M/s Bank Officers and Officials House Building Co-operative Society Ltd , Bangalore V. Assistant Commissioner of Income Tax Circle-3(2)(1), Bangalore

ITA 1202/BANG/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4721 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 11-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DK JHA
• Assessee Lawyers: S N SHYANBHOG
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 1 202 / BANG/201 8 ASSESSMENT YEAR : 2014 - 15 M/S. BANK OFFICERS AND OFFICIALS HOUSE BUILDING CO-OPERATIVE SOCIETY LTD., NO. 33, 1 ST FLOOR, SIRUR PARK ROAD, SHESHADRIPURAM, BANGALORE 560 020. PAN: AAAJB0694H VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3 (2) (1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S.N. SHYANBHOG, ADVOCATE RESPONDENT BY : SHRI D.K. JHA, ADDL. CIT (DR) DATE OF HEARING : 24. 0 5 .2018 DATE OF PRONOUNCEMENT : 01 . 0 6 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT(A)-3, BANGALORE DATED20.02.2018 FOR ASSESSMENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDERS OF THE LEARNED COMMISSIONER OF APPEAL S-3, BANGALORE, AND THE A.O. ARE ERRONEOUS IN HOLDING THAT THE AMOU NT OF RS.27,06,623/- BEING LOSS FROM BUSINESS CANNOT BE S ET OFF AGAINST THE INTEREST INCOME AS THE INCOME OF THE SOCIETY IS NOT TAXABLE ON THE BASIS OF MUTUALITY. 2. THE CIT(A) AND A.O. HAVE FAILED TO UNDERSTAND TH E FACT THAT THE ADMINISTRATIVE EXPENSES OF RS.31,23,181/- TO RUN TH E SOCIETY HAS BEEN CLAIMED AGAINST: (I) INTEREST INCOME OF RS.29,42,465/- (II) INCOME FROM TRANSFER / NO OBJECTION CERTIFICATE FEE S COLLECCTED BY THE SOCIETY AT THE TIME OF RESALE OF SITES BY TH E MEMBERS. (III) SHARE APPLICATION FEES COLLECTED FROM MEMBERS. ( (II) AND (III) ABOVE TOGETHER TOTALING TO RS.3,57 ,105/- ) ITA NO. 1202/BANG/2018 PAGE 2 OF 4 IN VIEW OF THE ABOVE, THE ADMINISTRATIVE EXPENSES H AVE TO BE DEDUCTED FROM THE INTEREST INCOME ALSO. 3. THE LEARNED CIT (A) AND A.O. HAVE FAILED TO UNDE RSTAND THE FACT THAT THE INTEREST RECEIVED IS FROM STATUTORY DEPOSI TS, DEPOSITS MADE OUT OF THE PROFITS OF THE APPELLANT AND FROM THE ADVANC E AMOUNTS RECEIVED FOR THE SITES FROM THE MEMBERS OF THE SOCIETY. HENC E, SAME IS ATTRIBUTABLE TO BUSINESS ACTIVITY OF THE APPELLANT. 4. THE CIT(A) HAS ERRED IN HOLDING THAT THE APPELLA NT IS NOT ENTITLED EXEMPTION U/S 80P (2) (D) OF THE IT ACT ON INTEREST OF RS.11,06,738/- RECEIVED FROM DEPOSITS KEPT IN CO-OPERATIVE BANK FO LLOWING RELIED ON THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF PR.CIT V/S TOTGARS CO-OPERATIVE SOCIETY (2017) 83 T AXMAN.COM 140 WHEN DECISION RELIED ON BY THE CIT(APPEALS) IS NOT APPLICABLE TO THE FACTS OF THE APPELLANT'S CASE. 5. THE TOTAL INCOME OF THE APPELLANT IS ENHANCED BY THE CIT(A) BY WITHDRAWING EXEMPTION ALLOWED BY THE A.O. U/S 80P(2 )(D) ON INTEREST OF ABOVE RS.11,06,738/-WITHOUT GIVING OPPORTUNITY T O THE APPELLANT AS REQUIRED U/S 251 (2) OF THE IT ACT. HENCE, ENHANCEM ENT OF RS.11,06,738/- HAS TO BE DELETED. 6. FOR THE GROUNDS AS CITED ABOVE AND ANY OTHER GRO UNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THIS APPEAL, IT IS PRAYED THAT THE ADMINISTRATIVE EXPENSES BE ALLOWED FOR DEDUCTION FR OM INTEREST INCOME AND EXEMPTION U/S 80P(2)(D) MAY BE ALLOWED B Y DELETING ENHANCEMENT OF RS.11, 06,738/- 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE LD. CIT(A) HAS FOLLOWED THE JUDGMENT OF HON'BLE KARNATAKA HIGH COURT DATED 16.0 6.2017 RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY AS REPORTED IN 395 ITR 611 (KARN). HE SUBMITTED THAT THE FACTS OF THIS CASE ARE DIFFERENT AND THEREFORE, THIS JUDGMENT IS NOT APPLICABLE IN THE P RESENT CASE. HE SUBMITTED THAT IN THE PRESENT CASE, ANOTHER JUDGMENT OF HON'B LE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TUMKUR MERCHANTS SOUHARDA C REDIT COOPERATIVE LTD. VS. ITO AS REPORTED IN 230 TAXMAN 309 IS APPLICABLE AND THEREFORE, THE MATTER SHOULD BE RESTORED BACK TO AO OR CIT (A) FOR A FRES H DECISION BY FOLLOWING THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED I N THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO (SUPRA). AT THIS JUNCTURE,THE BENCH WANTED TO KNOW REGARDING THE FAC TS OF THE PRESENT CASE BECAUSE THE DECISION OF HON'BLE KARNATAKA HIGH COUR T RENDERED IN BOTH THESE ITA NO. 1202/BANG/2018 PAGE 3 OF 4 CASES I.E. PCIT AND ANOTHER VS. TOTAGARS CO-OPERATI VE SALE SOCIETY (SUPRA) AND TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LT D. VS. ITO (SUPRA) ARE ON THE SAME LINE BUT THE CONCLUSION IS DIFFERENT BE CAUSE THE FACTS ARE DIFFERENT. THE BENCH POINTED OUT THAT IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO- OPERATIVE SALE SOCIETY(SUPRA), THE MONEY DEPOSITED IN BANK WAS OUT OF LIABILITY OF THE ASSESSEE AND IN THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO(SUPRA), THE MONEY DEPOSITE D IN BANK WAS NOT OUT OF LIABILITY BUT OUT OF ASSESSEES OWN FUNDS AND THERE FORE, THIS DECISION IS IN FAVOUR OF THE ASSESSEE. THE BENCH POINTED OUT THAT IF THE FACTS IN THE PRESENT CASE ARE SIMILAR TO THAT OF THE FACTS IN THE CASE OF PCIT AN D ANOTHER VS. TOTAGARS CO- OPERATIVE SALE SOCIETY (SUPRA) THEN THE ISSUE SHOUL D BE DECIDED AGAINST THE ASSESSEE BUT IF THE FACTS OF THE ASSESSEE ARE SIMIL AR TO THAT OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO( SUPRA) THEN THE ISSUE IS TO BE DECIDED IN FAVOUR OF THE ASSESSEE. IN REPLY, IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THE FACTS ARE NOT READILY AVAILABLE A ND THEREFORE, THE MATTER MAY BE RESTORED BACK TO THE FILE OF CIT(A) FOR FRESH DE CISION AFTER EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THESE TWO JUDGM ENTS OF HON'BLE KARNATAKA HIGH COURT. THE LD. DR OF REVENUE ALSO AGREED TO T HIS PROPOSITION PUT FORWARD BY THE LD. AR OF ASSESSEE. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND I FE EL IT PROPER THAT THE MATTER SHOULD GO BACK TO THE FILE OF CIT(A) FOR FRESH DECI SION AFTER EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THESE TWO JUDGM ENTS RENDERED IN THE CASE OF PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOC IETY(SUPRA) AND TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO( SUPRA) AND IF IT IS FOUND THAT THE FACTS OF THE PRESENT CASE ARE IN LINE WITH THE FACTS OF THE PCIT AND ANOTHER VS. TOTAGARS CO-OPERATIVE SALE SOCIETY(SUPR A) THEN THE ISSUE MAY BE DECIDED AGAINST THE ASSESSEE AND IF THE FACTS OF TH E PRESENT CASE ARE INLINE WITH THE FACTS OF THE CASE OF TUMKUR MERCHANTS SOUHARDA CREDIT COOPERATIVE LTD. VS. ITO(SUPRA) THEN THE ISSUE MAY BE DECIDED IN FAV OUR OF THE ASSESSEE. THE CIT(A) SHOULD PASS NECESSARY ORDER AS PER LAW IN TH E LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. ITA NO. 1202/BANG/2018 PAGE 4 OF 4 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 01 ST JUNE, 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.