Sri Laxminarayana Swamy Co-operative Society Ltd., Channapatna V. ITO, Mandya

ITA 1194/BANG/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5354 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 15-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 143(3); 195

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE DR. O.K NARAYANAN, VICE PRESIDENT AND SMT. P MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1194, 1 195 & 1196 /BANG/2009 (ASST. YEA R - 2004-05 TO 2006-07) SRI LAXMINARAYANA SWAMY CO-OPERATIVE SOCIETY LTD., GARUDAGAMBADA BEEDHI, CHENNAPATNA TOWN, BANGALORE RURAL DISTRICT. . APPELLANT VS. THE INCOME-TAX OFFICER, WARD-3, MANDYA. . RESPONDENT APPELLANT BY : SHRI B.P SACHIN KUMAR, CHARTERED ACCOUNTANT RESPONDENT BY : SMT. V.S SREELEKHA, ADDL. COMMISSI ONER OF INCOME-TAX O R D E R PER DR. O.K NARAYANAN, VICE PRESIDENT THESE THREE APPEALS ARE FILED BY THE ASSESSEE. T HE RELEVANT ASSESSMENT YEARS ARE 2004-05, 2005-06 AND 2006-07. THESE APPEALS ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A) AT MY SORE ALL DATED 30/09/2009. THE APPEALS ARISE OUT OF THE ASSESSMEN TS COMPLETED U/S 143(3) OF THE INCOME-TAX ACT 1961. ITA NO.1194TO 1196/B/09 2 2. THE ASSESSEE SOCIETY HAS RAISED COMMON GROUNDS F OR ALL THESE THREE ASSESSMENT YEARS. 3. THE FIRST CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE IS A MUTUAL CONCERN AND, THEREFORE, ITS INCOME IS NOT CH ARGEABLE TO TAX. THOSE, CONTENTION HAS TO BE REJECTED OUT RIGHT. TH E ASSESSEE IS A SOCIETY, REGISTERED UNDER THE CO-OPERATIVE SOCIETY S ACT AND IT HAS GOT SEPARATE JUDICIAL STATUS UNDER THE PROVISIONS OF TH AT ENACTMENT. THERE IS NO ASPECT OF MUTUALITY IN THE CASE OF THE ASSESS EE REGISTERED UNDER THE COOPERATIVE SOCIETY AS ONE OF THE OBJECTIVES OF A CO-OPERATIVE SOCIETY WILL BE TO MAKE PROFITS AND DECLARE DIVIDE NDS TO ITS MEMBERS. IN THE CASE OF MUTUALITY CONCERN, THERE IS NO ROOM FOR SUCH INTENTION OF MAKING PROFITS AND DISTRIBUTE THE SAME AMONG THE ME MBERS. THEREFORE, THIS ARGUMENT RAISED BY THE ASSESSEE IS QUITE UNKNOWN TO THE LAW OF INCOME-TAX ACT. THEREFORE, IT IS REJECTE D. 4. THE SECOND GROUND RAISED BY THE ASSESSEE IS THAT THE CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTIONS U/S 80P(2)(A)(III) AND (IV) OF THE INCOME-TAX ACT 1961. ITA NO.1194TO 1196/B/09 3 5. THE ABOVE SUB SECTION PROVIDE EXEMPTION, IN THE CASE OF A CO- OPERATIVE SOCIETY FROM TAX IN RESPECT OF ITS INCOME ARISING FROM THE MARKETING OF AGRICULTURAL PRODUCE GROWN BY ITS MEMB ERS AND PURCHASE OF AGRICULTURAL IMPLEMENTS, SEEDS, LIVE STOCK ETC. FOR AGRICULTURAL PURPOSES AND FOR SUPPLYING THEM TO ITS MEMBERS. IN OTHER WORDS, THESE TWO ITEMS ARE RELATED TO OPERATIONAL INCOME O F A CO-OPERATIVE SOCIETY. THIS ASPECT HAS TO BE LOOKED INTO BY THE AUTHORITY IN DETAIL. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE IS A SOCIETY COMPRISING A FARMER MEMBERS, WHO ARE WORKING BY THE MSELVES FOR THEIR COMMON BENEFIT AND, THEREFORE, THE OPERATIONA L INCOME IS ELIGIBLE FOR EXEMPTION. THIS ARGUMENT CANNOT BE BR USHED ASIDE LIGHTLY. THE ASSESSING AUTHORITY IS DIRECTED TO EX AMINE THE PARTICULARS OF THE SOCIETY AND ITS MEMBERS AND VERIFY THE ACTIV ITIES AND IF IT IS FOUND THAT THEY ARE CARRYING ON SUCH A SPECIFIED AC TIVITY FOR THE COMMON BENEFIT OF THE MEMBERS, THE SAID OPERATIONAL INCOME MAY BE EXEMPT FROM TAXATION. 6. THE THIRD CONTENTION RAISED BY THE ASSESSEE IS T HAT THE INTEREST INCOME EARNED FROM FIXED DEPOSITS AND RECURRING DEP OSITS MUST BE ALLOWED AS DEDUCTION. THIS ASPECT HAS BEEN RECENTL Y CONSIDERED BY THE HONBLE SUPREME COURT IN THE CASE OF TOTCARS CO-OPE RATIVE SALES ITA NO.1194TO 1196/B/09 4 SOCIETY LTD. VS. ITO, 229 CTR 209 (SC). THE HONBL E SUPREME COURT HAS HELD THAT IF INCOME ARISE OUT OF DEPOSITS , THE SAME SHOULD BE BROUGHT TO TAX AS INCOME FROM OTHER SOURCES. THER EFORE, THIS CONTENTION OF THE ASSESSEE IS REJECTED. 7. IN RESULT, THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THURSDAY THE 22ND DAY OF APRIL, 2010, AT BANGALORE. SD/- SD/- (P MADHAVI DEVI) (DR. O.K NARAYANAN) JUDICIAL MEMBER VICE PRESIDENT VMS. COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF 7..GF, ITAT, NEW DELHI. BY ORD ER ASST. REGISTRAR, ITAT, BANGALORE.