Sri Gangadhareshwara Souharda Pattan Sahakari Niyamitha , Gangavathi V. The Deputy Commissioner of Income TAx Circle-1 , Bellary

ITA 1272/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7144 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 07-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRATIBHA
• Keywords: Opportunity of being heard; Principle of natural justice; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER ITA NO.1272/BANG/2017 ASSESSMENT YEAR : 2009-10 SHREE GANGADHARESHWARA SOUHARDHA PATTAN SAHAKARI NIYAMITHA, C.B.S. COMPLEX, GANGAVATHI. PAN : AABAS2552D VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1, BELLARY. APPELLANT RESPONDENT ASSESSEE BY : SMT. PRATIBHA, ADVOCATE REVENUE BY : SHRI. M. RAJASEKHAR, ADDL. CIT DATE OF HEARING : 27.11.2017 DATE OF PRONOUNCEMENT : 28 . 11 .201 7 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A), INTERALIA, ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED CIT(A) IS BAD IN LAW. 2. THE LEARNED CIT(A) FAILED IN APPRECIATING THE FACT THAT THE APPELLANT HAD RIGHTLY CLAIMED DEDUCTION U/S 80P OF THE INCOME TAX ACT OF 1961. 3 THE LEARNED CIT(A) ERRED IN APPRECIATING THE FACT THAT THE APPELLANT IS NOT CATEGORIZED AS A 'CO-OPERATIVE BANK OR A STATE CO-O PERATIVE BANK' AND AS SUCH THE APPELLANT HAD NOT OBTAINED ANY BANKING LIC ENSE OR SPECIFIC APPROVALS FROM RBI OR UNDER THE BANKING REGULATION ACT AND HE NCE APPLICATION OF 80P(4) ITA NO. NO.1272/BANG/2017 PAGE 2 OF 4 IN THE PRESENT CASE IS NOT JUSTIFIED. 4. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT TH AT SECTION 80P(4) IS NOT SQUARELY APPLICABLE IN THE APPELLANT'S CASE AS THE APPELLANT IS UNDER A STATE LAW I.E. KARNATAKA SOUHARDHA ACT OF 1 997. 5. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER WHEN THERE WERE NO CONCRETE EVIDENCES TO SH OW THAT THE ACTIVITIES OF THE APPELLANT FALLS UNDER THE BANKING BUSINESS AND MERE DESCRIPTION OF 'NATURE OF BUSINESS' AS 'BANKING' IN THE AUDIT REPORTS WOULD NOT BE A SOLE FACTOR TO DETERMINE THE TRUE FA CTS OF THE APPELLANT. 6. WITHOUT PREJUDICE, THE DENIAL OF DEDUCTION U/S.80P BY THE LEARNED COMMISSIONER (A) IS ARBITRARY AND UNREASONA BLE AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 7. THE LEARNED COMMISSIONER (A) ERRED IN CONFIRMING TH E INTEREST U/S.234B OF THE ACT. 8. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT THE APPEAL MAY BE ALLOWED. 2. DURING THE COURSE OF HEARING, THE LEARNED COUNSEL F OR THE ASSESSEE CONTENDED THAT THE ISSUE IS SQUARELY COVERED BY THE ORDERS OF THE TRIBUNAL, THUS THE ISSUE CAN BE SENT BACK TO THE AO TO READJUDICAT E THE ISSUE IN THE LIGHT OF THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE O F PR.CIT VS. VIJAY SOUHARDA CREDIT SAHAKARI LTD., IN WHICH THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF THE AO IN THE LIGHT OF JUDGMENT OF THE APEX COURT IN THE CASE OF CITIZEN CO-OPERATIVE SOCIETY LIMITED VS. ASSISTANT COMMISSIONER OF INCOME TAX IN CIVIL APPEAL NO.10245/2017 DISPOSED OF ON 08 .08.2017. THE LEARNED DR HOWEVER AGREED TO THE PROPOSITION OF THE ASSESSEE. 3. HAVING CAREFULLY EXAMINED THE ORDERS OF THE AUTH ORITIES BELOW IN THE LIGHT OF THE RIVAL SUBMISSION, I FIND THAT IN IDENT ICAL CIRCUMSTANCES, THE ITA NO. NO.1272/BANG/2017 PAGE 3 OF 4 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 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. ITA NO. NO.1272/BANG/2017 PAGE 4 OF 4 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, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER, 2017. SD/- ( SUNIL KUMAR YADAV ) JUDICIAL MEMBER BANGALORE. DATED: 28 TH NOVEMBER, 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.