGE 4 OF 6 8. WITHOUT PREJUDICE, THE LEARNED CIT [A] FAILED TO APPRECIATE THAT THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF C ITIZENS CO-OPERATIVE SOCIETY IS NOT APPLICABLE TO THE INSTANT CASE SO FA R AS THE INCOME ATTRIBUTABLE TO THE MEMBERS UNDER THE FACTS AND CIR CUMSTANCES OF THE CASE. 9. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER AS PER THE PARITY OF REASONING OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF KARANVIR SINGH 349 ITR 692, THE APPELLANT DENIES HE RSELF LIABLE TO BE CHARGED TO INTEREST UNDER SECTION 234B AND 234C OF THE INCOME TAX ACT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. FURT HER THE LEVY OF INTEREST UNDER SECTION 234B & 234C OF THE ACT IS AL SO BAD IN LAW AS THE PERIOD; RATE, QUANTUM AND METHOD OF CALCULATION ADO PTED ON WHICH INTEREST IS LEVIED ARE ALL NOT DISCERNIBLE AND ARE WRONG ON THE FACTS OF THE CASE. 10. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, SUBST ITUTE AND DELETE ANY OR ALL OF THE GROUNDS OF APPEAL URGED ABOVE. 11. FOR THE ABOVE AND OTHER GROUNDS TO BE URGED DUR ING THE HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL BE A LLOWED IN THE INTEREST OF EQUITY AND JUSTICE. 4. AT THE VERY OUTSET, IT WAS SUBMITTED BY LD. AR O F ASSESSEE THAT AS PER ASSESSMENT ORDER, THE AO FOLLOWED THE JUDGMENT OF H ONBLE APEX COURT RENDERED IN THE CASE OF TOTGARS CO-OP SALE SOCIETY LTD. AS REPORTED IN 322 ITR 283 (SC) AND DECIDED THE ISSUE AGAINST THE ASSESSEE BY HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/. 80P(2)(D ) OF IT ACT. HE FURTHER SUBMITTED THAT CIT(A) HAS FOLLOWED THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF THE CITIZEN CO-OPERATIVE SO CIETY LTD. VS. ACIT AS REPORTED IN 397 ITR 1. BUT THAT JUDGMENT OF HONBL E APEX COURT IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE. REGAR DING THE JUDGMENT OF HONBLE APEX COURT IN THE CASE OF TOTGARS CO-OP SALE SOCIE TY LTD. (SUPRA), IT WAS SUBMITTED THAT ON THIS ISSUE, THERE ARE TWO JUDGMEN TS OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO- OPERATIVE SALE SOCIETY AS REPORTED IN 395 ITR 611 ( KARN) AND TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO AS REPORTED IN 230 TAXMAN 309. HE SUBMITTED THAT THE JUDGMENT OF HON BLE APEX COURT RENDERED IN THE CASE OF TOTGARS CO-OP SALE SOCIETY LTD (SUP RA) AND THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY AS REPORTED IN 3 95 ITR 611 (KARN) ARE ITA NOS. 1154 & 1155/BANG/2018 PAGE 5 OF 6 UNDER SIMILAR FACTS. HE FURTHER SUBMITTED THAT BOTH THESE JUDGMENTS OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF PCIT A ND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA) AND TUMKUR MERCHA NTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA) ARE ON SAME LINE B UT THE ULTIMATE CONCLUSION IS DIFFERENT BECAUSE THE FACTS ARE DIFFERENT. HE SUBM ITTED THAT IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA), THE ISSUE WAS DECIDED AGAINST THE ASSESSEE BECAUSE IT WAS FOUND T HAT THE MONEY DEPOSITED IN BANK WAS ASSESSEES LIABILITY AND NOT ASSESSEES OWN FUNDS BUT IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD . VS. ITO (SUPRA), THE ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BECAUSE IN THAT CASE, IT WAS FOUND THAT THE MONEY DEPOSITED IN BANK WAS OUT OF ASSESSE ES OWN FUNDS AND NOT OUT OF LIABILITY OF THE ASSESSEE. HE SUBMITTED THAT UN DER THESE FACTS, THE ISSUE SHOULD BE RESTORED BACK TO THE FILE OF CIT (A) FOR FRESH DECISION IN THE LIGHT OF THESE JUDGMENTS OF HON'BLE KARNATAKA HIGH COURT. T HE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT(A). 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN MY CONSIDERED OPINION, THIS ISSUE SHOULD GO BACK TO THE FILE OF CIT (A) FOR FRESH DEC ISION AFTER EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THESE TWO JUDGM ENTS OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO- OPERATIVE SALE SOCIETY (SUPRA) AND TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA). ACCORDINGLY, I S ET ASIDE THE ORDER OF CIT (A) IN BOTH YEARS AND RESTORE THE MATTER BACK TO HIS FI LE FOR FRESH DECISION AFTER EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGH T OF THESE TWO JUDGMENTS OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA) AND TUMK UR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA). IF IT IS FOUND THAT THE FACTS ARE IN LINE WITH THE FACTS IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY (SUPRA), THEN THE ISSUE SHOULD BE DECIDED A GAINST THE ASSESSEE AND IF IT IS FOUND THAT THE FACTS OF THE PRESENT CASE ARE IN LINE WITH THE FACTS IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. V S. ITO (SUPRA), THEN THE ISSUE SHOULD BE DECIDED IN FAVOUR OF THE ASSESSEE. NEEDLESS TO SAY, THE LD. CIT(A) SHOULD PROVIDE ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. ITA NOS. 1154 & 1155/BANG/2018 PAGE 6 OF 6 6. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 04 TH MAY, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.